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The SMB Digital Challenge: Scaled Activity Without Scaled Budgets

by on 7th Mar 2016 in News

In the UK, SMBs make up 99.3% of all business, yet account for only 18% of total marketing spend. One of the core challenges faced by small business marketers in the UK and, indeed, globally, is the lack of budget versus their larger peers, forcing them to limit their options significantly. ExchangeWire speaks with Jacob Knobel (pictured below), co-founder and product director, Densou Trading Desk, about how the outlook for the SMBs' digital marketing strategies could be looking much brighter.

ExchangeWire: What barriers to entry do small business owners face if they want to run digital marketing campaigns?

Jacob Knobel: Small business owners have an easy time advertising in print media and local broadcast television. It is very easy for small businesses to pick and choose from publishers in these channels.

Paradoxical as it may be, this is not the case for digital advertising. Publishers will only engage their sales teams if you have a certain volume. Media agencies and DSPs work on strict minimums too. As a result, small business owners are faced with closed doors in most places they turn to, to buy digital display advertising campaigns.

If SMBs don't have the budgets to scale their campaigns across multiple platforms, what advertising options are they left with, in the current environment?

For better or for worse, SMB advertisers can only buy digital display campaigns through Google and Facebook. They have both done a magnificent job building platforms well-suited for SMB advertising. Facebook and Google deliver great value to these advertisers and it has paid off for them.

These two giants have funded their growth with SMB advertising budgets. The real trick to their advertising programmes is that they tap into the long-tail of small advertisers that no agency, DSP, or publisher can handle. And they are dedicated to continue doing so.

Sheryl Sandberg stated that Facebook is focusing on converting their 30 million active business pages into advertisers. Google have repeatedly launched services to their AdWords platform to accommodate SMB advertising.

Google and Facebook have become great brands for SMB advertising. That position needs to be challenged.

Imagine if the The New York Times, The Guardian, or Le Monde, had a similar SMB-centric advertising platform. These brands would be equally great for SMB advertisers. Just look to the print industry, where this is already the case. These publishers have just been missing an SMB-centric advertising platform for digital display.

Densou Trading Desk has been built to allow SMBs an opportunity to tap into new inventory beyond Google and Facebook; how is that possible?

I believe that anyone who can buy a plane ticket online should be able to buy a digital campaign with any publisher. We are partnering with 25+ publishers in Europe to make this dream come true.

Our engine plugs straight into their publisher ad server and payment system. When we partner with a publisher, we tweak the design and pricing to their needs and go live a few weeks after.

Once live, the SMB advertiser goes to the publisher’s SMB platform. In this platform we help the SMB by automating the design of banners, campaign booking, handling, and invoicing.

Compare this to the traditional, hand-held process that requires involvement of at least three or four people and it becomes apparent why minimums were required in the old way of doing things and why no minimums are required with our platform.

Jacob Knobel - DensouIf publishers and DSPs alike have minimum spend thresholds, how receptive are they to allowing SMBs access to their inventory?

This is a great question. I think that the problem here is actually the other way around. Publishers put minimums in place because they had no tools to handle small campaigns. It is too costly for them to sell, traffic and invoice a campaign if it has a budget of USD$100 (£70).

Conversely, if publishers could direct all SMB demand into a machine that would handle pricing, payment and trafficking, they would quickly build a demand source with hundreds of thousands of dollars in SMB budgets. They would be glad to let that demand source access their inventory.

Our platform supports credit card payment and manual approval of campaigns. As a result, this demand source is better for the publisher’s cash flow and brand safety than standard programmatic offerings.

Through what type of buying model will SMBs have access to this inventory?

RTB is a subset of programmatic buying. By definition, RTB runs through a DSP and an SSP. Each of them is an enterprise-grade platform with high barriers to entry in terms of minimums, knowledge, etc.

Our novel way of doing programmatic buying is done without DSPs and SSPs. Instead, we are using an engine that we built ourselves. It plugs straight into the publisher's ad server.

When we built this platform, we were just looking to reduce the barriers to entry. It was a daunting task to build our own technology stack and it paid off.

It actually paid off for reasons we did not see to begin with. We had no idea that ad blocking, privacy, and the declining prices of RTB would turn into real problems. Our platform solves these issues by circumventing the RTB system and talking directly to the ad server. This allows our platform to be completely cookie-less, giving our publishers the upper-hand in the battle of privacy and ad blocking.

Our platform is the only cookie-less platform that can generate more revenue for publishers than their traditional cookie-based platforms. This was thought impossible until now.

With scalability comes pricing economies of scale. If SMBs don't have access to this, will they have to pay higher CPMs versus larger advertisers?

This is another great question. It comes down to economic reservation price. P&G is a very big advertiser that knows how to squeeze publishers for a good price. On the other side of the scale, a small SMB advertiser has no bargaining power to reduce the price.

Even with a price that is ten-fold of what P&G is paying, the SMB advertiser is satisfied to get access to this supply. Similarly, the publishers are happy to tap into a demand source that will pay 10-times more than their current advertisers.

This is about opening the display advertising for a new segment of advertisers. We believe this will benefit the market as a whole.

Aside from the barriers to entry on the media buying front, SMBs also have limited access to creative asset development. How is this challenge tackled?

Creative asset development is the hidden cost of display advertising. Everyone is focused on agency fees and tech fees. In reality, creative asset development might be more costly than all other expenses.

Google and Facebook have solved this with their text ads. By creating text-based templates, SMB advertisers did not have to pay for banner design. Using more modern technology, we have improved on this notion. Instead of just offering text-based templates, we offer full-featured banner templates with graphical content, call-to-actions, etc.

A digital display campaign has three steps. 1. Banner production; 2. Trafficking and reporting; and 3. Payment.

Our platform gives publishers the opportunity enable SMB advertisers to take care of all those steps in 10 minutes. This will benefit their freedom in choosing media partners and at the same time benefit publisher revenue globally.