ADFOX Sees Interest Grow For Programmatic In Russia

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Boris Image AdFox_edited-1

The Russian advertising market is one of marked interest for ad tech companies.

Certainly Western mainstays like Google are working their way in. But it's the local players that dominate. Consider Google's recent partnership with Yandex to expand its inventory offered by Russian publishers.

One such local player is ADFOX, a Moscow-based sell-side platform founded in 2005 that introduced its RTB offerings in 2012.

"We started with traditional ad-serving technology for Web and during development of different business models and different types of traffic, we created different functionalities, according to the demand of our clients," Boris Omelnitskiy, the company's chief development officer, told AdExchanger. "With that strategy, at the end of 2012, we started ADFOX's SSP that supports programmatic selling for publishers and that started RTB for us."

ADFOX certainly isn't the only company in Russia and Eastern Europe rushing to support programmatic in Russia. Yandex and Warsaw-based RTB House are also pushing to expand programmatic ad initiatives in the region.

Omelnitskiy, who is also the president of IAB Russia, spoke to AdExchanger about the work IAB Russia is doing to promote programmatic, the state of the industry in Russia and how ADFOX, which employs 35 people, is distinguishing itself among domestic and international players.

AdExchanger: What does ADFOX offer? How much of its work is in the programmatic or RTB space?

BORIS OMELNITSKIY: ADFOX is a technological platform for ad serving, independent statistics and advertising campaign analysis, serving more than 1.4 billion ad impressions per day. We work mostly on the sell side and many of the independent publishing players in Russia are among our clients, because Yandex, Mail.ru and Google all have their own ad technology. Gazprom-Media Digital is one of the biggest video ad sellers in Russia and it is also our client.

ADFOX provides technologies for advertising on Web, mobile, digital video and connected TV. In the beginning, the company was funded by the founders themselves. The company did not use external funding.

Who are your competitors and how does ADFOX distinguish itself?

Our main local competitor in Russia is AdRiver.ru, and globally, as for everybody, Google with DoubleClick for Publishers and DoubleClick for Advertisers.

One competitive advantage is that we have deep integration with local business processes. We have developed our services in close contact with our customers' needs, so we provide an API for integration with CRM and accounting systems, allow for usage of first-party data without leakage, provide reports to support the copyright holders while serving video ads and more. We are also a pure technology company and never compete with our customers in the field of selling media directly to advertisers.

Right now, is it mostly local and domestic companies doing programmatic and RTB in Russia? Or are some international brands working to get into the space?

I think both. We have a lot of DSPs with IPONWEB technology inside. Originally (the) IPONWEB company was from Russia, and they had the idea years ago to start programmatic buying. But we also have players from United States and Europe. Of course, among the technology companies, Google has a wide range of different technologies. Criteo opened an office in Moscow and Sociomantic from Germany is also starting to work in Russia. I've had contact and conversation with these companies. Turn or AppNexus, these companies are just in the process of researching the opportunity to start business in Russia.

What is the programmatic space like in Russia right now? 

Most of Russian market experts expect RTB in Russia to grow to less than 10% of display advertising in 2014. In the Russian RTB Market Overview report that ADFOX did with the Russian Association of Communication Agencies, it is estimated that the RTB market in Russia in 2013 was 1.2 billion rubles (approximately $35.6 million*), which is about 6% of display advertising in Russia, which totaled 20.1 billion rubles ($596 million). 

For global brands, these companies and brand managers ask about the opportunities to buy audience programmatically in their briefs, but do not always have the infrastructure ready to supply that kind of property. Right now, in Russia, some communication groups like GroupM or Aegis have started developing trading desks and their own technologies like Xaxis. We're excited for the results of this integration and we expect to see more money from big brands after finishing this integration process.

What are your goals for the company over the next year to 18 months?

We are a small local company and for us, our focus is audience buying and the use of big data for improving communication experience for advertisers.

Right now, we provide the opportunity to use first-party data. In Russia, right now, DMPs offer interesting segments for targeting and it is necessary to integrate all of these technologies in order to understand the Russian audience and improve any format of display advertising. We will continue to work with first-party data and with the different DMPs and programmatic infrastructure is only part of this big machine.

What is the situation with data in Russia?

TV is the main medium of advertising in Russia and advertisers and brand managers prefer to buy with social and demographic characteristics. We provide opportunities to target with third-party data suppliers with data age and gender. It works right now in Russia. If we talk about segments of some consumers' expectations, this is in process of development. In IAB Russia, we have a working group around RTB market development and a working group for development of the market of data. Right now, the big issues around data are pricing, trust among players and data leakage.

I don't know the situation in the American market, but in Russia, big publishers do not often trust Google and are not ready to provide to them all their data about conversion and ecommerce successes. So we help local players, advertisers and publishers to use their data and save it.

And tell me more about IAB Russia. What projects are you working on?

Yes, in Russia, IAB exists! It is a goal to develop the market and grow this market. We have started activations and some activity in 2011 and right now we have 30 members. Among our members are Yandex, Google Russia, RBK, Rambler and many of the biggest Russian media companies. Also among our members are research companies – TNS and comScore – and different tech companies.

One recent project was setting standards. Up until April, we had no specifications for everybody. Google has its own specification, (as do) other companies like Rubicon Project. But now, we have a specification from IAB and also important standards in the field of digital video.

In Russia, we are happy to use the experiences of the global IAB white papers and standards, and this is important for the development of open RTB specifications. For us, this is a real agenda for what to do and what items will be necessary to implement.

 

* Calculations done using XE.com, as of June 29, 2014.

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