Tag Archives: ad tech

Some big hairy questions for advertising and marketing technology

It’s an exciting time for the advertising and marketing technology world.  WPP recently acquired up to 25% of Appnexus, Millennial Media just acquired Nexage, and Mozilla recently announced it was entering the advertising landscape (self promotion, I know).

I’ve participated in this ecosystem for a while now and have some big hairy questions for us all going forward.  I think we should spend some time trying to think these questions through as an industry because we are all going to face it them.

What happens when we have five closed ecosystems?

You know, Google, Amazon, Apple, Baidu and Facebook.  These companies are large enough to become “first party” and could redefine the advertising landscape.  What happens to everyone else?  How is measurement accomplished for agencies and advertisers when 3rd party isn’t allowed?

Advertising buyers haven’t thought of the browser much, but they will play an increasingly important role

Back on the agency side, I didn’t see many line items on our media plans specifically for Safari, Internet Explorer, Chrome, Opera or Firefox but these might play a role moving forward.  Default blocking of cookies, add-ons like AdBlock Plus, and others are impacting ad delivery and targeting.

At large, users are just not in control of their advertising experiences

I spend a lot of time meeting with advertising and marketing technology companies in our sector and I just don’t see the inclusion of user permission/control within the innovation.  Imagine what the results would be if users actually were part of the process around making available the data they wanted marketers to react to.

The display category is much bigger than it was 4 years ago but are we setup to measure it?

Every couple of months a new ad unit is released and every few years, a new medium is created.  Display media has evolved across mediums and units and is at an all-time high; and tomorrow, it’ll be even higher.  Using some quick examples, we have display on Twitter, Pinterest, Firefox, Instagram, Snapchat, and Flipboard… all of which units didn’t exist 1,000 days ago.

We are entering a new wave of marketing and we’re buying the wrong metric

Reach and frequency are the wrong metrics for moving forward but they were the right metrics for yesterdays media buying.  I believe we’re entering the Intention Economy (stolen from Doc Searls) where “intention holders” will be able to make spot markets and evolve the advertising equation.  Why not?  Why not.  Technology has evolved and we’re starting to see the early infrastructure of this existing across Facebook and Uber.

Agencies will exist, they are just setup wrong for the future

One of the more popular questions that gets asked is whether or not agencies will exist in the future… and I certainly believe they will.  Relationships are super important and managed service is not going away.  However, agencies will change and morph.  If we move into the “intention economy” and we have “intention holders,” who becomes the agency for the user?  Who is the user agency?

These are just some of the questions that I’m thinking about – and are part of my industry breakfast conversations.   I hope you are thinking about them too as they are going to impact the next five to ten years of our industry.

Adobe Strategy: On Point for 2013

I am a fan of Adobe ($ADBE).  You certainly know this if you’ve been reading this blog.  Here is an article I wrote in 2011 about Adobe’s strategy that has pretty much held true and something we all should re-read.

ADBE Stock

This morning I read the 2013 Investor Presentation (PDF) by Adobe and wanted to highlight a few things that I found interesting:

On slide 22 of the deck, Adobe mentions “key digital marketing growth drivers:”

  1. Shift of marketing spend to digital
  2. Re-platforming of the Web
  3. Demand for Cloud-based solutions
  4. Multi-channel campaign and social marketing solutions
  5. International growth

#2 (re-platforming) above is really, really interesting.  I had been looking for a term to capture this insight and I think they nailed it.

The 1990s ad-stack is on the way out, or at least has matured.  The new marketing stack is filled with social, mobile, local, and dynamic delivery.  Marketing tomorrow will not look like marketing yesterday.

On slide 26, Adobe talks about their stack (well, cubes):

  1. Adobe Analytics
  2. Adobe Target
  3. Adobe Social
  4. Adobe Experience Manager
  5. Adobe Media Optimizer

I’d have to say that these cubes/stack are pretty much aligned for the future.  Marketers and agencies are demanding ROI for their marketing spend and quantitative validation is key to success.

