How Will You Differentiate Yourself in 2015?

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You’ve probably seen quite a few headlines lately about consolidation in the advertising technology industry. So it might surprise you to hear that between January 2014 and January 2015, the number of players in the advertising/marketing tech sector nearly doubled—from 947 companies to 1,876 companies. How can 1,876 companies each capture a distinct part of the market and position themselves for success?

With so many actors in the space, it’s more important than ever for companies to define what they stand for and what value they bring to their customers. They must break through the clutter and provide clarity around what they do, how they do it, and why they are even doing it. Here are a few things that are top of mind for AppNexus Marketing as we head into 2015—we hope they’ll be useful for you too:

#RealTalk: Avoid buzzwords—use real language to describe what you do and how you do it. This is challenging in an industry full of buzzwords that mean different things to different people. Be aware of your shortcomings and your strengths, and share them both with clients and employees. Remember that customers know you’re not perfect—being honest about where you need to improve is better than selling something that doesn’t really exist or that you can’t deliver. Be transparent in your pricing, in your conversations with employees, and in your dialogue with customers.

Be Visual: Most companies are working with a large range of ad tech companies that handle specific parts of their advertising business. When pitching to companies, remember that pictures are far more powerful than words. Go to the whiteboard and help them visualize the space beyond words. Where do you really provide value to them when you’re looking at the whole system?

Show How Customers Use You: It’s becoming a theme of this post, but it’s challenging to convey what value you provide by words alone. Talking about how your customers work with you is extremely powerful. One way to do that is through customer case studies that show real examples of the value you provide. In an increasingly competitive environment, there’s nothing more powerful than seeing products come to life. Customers can be powerful evangelists for your product—leverage their success stories!

Empower Your Employees: Build the tools and resources that allow your employees to thoroughly understand what your company does and why you do it so they can talk about it in a consistent way. Your employees are your best representatives and touch all the audiences you need to reach. It’s a mistake to ignore them—you have to make sure employees speak about your company in a clear way.

Create Communities: Go beyond your office walls. Be a leading voice in your industry, learn from your peers, and, when you can, help organizations that align with your mission. Which companies share your values, and how can you create partnerships?

Stand for something: Have a mission or purpose. Step back and think about not only what your technology does for your clients, but what it does for your clients’ clients. Where do you fit into the broader scheme of how people are using the internet today?

AppNexus creates value for different parts of our ecosystem, so it’s critical for us to be clear about what we do, how we do it, and why we do it. Following the guidelines above is the only way for us to maintain clarity about what we offer. While we still have work to do, we’re proud of our progress in some of these areas:

We strive to empower our employees from day one by educating them around what AppNexus does, how we do, and why we do it. All new hires go through an on-boarding program called AppNexus University, where they learn about our business, our company values, and our mission. We hold quarterly All Hands meetings, during which we address the state of the company today, and where we’re headed. Our Town Halls create an open forum for employees to ask questions of our senior leaders. We reinforce our four core values (Learn and Teach, Empower our Customers, See and Improve the Whole System, and Make Greatness Happen) through internal communications, outside partnerships, and even writing them on the office walls!

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At AppNexus, our mission to create a better internet drives everything we do. To us, that means helping advertisers increase the effectiveness of their campaigns, which in turn helps publishers monetize their inventory. This, in turn, creates great journalism, great apps, great games – all at no cost to consumers. Our employees know that it’s our core mission to create a better internet, but we haven’t always communicated this aspiration to our customers as well and consistently as we’d like to. That’s something we’re going to work on in 2015 and beyond.

better internet

 

#15for2015

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The 2015 Inaugural AppNexus Learn ‘N Hack

 
On January 14 and 15, AppNexus hosted its first ever Learn ’N Hack, a two-day company-wide hackathon designed to foster creativity, knowledge sharing and cross-functional collaboration. Learn ‘N Hack was inspired by one of our core company values, Learn and Teach.

Learn ‘N Hack kicked off with technical talks from AppNexian experts on topics ranging from “How to build a web app in 10 minutes or less” to “How I used Python to land a great NYC Apartment.” The next day, more than 200 AppNexians (both technical and non-technical) from five global offices divided into teams. They set about developing innovative hacks to improve the AppNexus experience for both employees and clients.

