25 Sep 2015
State of Ad-tech
The past year in the ad-tech industry has given us some strong indications about what is still to come. Some of the signs are very comforting and reassuring while others still cause some concern about the stability and growth of the online advertising ecosystem. For the purposes of this post, I will focus mainly on the display market.
In 2014, we saw many changes in the industry. We saw an increased prevalence of invalid traffic across all platforms and exchanges; although this is most likely directly correlated to the improved detection capabilities of companies like AppNexus, OpenX, and Pubmatic. If we look at the raw numbers of what percentage of impressions and display traffic was classified as fraudulent or invalid, it can be quite disconcerting. However we must look at it from the other side and commend the major exchanges, SSP’s and DSP’s on their unrelenting efforts to remove this traffic from the system. It is because of their hard work that we are even able to see what is invalid, because the same traffic was there before but was just never known to be fraudulent.
One of the most comforting changes we have seen are the sheer number of players in the space. More players means more competition, which always leads to companies being forced to be more efficient than their competition. The beginning stages of this highly competitive playing field will be a bit tumultuous, but there is a learning curve for any process and over time all the companies with the right talent, determination, and the right leaders will no doubt be successful as they will be forced to address the inefficiencies in the market. Right now, the ad-tech eco-system can be related to a soccer field where there are professional athletes playing against amateur players. However the difference is that most of the scoreboards are hidden because unless you are a publicly traded company, your revenue numbers are not shared openly. So a mid-sized network doesn’t always have an idea of how much better they could be doing because they don’t truly know how successful their competition is.
Coming up next year in 2015, I think we will see some major changes that will be great for the entire industry. First is the focus on education. There are so many amazing tools that exchanges like appnexus and different other platforms have created for both advertisers and publishers, but the awareness and knowledge of how to use them effectively for our own individual purposes is not as prevalent as it should be. Second is the awareness of traffic quality. Advertisers have become more and more aware of watching out for bad traffic and fake sites, which will help drown the fraudulent sources because they will not be able to slip under the radar as easily as they have been. Third is the increased competition, which as I said is always good for the big picture.
Over the past year, there are a few companies that we should commend for their efforts in making the online advertising marketplace a cleaner and safer ecosystem. OpenX has done an amazing job in cleaning up the traffic on their platform by scrutinizing their publishers heavily and only allowing proven quality traffic to be on-boarded and using The Media Trust system to police the active inventory. Their process is a model that others should follow.
AppNexus, one of the biggest and most important players in our space, has built so many helpful tools for both publishers and advertisers to make their operations and optimizations easier. Their commitment to serving both the buy and sell side players must be appreciated because it is a tough job to serve the purposes of these opposing forces. On top of that the CTO, Geir Magnusson, and the team that he leads have done a remarkable job in strongly policing the traffic by working on increasing their detection capabilities. They have also stepped up and increased the severity of consequences of being the one responsible for bringing the fraudulent or invalid traffic into AppNexus.
Last but not least, Pubmatic has done a great job in serving the needs of their publishers. The account reps as well the management there have shown their commitment to getting publishers the highest rates possible for their inventory. They have also shown to be great guides for publishers with limited knowledge of the programmatic space.
The programmatic market is growing and the reason the growth has been so rapid and stable so far is because of the technology behind the systems we use on a daily basis. The foresight and continuous improvement that has gone into the technology behind modern online advertising is astounding. We could not have asked for a better infrastructure upon which to build the future of this industry. The coming technologies will most likely address specific purposes and use-cases which will fill in the voids that many companies feel when they come across certain problems.
Although we will always get new technologies, we must always make sure the end-user is properly trained. Awareness of the existence and the knowledge of how to use these tools is what will make the ad-tech space an efficient and level playing field.
Thanks for reading! Please feel free to comment or reach out directly with any questions, concerns or suggestions.