With agencies continuing to voice concern about their battles with clients’ procurement officers, some high-profile agency executives have called to pay for performance. Perhaps they should look no further than today's direct-response business -- traditionally driven by search advertising -- where agencies like WPP GroupM’s Quisma have been operating for more than a decade.
Quisma continues to expand in the EMEA region beyond its German roots, with 19 offices in 17 countries. CEO Ronald Paul said his agency has doubled headcount over the past year with 320 full-time employees working across search, performance display, dynamic retargeting, mobile, social, affiliate marketing and more. He explained, “We’re the biggest agency in German-speaking markets when it comes to search, but it’s no longer our key investment area.“
With aspirations to expand into North America, Paul said his agency is on the lookout for similarly minded performance-marketing agencies in the US and Canada so it can extend the Quisma network. In 2012 Quisma managed $250 million in ad spend in Europe, according to Paul.
“We have nearly a 50/50 split in revenues between display and search. We’re seeing strong growth rates in display because, I believe, there are few companies willing to take risks from day one on behalf of their advertisers to not only promise but guarantee an outcome for their investments. As a result, two-thirds of our business is outcome-driven and one-third is agency fee-driven.”
AdExchanger asked Paul more about his company and what he’s seeing…
Is “programmatic media” taking hold in the countries in which Quisma has expanded? Or is it still early days?
RONALD PAUL: It depends. It’s common in the UK, Germany and the Netherlands, where it’s part of day-to-day business. But you have a lot of immature countries like Spain or Italy or the whole Central and Eastern European region, where you need to tackle it from two angles.
First, let’s look at the publisher’s side. They’re scared of the potential loss of control even though the opposite is the case. You need to spend time educating them, which helps reduce their dependency on ad networks. It’s about giving them back transparency and monetizing their inventory better. Publishers still believe their direct sales are producing the best yield and, consequently, they only test with a lot of “remnant inventory.”
That brings us to the advertiser’s side and their concerns. They think that programmatic buying or RTB is about remnant inventory, something comparable with ad networks where they often find low quality. They may test programmatic media, but it is not 100% integrated into their plans. Still, it’s growing fast.
It’s a very powerful tool in our stack. For us, being part of GroupM, it is easier to convince publishers to work with us. What we do in the programmatic space is more premium where we ensure scale and a brand-safe environment. For some advertisers, they advertise with us because of what we have in our GroupM portfolios.
In terms of the future and milestones for Quisma in the next 12 to 18 months, what are you thinking?
We want to solidify the position we have achieved so far in Europe. There is no competitor that is capable of offering one product across so many markets at scale. For us it is important to now replicate that model in Central and Eastern Europe (CEE). That is the reason we acquired H1, the leading search agency in Czech Republic. We want to transform that business into a performance marketing offering that includes the sophistication of the marketplace today.
CEE is for us, for the next 12 months, a very big opportunity due to our knowledge and experience with other European markets. With the programmatic space, you can create the marketplace by driving education and usage of technology, which is not the case normally in the CEE. Nobody really cares about labor costs in CEE, so that’s why they never really implement technologies to eliminate inefficiencies.
We do see a huge demand from performance-conscious advertisers in the Nordics, too, which we will continue to work on. We’ve been there quite a while in the Nordics through acquisitions. The first country was Denmark, then Sweden, and we’re quite positive that we’ll announce within the next two months another opening and two new presidents in that region.
Also, even though its sounds a little bit weird given the fact that our headquarters are based in Germany, we want to expand in Australia. It seems to be the most advanced digital market in the Asia region, and we want to see how we perform in Australia first because it’s kind of a benchmark market in the region. And given difficulties on the publisher’s side in China, we don’t want to start in China first.
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