Read the investor presentation if you get a chance.  It’s a fast read.  If your organization is not aligned with this thinking, rethink where you are headed.

 

 

Marketing Technology that Powers $42.3B in E-Commerce

Quick link:  Download report here.
This was our second year releasing the Marketing Technology Holiday E-Commerce report.  It’s no Lumascape, but it’s damn interesting.

It started as a simple project for me to understand which top e-commerce players were using different Marketing Technologies.  This year, we included trending information from last year’s report.

Here is a link to the new 2012 report (PDF), and a link to the old 2011 report (PDF).  The actual data set that it is derived from can be downloaded here for your own analysis.

I owe a big thank you to my friends at Evidon for providing me this information as Ghostery powers much of it.

AdExchanger was kind enough to write up the report late yesterday and hopefully you had a chance to read it.

Here are my takeaways:

1.  Social.  100% of the 20 surveyed sites were using social plug-ins or another form of social connectivity.  While social is the grouping, this shows the power of “earned” media; or at least the potential power of “earned” media.

2.  Audience.  I’ve been harping on this for years now.  We need to understand audiences in marketing.  Not just online, but in store too.  We’re seeing these top e-commerce sites learning about their audiences by deploying different marketing technologies that could help shape audience experiences, products, customer service, etc.

3.  Mixpanel.  I was surprised to see them in the top 10 marketing technologies utilized.  They are an analytics platform for the desktop and mobile web.    Impressive to see them breaking into the top 10.

4.  Slow decline of the ad networks.  Not the death as many folks have predicted but 51% less ad networks year over year.  Google AdWords was the top ad network (no surprise).

Again, the report isn’t perfect due to classification of companies but it’s directionally accurate.  I look forward to hearing your thoughts!

Self Service Still Requires Service

In the ad tech space, you basically are selling against two service levels:

  • Self Service
  • Managed Service

Over the past five or so years, these have become en-vogue since most companies in ad tech sell platforms of some kind.

As a buyer (or user of the platform), you basically have a decision to make.  Do you want to operate the platform yourself or do you want to rely on the company selling you the platform to handle operations.  The former is self service and the latter is managed service, fairly self explanatory.

Over the past 4-5 years in the DSP space, the majority of the marketplace was managed service.  This is for a host of reasons including lack of talent to operate platforms, simplicity around billing, and expected performance.

I am witnessing the tide shifting.  Buyers of platforms are shifting to self service operations and building on top of and around these platforms.

A bit of advice to companies selling “self service.”    You probably want to sell “self service” because it makes your investors happy as it’s higher margin (less staff to service) and you want a tech platform multiple, not a service multiple.   Companies who have biased towards this have severely lacked in support, even to the self service users.

You need to support your users of your platforms, whether or not they are self service.  Over service them.  Because if you do not, someone else will.  Your technology will be a commodity in future years.  Your service will stand it apart.

* Reading:  If you want to read a good book about service, read Setting the Table by Danny Meyer, the owner of some fabulous restaurants including Gammercy Tavern, Tabla, and plenty of others.  Service transcends industries, so don’t fear that the book is not about ad tech.

Golden Age of Ad and Marketing Technology

On AdExchanger yesterday, Terrence Kawaja talked about how Ad Tech was going through a potential Golden Age.  There have been some recent acquisitions/mergers that have helped validate some of this thinking.  But why?  And why now?

List of recent ad tech acquisitions or mergers, not complete:  33across/Tynt, SAS/aiMatch, DG/Peer39, OpenX/LiftDNA, Pubmatic/MobiPrimo, Rubicon Project/Mobsmith and Syncapse/Clickable, Google/Admeld, Google/Meebo, Yahoo/Interclick, ValueClick/Greystripe, Adobe/Efficient Frontier, Oracle/Virtrue, Salesforce/Buddy Media, IBM/Core Metrics

I was talking to a potential client yesterday and we were discussing advertising technology.  We talked about how media is transitioning into the paid, owned, and earned landscape and more importantly, the rent vs. own (audience) scenario.  In a world that’s becoming increasingly digital and platforms can help harness the audiences who engage with you (and your brand), then having marketing technology platforms will help you not only harness this audience, but it’ll allow you to segment, target, engage, and draw insights amongst many other things.