As the clock ticked down, teams rallied to present their final projects in one-minute pitches to the judges and to the entire global community. “SpeakNexus,” the AppNexus chapter of Toastmasters, was even on hand to help teams craft their pitches. When time was up, teams took to the Razzle Dazzle stage and went head to head in five categories: Pro (all team members are engineers), Pro/AM (more than half of team are non-engineers), Best UI/UX, Most Likely to Drive Revenue, and Audience Favorite.

The top ten teams came back on stage for a round of three-minute pitches, and a grilling from the judges. Finally, the judges scored teams based on plausibility, idea, execution, and value, and the winners were announced. Prizes included: the opportunity to pitch to Senior Product leads, bragging rights, champagne, dinner on AppNexus, orange Chuck Taylors, and a ‘pizza cat’ trophy!

AppNexus CEO and co-founder Brian O’Kelley summed it up perfectly when he said, “it’s really special that in just 24 hours, you can go from idea to something that you can touch and feel and show. That’s the heart and soul of who we are as a company.”

Some of our favorite quotes from Learn ‘N Hack participants:

  • “It was the most fun I’ve had at AppNexus . . . which is saying A LOT!”
  • “It was so apparent that we were all AppNexians as the Hackathon kicked off. We immediately started white-boarding our strategy, and assigning individual tasks that really let each person shine where their strengths lie.”
  • “The most unexpected part of the hackathon for me was how well we were able to communicate while working remotely. We had a team of 5 people working from 4 different locations and thanks to Slack and Vidyo we were able to collaborate effectively.”
  • “I am surrounded by amazing people who have skills I never knew existed. Simultaneously impressed and unsurprised, because we really do hire the best.”
  • “It was amazing how essential both technical and non-technical people were to designing, building, and presenting the product.”
  • “Trophies with pizza cats are awesome.”

Check out our sizzle reel above and view photos here. We can’t wait for next year’s Learn ‘N Hack!

To learn more about careers at AppNexus, visit careers.appnexus.com.

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Ad Viewability On Track To Become The New Currency Of Online Advertising

To hear more about this topic, attend the Viewability Panel being led by Laurent at this year’s IAB RTB Conference 2015.

In my previous post, I wrote about the latest IAB recommendations regarding trading on viewable impressions. This week, the IAB Europe published a white paper on ad-viewability—another illustration of the industry’s commitment to evolve to viewable impressions.

IAB Europe’s white paper provides a number of interesting insights from the market:

  • Advertisers’ and agencies’ position on non-viewable ads is clear: non-viewable ads have no value. The market (including publishers) must re-assess their commercial bases.
  • Attribution models must also be altered: conversions that are achieved after a non-viewable impression are simply fortuitous. Such conversions would have happened anyway, so the site where the ad was displayed should not be credited.
  • The link between viewability and television advertising is also becoming more and more important. A video GRP, relying on viewable video ads, is necessary to both Internet and TV markets.
  • There will be an eventual shift to viewable impressions within programmatic.

Today, we stand at the center of three converging forces:

  • Market needs for ad-viewability, as expressed in the IAB Europe whitepaper.
  • Pressure from the industry committee (the IAB guidance on ad-viewability trading).
  • Native integration of ad-viewability into the AppNexus platform.

Under these conditions, how can ad-viewability not prevail? Programmatic is a great opportunity for ad-viewability, and ad-viewability a great opportunity for programmatic.

Following the acquisition of Alenty, the pioneer in ad-viewability, AppNexus will be the first platform to integrate such advanced ad-viewability measurement as a core feature. The central position of AppNexus allows all kinds of companies (buyers, sellers, networks, etc.) to benefit from this new, revolutionary source of knowledge. Providing the same information to both sides of media transactions solves the IAB’s concerns about discrepancies.

At AppNexus, our goal is to improve the performance and quality of online advertising, thereby creating a better internet for publishers, advertisers, and consumers. In order to reach this ambitious target, AppNexus provides always-on, built in, reliable and independent ad-viewability measurement to all participants of the internet advertising industry.

To hear more about this topic, attend the Viewability Panel being led by Laurent at this year’s IAB RTB Conference 2015.

 

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Privacy: It’s No Secret that 2015 Could Be a Big Year

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For privacy, 2014 was interesting, even fascinating at times, but I wouldn’t call it exciting. In 2015, I think we’re going to see a lot more action.

