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!

aa

#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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What Europe Can Expect in Programmatic for 2015

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“The minute anything works in tech….it’s a bubble.”  Sound familiar? If you read this month’s Financial Times, you might have recognized this quote from a recent interview with tech pioneer (and AppNexus investor) Marc Andreesen.  If you’re in Europe, this quote might also characterize how the programmatic advertising market has been seen across Europe for the past several years. However, it seems we might be finally turning a corner.

2014 saw the penetration of programmatic in markets such as the Netherlands and the UK reach a tipping point.  This shift means that programmatic can no longer be perceived as merely a channel, something that can be tested, an activity that can be outsourced, or discussed only inside the board rooms of the large media players across the continent.

Let’s take the UK — one of the largest digital display markets in Europe — as an example: eMarketer recently reported that 2014 saw over $1 billion of programmatic spend, a figure forecast to grow by over 30% into 2015. In the Netherlands – another European leader — programmatic accounts for over 50% of all display!

Europe has always been a patchwork of individual markets, each with its own nuances and quirks, defined by social-economic forces and historical cultural reference points. Each market has embraced programmatic for different reasons – be it commercial opportunity, the ability to innovate and push the envelope, or the functional benefits of increased operational efficiency. There are parts of Europe that will emerge as global leaders in certain areas, such as the mobile landscape in Scandinavia, where geography and seasonal weather conditions have led to one of the most advanced mobile markets anywhere in the world.

AppNexus is fortunate to empower market-leading companies in all of the established and emerging markets across Europe. We will be looking to learn from our partners – about their businesses, competitive environments, and opportunities to innovate and differentiate —  and move into 2015 alongside them as their businesses evolve. 2015 will continue to see growth in display advertising all across Europe, and as such we expect businesses to be investing in their internal resources and technical capabilities. This growth and investment promises that 2015 will be another exciting challenge and opportunity for everyone in the region.

Here’s what I see as the major 2015 trends influencing the European programmatic industry:

 

  1. Advertiser level participation – There still exists a knowledge gap between the agency and the advertiser. Advertisers want to participate, and growth relies on their grasp of the concepts and opportunities.
  2. Cross-device – As the mobile opportunity begins to define itself, there is no doubt that consumer behaviour and advertiser demand points to this being a huge growth opportunity.
  3. Disruption of TV budgets by connected devices – fragmentation of viewing continues (in Sweden in 2014, TV viewing actually declined for the first time ever!) We all need to learn more about where this goes, but 2015 will provide disruption here for sure.
  4. The rise of the German programmatic market – Germany is still the largest ad-market in Europe (although digital accounts for around 30%), and so far has approached programmatic with a degree of trepidation. The market appears to have learnt a great deal in 2014, and looks ready to step out.
  5. Privacy legislation/directives – a hot topic in Brussels, and of course a very critical topic for digital advertising overall. We expect guidelines to emerge this year which will help us to shape the direction the European markets will take.

#15for2015

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Empowering Your Clients Through Customer Experience

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Empowering our customers is at the core of AppNexus’ values. It is what drives our services and support teams every single day. In my group—Customer Enablement—we believe the relationship between our company and our customers is at its best when we target and align to our clients’ needs. Powering this alignment is a client-focused mindset that leads to:

  • Customizing the client experience
  • Integrating our business models with our customers’ business models
  • Empowering customers to be self-sufficient

These goals come together and foster something that is essential to any great customer experience: community. A thriving customer community ensures long-lasting relationships between companies and their customers.

As I reflect on customer enablement in 2014 and think about our team’s goals for 2015, I hope that our experience and observations will inspire you to develop a customer enablement program that will empower your own customers:

Aligning to customers’ needs is the key to empowering them to succeed. A one-size-fits-all service model leads to poor customer experience. It’s about understanding the goals of a customer’s business in order to create a specific customer experience. Product, engineering, and customer enablement need to go hand in hand to create a unique, holistic customer experience. In order to improve the product support we provide for clients, we divided up our support team into smaller sub-teams called “Houses”. Each House looks after a portfolio of clients, ensuring that clients work with a smaller group of support specialists, and that specialists gain a deeper understanding of their clients’ business goals and unique use cases. This support model allows them to become better advocates for their customers.

