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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