2014 was a lot of thinking, dialoging, and preparing for changes to come. For example, in May, the White House released its Big Data Report, the result of a series of stakeholder meetings and pondering about the future of privacy in a world of Big Data. Also in May, the Federal Trade Commission released its Data Brokers report. Later, in September, the FTC hosted a public workshop about Big Data and discrimination. These reports don’t set policy, but they do frame the debate and make suggestions for shaping the future.

There was a real change in California in the form of an amendment to the state’s Online Privacy Protection Act (CalOPPA) that came into effect in January. It upped the requirements for companies’ privacy disclosures, including disclosures about how they respond to Do Not Track (DNT). It did not, however, produce significant changes in how companies do business. So, it influenced thinking and altered the debate, but didn’t drive big change.

The ad industry, too, produced some important work that sets the stage for the coming year. The NAI released to its members a draft policy guidance document on the use of non-cookie technologies. Also in 2014, companies began implementing compliance with the NAI Mobile Code, which fully comes into effect in 2015.

There were some big changes we thought might materialize in 2014, but didn’t. “Do Not Track” did not arrive, as the W3C DNT working group saw leadership changes and significant attrition. Also, Europe did not manage to finalize a General Data Protection Regulation, as some hoped, or even expected, might happen in 2014. Unsurprisingly, but significant, we did not see any US federal privacy legislation get traction.

Finally, we can’t talk about privacy in 2014 without mentioning Edward Snowden. The surveillance practices that Snowden brought to light continued to influence privacy debates throughout the year, and up to today. It’s especially had an impact on transnational privacy discussions between the EU and the US, and is being used to leverage reforms in the US-EU Safe Harbor, which is widely viewed in Europe as ineffective.

With conversations swirling around big data, privacy, and competition, the stage is set for 2015 to be a year of significant change. The industry itself has changed enormously– we’re reaching a new state with programmatic at the forefront, and new data-driven business models popping up. At the same time, there is a wave of consolidation across the industry. Changes in privacy are going to have to catch up with the market.

Here at AppNexus, we’re thinking about these questions a lot: how to do things the right way in the immediate term, but also how to chart a path to a future of not just privacy-friendly advertising, but an Internet that fulfills all its promise.

Here are my tips and predictions for privacy in 2015:

  1. First, don’t become complacent. There was more talk and less action in 2014, but don’t expect it to stay that way.
  2. To that point, we should expect action from the FTC, as it reigns in edgy business practices, and looks for opportunities to draw some fences around Big Data.
  3. Self-regulation is lagging the marketplace a bit, but look for a big push to catch up in 2015. In fact, the FTC’s Jessica Rich exhorted us to do so in her speech at an AdExchanger event in January
  4. Don’t underestimate the importance of Europe. They’re having BIG conversations about privacy and our digital future. There’s a very good chance they will finalize a general data protection regulation, but there’s also a lot more on the table. In privacy, lately, as goes Europe so goes much of the globe.
  5. Do Not Track is all but dead and almost certainly irrelevant. Even though what’s left of the W3C working group trundles on, it’s widely recognized that their process won’t produce a credible standard. Moreover, when DNT was proposed, the online world was very different. DNT is a blunt instrument that arose from a simpler time. The future of privacy lies in more nuanced solutions.
  6. Snowden’s (and others’) disclosures about government surveillance will continue to influence the privacy debate. What the public learned in those exposed documents has fueled significant distrust in not only government, but in the online world in general (and rightly so). These are big issues we can’t just hope will go away—we have to become engaged and take action to protect Internet users, and to restore their trust.

#15for2015

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It’s Not How You Start, It’s How You Finish

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We all entered 2014 looking forward to another strong year of overall growth for Internet advertising, a batch of new ad tech IPOs, and increased M&A activity.  If we decided to take a year-long sabbatical and checked back in on December 31, we would have discovered…another strong year of overall growth for Internet advertising, a batch of new adtech IPO’s, and increased M&A activity. Expectations met! But what would we have found had we checked in around mid-year?  A 50% collapse in stock prices and a number of failed fundraises.