Gone are the days where we continually rent audiences from media companies and pay them significant dollars time and time again.  We should not have to do that continuously if we have platforms that allow us to engage with audiences, have them opt-in to participate with us (as a brand) and interact with them over time.  I’m not saying there is not a role for paid media as there certainly is a role for renting audiences to help us refresh out funnels.

Why this is so important for marketing and advertising technology is because most brands (and their respective agencies) are new to this.  An ad-server is not enough anymore.  Over the past few years with increased velocity, we are re-writing what it means to be a marketer from a technology perspective and using this technology to make ourselves more effective and efficient, which in turn, benefits the consumer.

The Golden Age might be here because many forward thinking strategic companies see the future and need to button and scale up their infrastructure.  The world is their oyster right now and we’ll continue to see additional acquisitions and mergers.

Google's Dominance and Why I Will Continue To Invest in Ad Tech

There have been a couple recent announcements in the marketing and advertising technology worlds.  Salesforce/Buddy Media last week, and now this week, DoubleClick Digital Marketing Suite.  For those of you not following the DoubleClick announcement, read here and here.  This morning, Digiday came out with a an article entitled, “Is Google Running Away With Ad Tech?” which I’d like this post to generally respond to.

Google is Intent Rich
As a media buyer, one of the best performance signals we have for buying media is Intent.  Murthy Nukala, CEO of Adchemy wrote a visionary piece recently that explained a bit about Intent and you can read it here.  Intent is way far down the purchase funnel and in a last click world, it generally gets all of the credit.  Being that Google is an Intent harvesting machine, it will continue to manufacture dollars.   Most of the Intent comes from its search engine, so the biggest risk to Google’s advertising dominance is if Google remains a top search engine.  As of now, it does not look like it’s going anywhere.

Google has Vision
I have a few very smart friends who have sold companies to Google for ad tech.  They are true visionaries and have a common vision.  Inside of Google, they are harnessing that vision and leading the way with it.  Neal Mohan has one of the best jobs in the world, IMHO.  He gets to execute this vision, not just talk about it, with Susan Wojcicki and continue to build one of the largest ad tech stacks we know of as an industry.

Google’s Enemy Is Themselves
At some point, which is unknown, there is a good chance a modular home falls apart because there is a stress fracture.  With Google, they are basically building a modular home with ad tech.  They are buying fantastic companies and piecing them together.  The recent announcement about rewriting their backend onto their own platform is extremely important, but one would have to think that mixed cultures and many different technologies will eventually be a potential kink in their armor.

There size is another reason to be concerned.  Publishers are realizing (some have realized a while ago) that Google is a big threat to them.  Google is the casino and knows both the dealer and the player.  They have the data.  This data can and will (might) be used against either party when it benefits Google.  This is a serious issue, essentially as Google continues to satisfy both the demand and supply side.  If publishers pull away, this means Google has less data.  The less data Google has, the less significant they become.

Google Needs to Watch the Government
We know that Google is big.  They are big enough that they need to seriously be concerned with how they are fronting to the industry.  In many circles, the term “monopoly” comes up.  From an entrepreneurial perspective, monopoly is pretty phenomenal because it means you’ve out executed every competitor and basically have won the war.  However, we know the USA doesn’t like monopolies and there needs to be competition in our economy.  Privacy concerns are serious and Google needs to keep these in mind going forward.

Why I Will Continue to Invest in Ad Tech
We believe that Google is strong.  There is no doubt.  Using a sports analogy, they are a team that you can bet on to make the playoffs each year and have a good shot at the Finals.  However, one has to bet against them.  There needs to be competition in the space and there are many companies impacted by Google’s dominance and won’t let Google take over the entire industry.  Each one of those companies, either direct or indirect competitors of Google will be stepping up their M&A game over the next 12-36 months to build an ad stack that’s comparable or better than what Google has.  Remember, in ad tech, features are very important – and Google with their early lead may have a legacy stack fairly quickly because the features they acquired might get old and stale.   This leaves the door open for many players.

