I’ve spent a bunch of time with ad servers in my life.  It all started when I was installing phpAdsNew for my brother‘s website, Exotic Car Network, creating ad zones across Student.com in OpenAdStream, a web property that about 7 of us ran in the late 90s, working on the team to create a self-service ad buying platform for eBay, creating a proprietary ad server for the in-game advertising marketplace called Radial, founded MDC‘s trading desk practice using BidManager and TerminalOne, and finally, using DART, Atlas, and MediaMind at the agency that I’m currently at.  Now looking back at it, I’ve centered much of my career around served and tracked media.

So as you can see from above, I spend quite a bit of time with media technologies.

I believe they will play a large role in the future of advertising and I will continue to play in this field over the coming decades.  There’s been an increased amount of coverage in this space which was once reserved for the back floors of the premier industry showcase, AdTech.  Terry Kawaja is bringing some light humor and some fantastic charts, John Ebbert is creating a mini-media empire (well, not an empire), Brian Morrissey is resurging an old newsletter back to the top, and there’s been a handful of acquisitions lately including Admeld (Google) and MediaMind (DG Fast Channel) totaling close to $1 billion.

According to the display Lumascape, the only category with 87.5% of companies acquired, yes, 87.5%,  is the ad server category.  Crazy when you think about it.  Atlas, DART, MediaMind, Pictela, PointRoll, MediaPlex, etc have all been acquired.  There are some independents in the market today such as OpenX and insurgent AdZerk, but the majority have already been acquired.  I predict that the category is still ripe for innovation and will continue to see many new players enter the space.  I was a personal shareholder of MediaMind and it was one of the larger positions I’ve held.

I continue to think that the best 3rd party ad server is exactly that – a 3rd party ad server that is not biased towards any media.  Almost exactly a year ago, I wrote a piece titled, “Insurgent:  How to take down Atlas and DART.”  I continue to dislike Google’s positioning in the marketplace as overnight they theoretically could shut off access to their inventory for non-DART users (could, not should), Microsoft has an ad serving system built in the 1990s and still feels like it, and this left an opening for a major ad serving player to come in with an independent stance, thus MediaMind gained traction.  I love this stance as mentioned above and it needs to continue.

A few days ago, I wrote a post about attribution and the growing advertising operations line-item.  If you haven’t read it, you should.

If I personally was to start a company tomorrow, I’d probably create the next 3rd party ad serving system built for the future of all media (able to serve site-direct placements, social media and RTB) and include the opportunity for biddable, rich media, video, and full reporting & analytics.  I believe no ad serving system delivers superior reporting and analytics so this is an area that I’d specifically make sure I’d nail.

I think this is an area for massive innovation because the vision that the industry hasn’t recognized the full vision for the future… I believe that all media will be served, tracked, and optimized across all channels.  Television, print, radio, and out of home will all in some way or another be served, tracked and optimized.  This obviously cannot happen overnight as there are quite a few barriers and obstacles to go thru, but the opportunity is huge.  There is a reason why 87.5% of the companies in the ad serving segment have been acquired.

Note, I don’t think you need to start from scratch.  If you could raise some money, you can start by acquiring several of the pieces.  There are quite a few DSPs who could use an exit right now.   There are even some large independent ad servers who would be interested.  A roll-up strategy would be interesting and something that could come together nicely.

One of the bigger parts here is that you need to service the advertiser (or marketer).  This needs to be written on all company walls.   Mandated thru corporate handbooks.  This is similar to how SSP’s service the publisher.  You cannot be all things to everyone and when this happens, decisions sometimes become very tough to make as you try to please too many constituents.  Think about all the decisions Google (and Admeld) had to make about where to flow it’s ad dollars – to Google-run sites or it’s 3rd party network of sites.  Stick to one core area of focus and innovate within it.

This area gets continually dinged because there isn’t a ton of money to be made.  $0.04 average CPM and 200 billion monthly impressions net out to about $8MM in monthly ad serving fees (~$100MM/yr).  That’s a nice company but think of how many are larger.  If you create a robust reporting & analytics infrastructure, ad verification, workflow solutions, etc – you can charge a premium.  I believe you can.  Create a premium bundle of services to execute within the Ad Ops space, and sell them as one package.  There are buyers.

The space is only going to heat up further.  Continued innovation, a lot more media technology thinking, and investment will raise the industry forward.  I know I want to be a part of it!

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