Indeed, many of the predictions heading into 2014 didn’t seem so prescient by August 2014, as there were only “relative winners” and a whole group of ad tech companies that Wall Street analysts and industry pundits left for dead.  Fast forward four months, and we are again talking about a rising tide lifting all boats and trying to predict the next big acquisition.

So, what should we expect in 2015?  Think 2014 on steroids.  Having worked in the ad tech for over 15 years, I have seen two full cycles, and I believe we are entering the third inflection point in our sector’s history.  My colleague, Michael Rubenstein, has dubbed this upcoming period the “Ad Tech Power Game”, or #ATPG for short.  Companies of all sizes across most industries are coming to the realization that either ownership or skilled leveraging of advertising technology is critical for the growth and go-forward strategic relevance of their businesses.  Combine this point of view with a generally strong global economy and the continued structural shift of offline-to-online, and we’ve got a formula for a robust and dynamic 2015.  That’s not to say that there won’t be setbacks.  It doesn’t mean there won’t be periods when naysayers have their 15 minutes to point out all of the reasons why ad tech isn’t strategic or important.  But I do think we will all be experiencing “higher highs” and “higher lows” throughout the year, and if we can keep focused and continue delivering innovation and value, we will look back upon 2015 as one of those inflection point years that we can tell our grandchildren about.

5 Tips to Help You Prepare for 2015

  1. Be prepared for an even better underlying business environment: The global economy is entering its fifth full year of recovery. Expect overall global acceleration (led by the United States) in 2015 and 2016.
  2. A rising tide lifts all boats: Although a gulf will continue to exist (perhaps a dramatic one) between winners and losers, expect only “relative” losers, as the underlying business environment should be robust enough to allow everyone to grow.
  3. Expect the unexpected: Alliance Data and Conversant? Oracle and Datalogix?  We will see both familiar names as well as unexpected participants in the Ad Tech Power Game.
  4. Lots of opportunities: Given the strong underlying economy and positive sector dynamics, our collective greatest challenge will be prioritizing what will move the needle in 2016 and beyond.
  5. Step on the gas pedal heading into 2016!

 

#15for2015

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Engaging Millennials to Become Their Best, Most Authentic Selves at Work

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By 2025, nearly 75% of the global workforce will be Millennials. Today, Millennials are working their way up the org chart, making a bigger and bigger impact on businesses. Businesses that do not adjust to their sensibilities will not be able to attract and engage the very best talent of this rising generation. Having hired a couple hundred of them myself, here’s what I’ve learned about engaging Millennials.

Millennials are the most expressive generation in recent history. They expect a workplace culture where they can express themselves authentically and be heard. They perform best when they don’t feel the need to wear masks or inhibit their personalities. They thrive when they can express their ideas freely and can challenge the status quo. Businesses need to create space for authentic expression AND listening. Some ways to do that are:

  • Create a “Friday Bullets” tradition where every week, employees email their teams something they are excited about, and something they are concerned about.
  • Create a weekly “Q&A” where employees can teach and exchange information with each other, or regular Town Halls where employees can ask questions of the company’s leaders.
  • Treat them as thought partners. Ask them to give meaningful feedback on strategy, priorities, or work projects. Then act on their feedback.
  • Encourage authenticity by being your most authentic self.

Millennials don’t want a job, they want an experience. The concept of a job for life has long since passed, but most companies are still operating as if it exists. Millennials don’t want to climb a corporate ladder—they want to play on a jungle gym, swinging from one experience to the next. Some ways to support that outlook are:

  • Don’t provide career paths; provide career maps. Show employees not just how they can move upwardly in a role, but how they can change roles completely from one function to another.
  • Help employees identify and spend time on side projects that create value for the company but that aren’t a part of their job descriptions, per se. Bake these projects into your quarterly goal-setting process.
  • Support international work assignments. Short multi-week or multi-month assignments are great experiences.

Millennials expect rapid growth and recognition. If Millennials aren’t growing, they aren’t staying. The expectation of continual learning and development is core to Millennial DNA. This sensibility frequently manifests in the (not always realistic) expectation of rapid promotions and other forms of recognition.  Businesses can adjust to these ambitions by:

  • Training managers to give continuous feedback and coaching to employees.
  • Being deliberate about assigning employees projects aligned with their interests.
  • Recognizing employee success in ways large (e.g. stock-based awards) and small (e.g. a simple thank you). Finding ways to “gamify” recognition programs works with Millennials. For example, read about the Olympic Events in our onboarding process.