The AppNexus business model is unique. We make our money on transaction fees, so our success is directly linked to the success of our customers. Our customers’ goal is to optimize their marketing budget’—meaning, they win when they execute a full campaign and achieve the best possible results for their spend.  We want our customers to achieve this goal, because success makes them want to continue using our platform. Their incentives and our incentives are completely aligned—it’s the most authentic service model in the industry! We are truly partners and we truly care about our customers, because if they succeed, we succeed; if they fail, we fail. When a provider’s and a customer’s business models are fully integrated, an authentic match of incentives is created.

Part of empowering customers is setting them up to be self-sufficient. No one wants to spend time submitting cases or making phone calls to support teams—they just want their campaigns to run. So we provide alternatives to submitting tickets and making phone calls: we focus on creating materials that allow our customers to succeed, such as troubleshooting guides, webinars, e-learning modules, or self-diagnostic tools like Campaign Doctor.  Over the next year, we’ll work to integrate all of these resources into one interactive environment, where an integrated knowledgebase and e-learning can come to life. We want our customers to have everything they need at their fingertips so that they can resolve issues on their own, without having to submit a ticket or pick up the phone.

Customer service is important to us because of our business model and our company values. And because we like our customers! We want to help them and get to know them. In November, we launched “Cases and Cocktails,” an event designed for customers to meet the AppNexus Support Team, and to ask any technical questions they may have (over drinks!). Over 30 clients attended who were thrilled to meet face-to-face the people on the other end of their support tickets. An event like this supports our goal of creating customer communities—environments in which customers can really interact with the company and with one anothers. We aim to go beyond the typical relationship in which a customer submits a ticket, and a support person answers it. We provide consistent, quality experiences, as well as the tools that empower our customers. In 2015, I expect more and more companies to focus on the design of the customer experience.

I am excited to continue to craft and align our Customer Enablement offerings in 2015. At AppNexus, we know that success only comes when our values align with our customers’ and our service models evolve with their needs. We strive every day to put ourselves in the shoes of our customers to create helpful, meaningful experiences that pave the foundation for long lasting relationships. 2015 is shaping up to be a thrilling year!

As we kick off this new year, here are a few tips for empowering clients through customer experience:

  1. Create a holistic, targeted customer experience – integrate product and service offerings.
  2. Integrate business models—understand what the mutual incentives are, and figure out a way to link successes.
  3. Empower customers via self-sufficiency – provide everything they need at their fingertips.
  4. Don’t ask customers to cater to your needs—figure out how to cater to theirs.

#15for2015

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High Stakes, Disruption, and Innovation: Programmatic in Australia

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AppNexus announced its Australian expansion in March of 2014. We were drawn to Australia because of our strategic partnerships with several of Australia’s largest media and marketing leaders, a fascination with the pace at which the market seemed to be evolving, and the heft of a handful or two of influential participants. Having spent more than a year talking with Australia’s ad tech power players, it’s clear to me that as a top-10 global advertising market where approximately 20% of display spend is programmatic (eMarketer, PWC), Australia has embraced advertising technology—and is still leaning forward.

From my vantage point, 2014 represented what I’d call “A Big Deep Breath” for the Australian programmatic advertising market. The volume of direct-response dollars that migrated to programmatic for the last several years has started to plateau, which caused two important responses from major buyers and sellers:

  • The first, from the buyer, was the growth response: agency trade desks, responsible for the bulk of the dollars spent in programmatic, began to develop multi-pronged strategies for capturing the next wave of growth in programmatic. These strategies involved raising the profile of programmatic in annual trading agreements, focusing on audience access alongside—and sometimes apart from—media, and finding new ways to execute “traditional” buys through programmatic technologies.
  • The second, from the part of the seller, was acute awareness that a) programmatic will not replace direct sales at almost any level, and b) their media and audience assets are going to be a critical ingredient for the future of programmatic growth in Australia. These realisations bolstered confidence, and caused major publishers to experiment with new ways of trading that enabled them to retain both control and value of their media and audience assets.