Additionally, we don’t know where the next search engine might come from.  Twitter, Facebook, Amazon, Apple, DuckDuckGo (no cookies, I know), and maybe a few other players are building this.  If Intent breeds dominance in advertising, then these players cannot be overlooked.  Either Google buys them (probably not most of them), or they could be the foundation for the next big advertising tech companies.

Some of the players I’m watching to make moves are:  Apple, IBM, Adobe, Accenture, WPP, SAS Institute, Salesforce, Microsoft, Experian, ValueClick, Amazon, eBay, Walmart, Akamai, SAP and Oracle.

One Buying Platform for All Media

Back in June 2011, I wrote a post titled, The 87.5% Category According to Luma – Lots of Acquisitions.  The purpose of the article was to highlight that ad serving systems for online/digital media had a high propensity to be acquired or realize a significant exit.  87.5% of all ad servers on the chart had gone through an exit.  Not bad.

Over the last week of December, I spent some time at home and caught up on my favorite blogs and online content in between playing with my two kids.  In doing this, I spent time reading a December 20th post on AdExchanger by Google’s VP of Display, Neal Mohan.  While I’ve personally never met Neal, I have a lot of respect for what he’s doing at Google.  He has a great quote that I couldn’t agree with more:

We also know that advertisers and agencies ideally don’t want a separate buying platform for each type of media — they want a way to buy across all formats, and in 2012 I think they’ll get it. Real-time bidding (and by extension audience buying) has proven to be a transformative technology for buying desktop display — on our exchange, it currently accounts for 60 percent of all transactions. In 2012, we’ll start getting into that ballpark for mobile and video as well.

If you recall, when I wrote the 87.5% article, I highlighted an area in particular stands out to me as a killer opportunity:

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.

It looks like Neal and I are thinking the same thing and if any of you entrepreneurs are as well, I’d love to meet you.  This is an area that we are searching to invest in at kbs+ Ventures.  You can contact me here.

Areas of Interest from kbs+p Ventures Summit

We launched kbs+p Ventures about 6 months ago as an early stage investment arm of our agency, kbs+p.  Last Friday, we hosted a summit where we brought a small group of people with both visionary and tactical backgrounds to help us filter the areas that are of potential investment focus.  While most firms keep this confidential, following Fred’s recent post over at AVC, I’ll open these thoughts up as well.

Why?  I hope that any of you reading this blog might help point me/us in the right direction of entrepreneurs who are innovating in any one of these spaces.  You can easily get in touch with me here or on Twitter or LinkedIn.

In no particular order:

1.  Virtual Currency – what will the impact be of Facebook Credits?

2.  Measurement – how do you measure engagement?  How do you value “social”?

3.  Fan Acquisition – what are the best ways to acquire “fans” and “followers”?

4.  In-Stream – should brands participate in the stream of conversation and if they do, what are the rules to play by?  A company who is participating here is 140Proof

5.  Influence – how do you buy influence?

6.  No two networks or channels are used the same way.  I.e. While Facebook is a social channel, so is Linked In.  Think about the differences in your usage.  Compare this to 20 years ago when ABC and NBC, both television stations, were used similarly.

7.  With millions of web publishers, how do you match creative to each individual publisher?  It’s tough.

8.  We spend a lot of time targeting specific audiences, but an additional filter to overlay is “mindset.”  Are they currently in the “mode” to purchase? How do we differentiate messaging based upon where audiences are in the funnel?

9.  How do we combine SEM + social media monitoring.  If a topic is trending, how do we buy SEM against it?

10.  Predictive Trending – how do we predict what might trend and then purchase advertising around it.  (current company doing this is buzzfeed)

11.  How do we create video at low-cost, and then scale the distribution

12.  There currently isn’t one cohesive “stream” of me.  How can we harness the entire stream?  Where will the meta-stream live?

Leave comments and/or questions.  Would love to elaborate on any or all of these.