Millennials expect that their work will have purpose. Millennials sometimes resemble goal-oriented hippies. They have high expectations professionally yet their work has to have a bigger meaning. The need for their work to connect with their intrinsic motivations is important. When there is a work-values disconnect, Millennials can be quick to leave. Some approaches to adjust to this challenge are:

  • Explain the “why” behind the “what.” Don’t give assignments without context. Explain what business problem they are solving, what customer need they are filling, or how their work aligns with the company strategy.
  • Lead from your purpose. Whether you are managing a team, or leading a company, be clear in relating your organization’s purpose and speak about it authentically to your employees.
  • Create a career management framework that helps employees identify and connect with their purpose, even if it means they leave your team or your company. Millennials will, as they should, align with purpose before company loyalty.

Millennials cannot be “sold to.” Millennials have a sensitive BS meter. They expect transparency, and are attracted to authenticity. They quickly lose trust in leaders who do not seem transparent or authentic. To align with them, it is helpful to:

  • Trust them with the real story, good or bad. Don’t sugarcoat what isn’t working. Avoid hyperbole. Straight talk is the way to Millennial’s hearts.
  • Talk in personal terms. Reinforce your points with personal examples, sometimes showing vulnerability. Millennials want to relate to their leaders; help them by being relatable.

If we pull together all of these tendencies, what are Millennials really saying to employers? They want expression, life experience, growth, recognition, purpose, and authenticity. Don’t we all? The difference is that Millennials are demanding these things with a new intensity; anything less than that is a deal breaker for them.

Employers stopped showing long-term loyalty to employees a while ago. Millennials get that. They will act in their self-interest, the same way employers do. That isn’t a bad thing—I’d say it’s a great thing.  They are demanding that employers engage with them to develop into their best, most authentic selves.  Not only should businesses support that, but we should all learn from it. What if we all treated our professional journeys like paths to becoming our best, most authentic selves?

#15for2015

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2015: Hold On To Your Hats

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2014

Picture this: An industry characterized by both innovation and consolidation. Mounting automation of programmatic video, mobile, and native advertising. A staggering increase in fraudulent and malicious activity from bad actors on the web. Major media conglomerates like Google and Facebook, seeking to build “walled gardens” that endanger the very future of a free and open Internet for both advertisers and publishers.

If you are a programmatic media company (PMC), this catalog of blessings, challenges and changes might strike a familiar chord as you reflect on your organization’s experience in 2014. AppNexus defines PMCs as including demand-side platforms (DSPs), supply-side platforms (SSPs), trading desks, data partners, ad networks, publisher representation/sales houses, and all other value-add players who support advertisers, agencies, and publishers in the programmatic advertising space.

To anyone outside the tight-knit ad tech industry, these acronyms are sometimes confusing.  But they are all key actors in online advertising – a massive sector that, according to PwC, is “is closing in on TV advertising to become the largest entertainment and media advertising segment.” PMCs live and die by the differentiated value they offer. As has been the case in earlier periods of challenge and change, 2014’s volatile but promising climate spurred PMCs to innovate further in the areas of viewability, fraud detection and management, and performance insights. Cross-channel and attribution solutions were no longer buzzwords—they became necessary capabilities.

Even as the industry continues to evolve in response to new challenges and demands, it also took important steps toward aligning the strengths and outlook of its many players. Multi-hundred-million dollar investments and acquisitions in the PMC space resulted in the consolidation we’ve been expecting for years. From data-focused PMCs (such as BlueKai, [x+1], and Datalogix), to those innovating with audience and performance (such as Matomy, Bannerconnect, Conversant, Bizo, and PerfectAudience), money flowed in from enterprise players and agency holding companies alike. The marketing industry has always looked to the PMC space to unlock the next frontier of digital advertising’s potential. Combine this reliance with the heightened frenzy and competitiveness of the Ad Tech Power Game, and accelerated M&A activity seems in retrospect to have been an inevitable outcome. Not surprisingly, many of these PMCs are AppNexus customers who look to us to provide core infrastructure.  Our focus is on helping them scale their innovative products by plugging into our open and customizable platform.  As the leading independent ad tech company, we’re uniquely positioned to offer this benefit.