In 2015, I expect the Australian advertising industry to exhale that “Big Deep Programmatic Breath”, and the trends and experimentation that characterised 2014 will crystalize into clear growth strategies for buyers and sellers. Watch the power dynamic unfold as publishers work to increase competition for their audience and data while, simultaneously, major agency holding companies work to translate their buying heft into competitive advantage for the agencies and their clients. I don’t think both forces can operate in total harmony, but I do think that we’ll see some newly strengthened and carefully cultivated partnerships. Additionally, buyer and seller strategies will almost certainly translate into a consolidation of the systems and technologies they each use to execute their mission. I’m particularly keen to see which companies invest in up-skilling their people to capture the advantages created through advertising technology, in contrast to the companies that outsource the very intellectual capital that they’ll ultimately need to differentiate their businesses. As a company with a core value of empowering our customers, I’m quite biased towards the former. Companies playing the “long game” with their talent here will win.

In particular, watch for five key dynamics in Australia in 2015:

  1. Major buying groups innovate to defend their turf from media companies, technology vendors and competing buyers. Agency trade desks play a pivotal role in this effort, though new muscles need to be formed and strengthened. Visionary leadership is rewarded.
  2. Major publishers have a standardised programmatic offering for their data, and most notably, they become comfortable decoupling their data from their media with the right controls and terms. This causes CPM increases across programmatic channels.
  3. Companies with troves of proprietary consumer purchase and identity data—think airlines, grocery chains, banks, telcos—will get very serious about turning those assets into marketable media & advertising products. Those that execute successfully will become a disruptive force in the marketplace, forcing current leaders to adapt and accelerate their own plans.
  4. Cross-platform buying and selling becomes a point of differentiation for both buyers and sellers. Mobile, still anaemic in terms of revenue, becomes an important ingredient in that offering, but still struggles for appropriate attribution.
  5. Major global media companies further wall off access to their supply, demand, and audience assets. Closed vs. open advertising marketplaces become more starkly defined, forcing important strategic choices for participants.

It’s a fun time to be in this industry, and the high stakes, strategic thinking, and true visionaries in Australia make it truly rewarding.  I couldn’t be more excited about the year to come.

Cheers!

You can meet Dave at Ashton Media’s “Programmatic Summit 2015” in Sydney on March 5th where he will deliver an opening presentation.

#15for2015

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2015: Ad Viewability Finally Grows Up

 

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When my Alenty co-founder Nicolas Thomas and I “birthed” our viewability start up in 2007,  we were amazed by the potential of this new born creature. One year later, in 2008, the company took its “first steps” when we signed our first clients. After the first steps came time for education – of the industry, that is: the market had to understand that not all ads were viewable! At the same time, our “child” start up continued to grow and evolve in order to adapt to a fast-changing world filled with new technologies,  TLAs (three-letter acronyms), and channels.

In 2013, Alenty “graduated” to become a MRC accredited company and was ready to conquer the world (“A nous deux, Paris !”, like in Balzac’s novel).  Only a few months later, in March 2014, the MRC lifted its advisory on trading on viewable impressions, and Alenty started a life-long partnership with AppNexus.

As we exited 2014, ad viewability faced a new challenge: an IAB report postulated that there is a 30% “margin of error” that needs to be taken into consideration in order to deal with the differences among vendors.

The question on my – and all of my peers’ – mind: was this bad news for ad-viewability?

On the contrary: this news proves that ad-viewability is finally on its way to becoming an “adult” offering in 2015.

The way the IAB applies this margin of error may not be the only one, nor the best. But I’ll come back to this possibility in another post.

Being an adult means that the market now has operational methods to use ad-viewability at scale. Ad-viewability is no longer a teenager’s dream with little realistic background or application. It is a grown-up vision: mature, solid, consistent, and something that has the potential to profoundly change the advertising world.

As we embark on 2015, I believe we finally have the necessary components for the success of a market-wide switch to viewable impressions:

  • Standard market guidance: The IAB’s realistic assessment allows ad-buyers and sellers to agree on deals over viewable impressions.
  • Feature integration: Viewability becomes a built-in feature of ad-trading platforms like AppNexus. Traders can now apply the concepts directly in their buying strategy.

