Nowhere to Hide: The Transparent Online Ad Market in 2011

The noise was worse this year than last year. Too many acronyms: DSP, RTB, SSP. Too many new people hiring, selling, calling: Trading desks, data providers, video and mobile companies, new ad networks and ad servers.

That’s why 2010 was the year of the “market map”. You know, those slides with Advertisers on one side and Publishers on the other, and all those logos in bubbles in between.

I love those market maps as much as the next guy-who-wants-to-show-people-how-complicated-their-job-is. But every time one gets presented, the question is invariably, “How can all these companies exist? How can they survive?”

Actually, many will survive – they’re full of smart people with good ideas, and healthy competition brings out the best in business. But they won’t all stay in the bubbles they’re in now.

Rock The Boat (RTB)

It’s easy to look at 2010 as the year that real-time bidding (RTB) came to Europe. But beyond geeky excitement about the technology, let’s all admit that RTB is a symptom of the bigger trend, not the trend in itself. If 2009 was the year that the big agency groups talked the talk about forming trading desks and centralising their data and audience buying, then 2010 will be seen as the year that they walked the walk: budgets actually shifted, people were hired, and their commitment was clear.

As a result of the shift in audience buying strategy, the ease of use of DSPs like Invite and Appnexus, and the accessibility of aggregated supply by Google, AdMeld and others, buyers accelerated trading using RTB and exchanges. Eventually, buyers started speaking to publishers about forming “buy-side networks”, or “marketplaces”. And not just agencies – mustn’t forget Orange, an end advertiser. This agency focus forced all top publishers to begin to take a good, long look at their audience value, and the data that makes those audiences valuable in the first place.

Of course, agencies have been buying audience as long as they’ve been, well, agencies. Site-specific buying, network buying are all proxies for finding the best way of reaching the advertiser’s target audience. In 2010, however, technology made identifying and transacting on that audience far easier.

Watch for Search marketers and agencies to enter the display market. They have the performance and targeting experience, and access to some pretty big budgets. And now, with RTB, they get the transparency and targetability they need. For display agencies and networks – less so for those who have a strong search background – they’ll be competitive. For publishers, it’s another big reason to get connected via RTB.

In the end, RTB gets the attention, but it simply a stalking horse for the shift in demand to more transparent audience buying.

Technology Makes Things Easier - Finally

With increased transparency and smart use of data, markets are, finally, becoming more efficient. Past trends, like rich media, video, even ad serving have added sexy features and helped to build CPM and revenue for the whole value chain, but added to the complexity of executing online transactions. Even data management and targeting providers made inroads because of the value they offer, but were difficult and time consuming to integrate.

Efficiency is now the name of the game, and technology has made that possible. Programmatic buying and selling, via demand and supply platforms, is accelerating. New data management platforms will arise, meeting the challenge of current data providers whose technology now takes a platform approach.

Transparency, not cool but ultimately seldom-used features, will decide the success or failure of these platforms, since scalability will be limited by how well you can value your inventory or purchases.

Your New Media Buyer: TRON

AdMeld expects that programmatic buying – platform to platform, real-time – will increase at least 400% globally. (Take that with as much salt as you like, as we benefit the bigger that number is.) It sounds like a lot, but there are a number of factors at work here:

• Audience targeting and creative optimisation are continuing to improve. The results of these efforts are really encouraging to advertisers, who will shift more NON-DISPLAY budgets, such as Search and even TV, to display.
• Quality advertisers want their budgets spent on quality publishers, and fortunately, those publishers will get more comfortable with audience selling – which will increase the scale and quality of biddable inventory.
• RTB, which has up until now been solely the province of performance budgets, will begin to attract guaranteed buys and, thanks to transparency, branding campaigns. If you know you’re reaching the audience you want, you won’t limit the types of messaging that you reach them with. Especially as more than 75% of all users simply don’t click.

And Introducing…The DMP

There’s no bubble yet for “Data Management Platforms” on most market maps. But data management will get white hot as publishers begin to tap the value of their first-party data more strategically. As Jeff Crowe, GM of Norwest Venture Partners (full d.: an AdMeld investor) puts it, “Platforms which enable superior audience management and targeting through the sophisticated use of data will give strategic advantage to both advertisers and publishers alike.”

Data Moves Out of the Third World

While the attention in the media will be on Consumer Privacy – think Digital Economy Act or the Open Data Initiative – I think the real data revolution will be transparency between the parties in ad serving transactions. Right now, it’s like we’re doing business in a third-world country, with data, like bribes, being part of the transaction, but no one asks and no one tells. That actually has a chilling effect on transactions and real businesses have been built on some shaky ground.

But the IAB, AOP and the data providers themselves have made this a priority now. What data, who can use it, how you can gather it, how much it costs, and how long it can be stored will see some real progress in 2011. In the end, I’d bet nearly all the same players will still be working together, but with a lot more confidence and trust.

What’s User #27485937459 worth?

For publishers, audience selling is the big trend in 2011. Agencies have moved their budgets and split their site-specific, or strategic, buying and their audience buying. Now publishers have to be ready to offer the right products at the right prices to the audience buyers, or they will leave enormous amounts of money on the table. Those publishers who don’t have a paywall to lean on will have to get really good at audience selling in 2010.

Networks, Pick a Side

The concept of a “buy-side network”, like the Group M Marketplace, is worth watching this year, as the trend continues. “Sell-side networks” are how I’d describe the traditional ad network; companies that represent publisher inventory, blind or not, to agencies and advertisers. Now, with agencies openly forming their own networks, both publishers and traditional networks – and really everyone in the value chain – has to start thinking about what that will mean to their long-term offering. Some networks will become agencies, such as Yieldivision in the Netherlands. Some will essentially become publishers, like the big sales houses in Germany, to thrive.

Offline lives will drive more online ads

Many online ads are trying to ultimately drive offline behaviour: buying a car, choosing a toothpaste brand, going on a date. This year, as the big offline data companies get better at connecting their offline segments to user cookies, more of the population’s offline data will come back online to drive more advertising. Like RTB, this movement isn’t because the data providers want it, or because the publishers want it, or even because the users want it (though they do like their relevant advertising). This is because advertisers want to reach their audience more effectively and efficiently, with less waste and better ROI. And when they can reach them, bigger budgets will follow.

Convergence Will Still Be a Headache

Traditional publishers have the best content. But they are the worst at making that content available for mobile devices, for example. Why? Few resources and still-weak demand. Video is relatively easy for digital arms of TV companies, and eCPMs remain high, but those publishers have found it difficult to scale well to grab more share of budget. And the big magazine and news publishers haven’t figured out the video side yet either – do we make the content? If so, how do we do it consistently and with the same quality we bring to the rest of our business? And then, how do we scale it, both supply and demand?

I’m not sure if this year is the year that video truly breaks through. But many publishers are working on it, and the demand side is going to figure out how to get better results, and publishers will get better at mobile, better at video, better at more devices. Slowly but surely.

In the End, Premium Publishers Will Stay Premium

Brands matter. Brands like the MailOnline, Telegraph, FHM, MacUser, Autotrader and Gramophone inhabit space in peoples’ minds, inspire emotions and are trusted by their users. And because of that, performance is enhanced for many campaigns by running on premium brands. As long as they learn to value each impression correctly for their buyers, publishers can turn RTB and data and the other trends to their advantage and become sellers of Premium Audience, not just Premium Content.

While the noise will continue, here’s my hope that the new market, with its greater transparency, access to data, efficiency and bigger budgets, brings you better performance in 2011.

Tom Jenen (@tomjenen) is Commercial Director, EMEA at AdMeld (@admeld)