Not everyone agrees with our point of view. 2014 saw significant investments from major media businesses (such as Facebook, Google, Yahoo, and AOL), which continue to drive spend away from an independent, exchange-oriented ecosystem and towards walled gardens. As a counterbalance, AppNexus doubled down on its efforts to empower PMCs by launching world-class marketplace solutions for private Deals, Packages and mobile advertising. We reinforced our belief adtech should be a democratic ecosystem—even the smallest players should have the opportunity to compete in an open and dynamic marketplace.

2015

If you thought 2014 was intense, as the old saying goes, you ain’t seen nothing yet. The so-called walled gardens of media will continue to grow and become centers of gravity for spend, fueled by their proprietary media and cross-device capabilities. The industry consolidation that occurred in 2014 will accelerate further in 2015, converging towards simplicity and single-stack solutions. Quality concerns will be at an all-time high, and best-of- breed technology will put more pressure than ever on rooting out fraudulent inventory and the bad actors who fuel it. Mobile advertising will finally be truly programmatic, which will challenge mobile-oriented PMCs to provide insights, transparency, and results to meet the expectations that exist only in the desktop world today. Video budgets, which already saw a doubling in percentage executed via programmatic channels, will continue scaling as innovations in programmatically-enabled TV come to fruition.

So what do we recommend PMCs focus on this year given the state of the industry?

  1. Crystallize your enhanced value proposition for your clients. Think beyond RPMs when working with publishers to help them manage and optimize content. Think beyond last click when working with advertisers to help them understand and optimize spend across channels and devices. Your client base is getting smarter, which will only unlock more challenges for you to help them solve.
  2. Ensure your data strategy is locked down… *quickly*. Data access, control, and monetization will differentiate the winners from the losers — especially as offline data becomes not just accessible but critical for online use and optimization. As data scales in programmatic usage, it will shift from being a standalone asset to its value being directly tied to usage with media. Make sure you have solutions which allow for flexible combinations therein. Ensure users’ privacy and protect the value of these assets through control of your data; data leakage will not be tolerated.
  3. Partner for commoditized capabilities. Whether core infrastructure like viewability and cross-device or scale marketplace capabilities such as Deals and Packages, getting turnkey access to those as part of AppNexus’ platform solution will ensure that your investments and innovation focus on the future, not the past.
  4. Differentiate, then execute relentlessly. The pace of innovation in ad tech this year will be the most rapid since programmatic offerings became available. Decide what you want to offer your partners, and focus. If you’ve created a unique content asset, set your strategy and start showing results – we will all need to fail fast and iterate.
  5. Keep a “pilot” mindset. With thousands of offerings and partners available to advertisers, agencies, and publishers, make their decision-making process simpler. Rise above the buzzwords by enabling clients to quickly understand the results your solutions provide.
  6. Finally, hold on to your hats. 2015 is gonna be a wild ride…
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The Year of the Media Agency

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The first part of Q1 – aka “Ad Tech Prediction Season” – is one of my favorite times of the year.  For these few weeks, our industry comes together to share thoughts on the new technologies, trends, and three letter acronyms that will define the year to come.  Companies are funded, partnerships announced, and everyone fills the blank, officially declaring this the year of ___________ .

Consolidation!…  Cross device attribution!… Video!… Mobile!… Programmatic TV!

However, amidst these more exotic predictions, I feel that sometimes our industry overlooks some of the less sexy topics.  So allow me to take a subversive stance: I believe that 2015 will be the year of the media agency.

I’ll explain.

Amid all of the noise about ad tech companies selling direct to marketers and marketers taking programmatic ad buying in house, I’ve seen two subtle, but important, changes start to happen in the media agency.

1) Traffickers are Becoming Traders

When I worked in the media agency world (in the 2000’s), the job of the ad trafficker was pure execution.  The media planning team would make a very detailed (and very complicated) excel spreadsheet called a “traffic sheet” and hand it to the traffickers.  The traffic sheet told the traffickers exactly where to place each ad, each size, each pixel, click through, and the cost of each media placement.  The job of the trafficker was to take those instructions, push the necessary buttons in an online trafficking interface (typically DFA or Atlas), and email tags to the publishers on the media plan.