With this in mind, I predict the following for ad-viewability in 2015:

  • We will see a rapid growth of deals of viewable impressions. With or without the IAB’s 30% margin of error (see tips below), more and more players will agree on deals that include viewable impressions.
  • Good inventory will get rewarded for its quality. With a lower demand for non-viewable impressions (why buy them when you know they’re non-viewable?), buyers’ advertising budgets will switch towards high quality inventory.

So, the question is: How will you benefit from these exciting changes in ad-viewability?

  1. Whether you’re an advertiser, agency, trading desk, network, or publisher, you must work with an accredited viewability vendor. The differences among vendors mainly come from the use of different technologies that limit their measurement capabilities. A simpler way to put it: a vendor who can only measure 70% of impressions cannot guarantee more than 70% of viewable impressions. The best combination of technologies is “geometry + browser optimization.” Vendors who only use one technology have a low success rate. See my post http://blog.appnexus.com/2014/what-does-the-mrc-certification-mean/ for more. Alenty / AppNexus technology has one of the highest measurement rates, above 95%, thanks to its hybrid method (geometry + browser optimization) and its adaptation to the mobile web.
  2. When you can, choose the same viewability provider as your client or supplier. In order to reduce the pain of comparing viewability data provided by two vendors, try to use only one from trading. For instance, if you are a trading desk, you can use the AppNexus viewability measurement to count viewable impressions. If you buy on publishers who also use the AppNexus platform, you will get consistent results. AppNexus’ measurement success rate is above 95%. So you only need to take a small margin of error when you target a number of viewable impressions.
  3. When you have to use two different viewability providers, have a close look at their measurement rates. Following the same example as above, if the publishers use another vendor, whose success rate is only 70%, you need to take a 30% margin of error. In this case, the publisher will only count 7 million viewable impressions in order to reach the agreed upon goal.
  4. Train yourself on the concept of cost per viewable impressions. 2015 is said to be a transition year in which the market will shift towards viewable impressions. Even though the IAB now recommends billing on served impressions, the ultimate goal is to pay for viewable This means that you will grow accustomed to dividing your media budget by the number of viewable impressions. This way, you will start using VCPM (Cost Per Mille Viewable impressions).
  5. Optimize on viewable impressions. In the scope of such agreements, both parties (buyer and seller) will start optimizing on viewable impressions.
    The result of this will be a global improvement in the quality of online inventory. This may be the best news for this new year!

Happy 2015!

#15for2015

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The Curious Case of The Missing $20 Billion Dollars (and 5 Mobile Predictions For 2015)

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Billions of dollars are missing and no one seems to know where they’ve gone.

Every year, I look forward to Mary Meeker’s “Internet Trends” report. My favorite part is always this chart:

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It shows the amount of time people spend consuming content through different channels, versus the dollars spent advertising on that channel. Each year, the gap between dollars spent on mobile advertising versus time spent on mobile devices increases: in 2011, the implied gap was about $14 billion; in 2013, it was about $28 billion.

So why is the gap in mobile ad spend so damn large? And when will those billions of dollars come flooding in?

I spend a lot of time with people who should know the answer to this question, and I never pass up an opportunity to ask them what they think. What’s funny is that everyone seems to have a different answer:

  • Some people think ad formats are broken in mobile. Who would want to spend a bunch of money to show someone a teeny-tiny ad? Even though mobile ads are small, there are many positive qualities for advertisers. In mobile apps (which provide most of the ad space in the mobile world), the ratio of ad space to content is very high, and ads are view-able far more often. From the data we see at AppNexus, engagement rates are surprisingly good on mobile ads, even accounting for accidental “fat finger” clicks.
  • Others think that mobile is “just different.” They can recite a list of reasons why mobile is some magical new medium that you have to think about as a distinct platform. But I think that Mobile advertising is far more similar to traditional web advertising than it is different. Sure, there are some differences in plumbing, and users tend to behave a bit differently when on their phones, but the basic mechanics are the same.

