The Gers suffered a 4-3 loss to Spartak Moscow in Russia on Thursday night.
The Gers suffered a 4-3 loss to Spartak Moscow on Thursday night in Russia, despite taking the lead three times in the first half and going into the break 3-2 up.
But two quick-fire goals from Spartak - just before the hour mark - completely turned the game on its head and has seen Rangers slip from top of Group G to third, level on points with second-placed Spartak.
Gerrard believes his side are still more than capable of finishing in the top two places and qualifying for the Round of 32. But he believes it has become a whole lot harder - and reckons the Villarreal clash has become more "exciting".
“It is still wide-open and it will go to the wire which is what we predicted at the beginning. Villarreal becomes even bigger now and more exciting," Gerrard said.
“But we were under no-illusions before the game – we knew it was going to go to the wire anyway but tonight’s result makes the challenge a bit more difficult.”
Rangers took the lead to go 1-0, 2-1 and 3-2 up in a topsy-turvy match that began with Spartak scoring an own goal through Roman Eremenko. Daniel Candeias scored an exquisite effort for the Gers' second.
Glenn Middleton scored his first goal in Europe with a calm left-footed finish for the third, but Spartak scored four thanks to strikes from Lorenzo Melgarejo, Luiz Adriano, Sofiane Hanni and an own goal from Connor Goldson.
Focus switches to hosting Stephen Robinson's Motherwell at Ibrox on Sunday afternoon, while the Gers are next in action in the Europa League against Spaniards Villarreal on home soil.