Today, the role of the trafficker has started to change.  Rather than carrying out orders, they’re starting to select the media themselves.  Instead of using a first party ad server, they’re starting to use more intelligent ad buying technology.  The shift has begun: traffickers are becoming ad traders.

In this transformation, they are taking on a much more valuable role in the advertising ecosystem.  Rather than simply carrying out orders, they are responsible for monitoring analytics, optimizing ad placements, adjusting bids, and for maximizing the return on investment for their advertisers.  In 2015, I think we’ll see a lot more focus on these traders and increasing visibility of the difference a good trader can make.  The last few years have been filled with hype about “automatic optimization” and “machine learning” – but next year we’ll realize that the best performance can only be achieved through the union of advanced technology and a highly skilled trader.

2) A Focus on Media Investment

Media agencies are really good at buying most media channels.  For instance, I can’t think of a single marketer who has taken television buying in house.  Agencies are just too good at it.  If a marketer were to take TV buying in house, they’d simply be wasting money, compared to what they would be able to accomplish through working with an agency.  So why is there so much hype about marketers taking programmatic in house?  I think the answer is simple:

In programmatic advertising, media agencies haven’t yet been able to create value from heft.

Let me say it a different way: the way I see it, agencies today manage more than 90% of digital spend, which gives them incredible heft and influence in the market.  But due to the complexity of digital media, they haven’t yet figured out a sustainable way to turn their heft into differentiated value for their clients. In 2015, that will change.

Partially due to the pressure from direct-to-client competition, agencies will start to embrace a new product category called “Media Investment Platforms.” Media Investment Platforms will allow agencies to aggregate their digital heft and negotiate preferred deals with publishers.  Using a Media Investment Platform, agencies will be able to negotiate preferential pricing on media, and private access to publisher inventory and data.  Those large, high level agreements with publishers will allow agencies to create a media ecosystem whereby they are able to outperform any buyer going out into the open market alone, without the benefit of agency preferred deals.  Ironically, I believe this will also be a positive step for publishers who will be able to do fewer, larger deals with agency holdco entities, and avoid the high cost of sale that currently plagues the highly fragmented programmatic landscape.

So – what is my prediction for 2015?

In short: advertisers will continue to buy media, publishers will continue to sell media, and agencies will still be the best way to connect the two.

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Marketplaces: A vision for 2015 and beyond

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2014 was a huge year for programmatic advertising.

In 2014, programmatic advertising in the United States alone hit a new milestone: $10 billion. Growth aside, the year also forecasted the next act for programmatic: differentiated demand and differentiated supply – or, to reduce these concepts to their essence, differentiation through innovative new trading models. Whether it’s watching integrated, no-hassle deals executed across supply sources in Console or seeing a media buyer take a $10 million campaign to 20 new digital sellers from RFP to fully-negotiated plan, all within Twixt, it’s clear that we’re entering an era of transformation in the advertising technology story.

But 2014 also exposed some of the significant hurdles to realizing the full potential of ad tech’s next act. Deal ID showed its lack of scalability as originally implemented. One group in the agency holding company was still physically RFPing another group.  Investments in sell-side Programmatic Guaranteed technology failed to gain traction because they did not address the needs of buyers.  Last but not least, invalid traffic threatened to undermine all of the hard-won progress that has been made since programmatic advertising began in 2005 with the launch of the Right Media exchange.

In 2015, we will clear those hurdles to raise the curtain fully on the future of programmatic advertising. We’ll provide technology to allow buyers and sellers to leverage their differentiation *scalably* and *efficiently* in RTB trading relationships.  We’ll connect the demand-side investments we have made in Programmatic Guaranteed to the sell-side pipes that are uniquely positioned to distribute high-quality, efficient demand.  And we’ll start pounding big, galvanized nails into the coffin of invalid traffic with a variety of investments including our Certified Supply program.

The common theme across all of these exciting investments is an orientation towards “Marketplaces.”  This is an expression of one of AppNexus’ core values:  See and improve the whole system. The industry can’t overcome the significant hurdles that were exposed in 2014 with “just” more technology.  We’ll need smarter technology –  technology that also incorporates a deep understanding of the structure of the market combined with the processes, goals, and incentives of market participants.  At AppNexus, we recognize that technology alone doesn’t solve problems. Buyers and sellers working together through technology solve problems. That’s our Marketplaces vision for 2015 and it’s a powerful one.