As you can tell, I don’t buy these answers. Here’s what I think is going on:

The biggest blocker to mobile spend is attribution. Today, most marketers and agencies can’t tie the ads they show on mobile devices to subsequent actions or purchases made by users on their PCs or other devices. Moreover, the most popular attribution system used by agencies, Google’s DCM, doesn’t yet offer the ability to track users across devices. As a result, many of the largest media buyers have been hesitant to shift budgets into mobile.

If you could wave a magic wand and provide a perfect attribution system with widespread usage by marketers and agencies, the mobile ad landscape would change quickly, and ad spend would increase.

One company trying to do this is Facebook. With their recent re-launch of Atlas, Facebook has taken the first serious step toward solving mobile attribution challenges. Google is presumably working on similar features in their suite of ad serving products, and a number of start-ups are also working on these problems (one of which was recently acquired by AppNexus).

With all of this progress toward better cross-device attribution, we may finally start to see that $28 billion gap start to narrow.

Here’s what I think will happen in 2015 in mobile advertising:

  • Ad dollars are flowing into mobile, but not fast enough to catch up to growth in consumption. Mobile consumption growth will continue to outpace ad spend growth in mobile, because agencies and marketers will need to time to adopt new attribution technologies. More likely, 2016-17 will be the big growth years.
  • Facebook’s Atlas doesn’t get the traction they hope for. Google catches up and builds cross-device measurement into Doubleclick Campaign Manager, which most marketers and agencies already use.
  • Ad fraud becomes a bigger issue in mobile. To date, verification vendors have largely ignored mobile, as it’s still a relatively small source of ad spend. 2015 will see the launch of a number of mobile verification solutions, and more noise about ad fraud in mobile. Following the launch of Certified Supply at November’s New York Summit, AppNexus will continue to focus on inventory quality throughout 2015, across all channels.
  • Publishers continue to shift content toward native formats, but dollars are slow to move into native. Agencies will need to change creative in order to make native work, which will take some time.
  • Mobile technology companies start to look increasingly like media companies. Almost all of the sell-side tech companies have been acquired by media companies. With Twitter’s acquisition of MoPub, and Millennial’s acquisition of Nexage, there aren’t any major mobile ad tech providers that don’t also sell media. Look for an independent player to emerge in 2015.

 

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Introducing Fifteen for 2015 (#15for2015)

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It was a cold December day in the New York City AppNexus office when a few members of our Marketing team got together in our Hulk conference room. We were there to talk about whether or not we should produce a blog post around 2015 industry predictions.

What seemed like a pretty simple conversation quickly turned into everyone throwing out questions.  Are predictions actually useful?  Does anyone care?  Should they be about the Internet as a whole?  Just about the online advertising industry?  Just about AppNexus?  Should it be about technology or about business?  Should we do a different set of predictions for each type of customer we have? Who should create the predictions and write the post?  There’s so much we could cover—how can we fit it into only one post?

We decided that we would produce 2015 prediction content only if that content aligned with our company value to learn and teach; if it would touch on and consider the whole system; and if it would empower our customers and our industry to make greatness happen in 2015.

Our solution was to have 15 leaders within AppNexus each write a blog post focusing on his or her area of expertise. Not only will these posts make predictions and provide advice about 2015, but we hope that readers will learn from them, feel inspired by them, and come away with a better understanding of what’s around the corner for our industry. It kicks off now, and we’ll be publishing one post per day from January 20th through February 9th.

Just a sample of upcoming posts include “The Curious Case of the Missing $20 Billion Dollars” from Senior Director of Publisher Product Arel Lidow, “Ad Viewability Finally Grows Up” from former Alenty CEO and Product Executive Laurent Nicolas, “Data Science: Perception and Reality” from Chief Data Scientist Catherine Williams and “Tomorrow and Tomorrow” from CEO Brian O’Kelley.

As for my own prediction: this will be some of the best content you’ll find all year long. It will prepare you to compete in and win the Ad Tech Power Game (#ATPG). And at the end of the series, we’ll compile the content into one 2015 guide that you can easily refer back to and share. Enjoy our #15for2015!

 

 

 

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