Here are 5 tips to get on board:

 

  1. Buyers: No more manual RFPs! Seriously, there’s just no need for it; Twixt is free for RFPs, it can RFP anyone with an email account, and it’s been refined by interactions with over 1000 users thus far.  More importantly, Twixt provides a foundation for better control and visibility of your buying process, as well as tighter integration between buying and trading.
  2. Buyers: Start demanding more from your system vendors. Demand better support for direct buying, tighter integration between decentralized buying teams and centralized trading teams, better products, higher development velocity, and more aligned business models.
  3. Sellers: Ramp up investment in the differentiation and merchandising of your inventory. Whether it’s therough deals or programmatic guaranteed, merchandising will produce more and more importance relative to “selling.”
  4. Sellers: Get smart about where your traffic/inventory is coming from – the bar is rising rapidly and the see no evil approach to invalid traffic won’t get you to 2016.
  5. All: Hold on for a great ride! Hope your 2015 is happy, safe and prosperous!

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#15for2015

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Data Science: Perception and Reality

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Based on the title, you might think I’m about to describe ways in which companies get data science wrong, misunderstanding what data science is supposed to mean and how to do it.  And while that’s a perfectly valid blog post, and I’ll touch on a few of those themes in my tips for 2015 later on, for now let’s think of the title a different way.  Think metaphysics: data science itself is a new, rapidly evolving type of perception of business reality for 21st century companies.

Consider an old-fashioned perception: hearing.  Sound waves are constantly barraging us, and our highly evolved and complex ears are responsible for capturing that data.  But without our brains, that sound data would be nothing—just noise, static, snow.  By filtering the sound waves, identifying both patterns and anomalies, and interpreting, our brains give us the ability to perceive the world around us—they allow us to hear.

Modern companies collect vast amounts of data, like ears do, but interpreting that data correctly is what provides the accurate perception of business reality, turning data from static noise into valuable insights.  When a company’s decisioning is data-driven, those decisions will be stronger and more reliable, and will lead to better results.  Using the hearing analogy: I make better decisions about crossing streets because of my ability to hear 10-ton trucks coming, for instance.  Similarly, data products and algorithms based on rich, accurate interpretation of data are more successful; my singing is much more likely to be on pitch if I can hear the rest of the karaoke music.

At growing companies, data science isn’t usually an initial focus; existential issues like finding market footing take precedence. But eventually, many companies realize that they need to reinvest and focus on their data—and that’s exactly what’s happened at AppNexus.  It’s been an exciting process to be part of.  We’ve evolved from using byproduct data almost as an afterthought, to bringing data front and center, making a deliberate, strategic investment in developing our data assets to their fullest potential.

Today Data Science is its own function at AppNexus, with a dedicated hardware cluster and ever-expanding expertise in data science tools and techniques.  We’re more ready than ever to perceive whatever our data has to tell us about the reality of our ecosystem, our clients, and ourselves.  And just in time!  You may have heard that 2015 is the year of the Ad Tech Power Game—a.k.a. #ATPG—and what could be more useful than a new found set of ears (so to speak) to help us help our clients navigate?

As you prepare for the year of the #ATPG, here are a few tips:

 

  1. Data science isn’t just a buzzword, it’s a means of perceiving business reality. Be aware of what your data is telling you about the world. Don’t just look at the graphs that have the trend you’re looking for—be honest with the data, be rigorous in understanding it correctly, and then listen to what it’s telling you.
  2. For algorithmic uses of data, remember the 80/20 rule: while there are many sophisticated, modern tools you could use to do predictions and modeling, in most cases that complexity isn’t necessary in order to get 80% of the return. Avoid the hype of “deep learning.” Avoid the hype of buzz words. Know that it’s not always necessary to have the latest and greatest tools.  Some of the best, most tried and true algorithms and techniques for extracting value from data have been around for decades.
  3. Finally, know that data science is fundamentally creative. When you’re hiring, look for creative problem-solvers. There’s no boiler plate, no one exact set of skills that makes a good data scientist—it’s about whether and how she can use data to solve problems creatively, to glean insight and translate that into business value.
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