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The Critical Trends in Online Advertising: MIMA Summit 2014

Advertising Technology Presentation for MIMA Summit 2014

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The Critical Trends in Online Advertising: MIMA Summit 2014

  1. 1. The Critical Trends in Digital Media By Eric Picard, CEO of Rare Crowds Built around my deck – 5 Important Memes for the Digital Advertising Industry: http://www.slideshare.net/ericpicard/
  2. 2. History of Digital Advertising 1990 2000 2014 1991 “Public” Birth of The World Wide Web 1994 First Clickable Banner Ad 1997 • Pop Up Ads • Paid Search 1998 Ad Networks 1.0 (e.g. Value Click, Advertising.com) 2002 • Behavioral Targeting • Google AdWords 2003 AdExchanges 2005 • Dynamic Creative • AdNetworks 2.0 2007 Demand-Side Platform and Real-Time Biddiing 2004-2006 Video and Mobile Point Solutions (e.g. Tremor, Millennial, YuMe) 2010 Data Management Platforms 2012 Programmatic Direct 1995 • Ad Servers • Rich Media Ads Emerge 2013 Native Ads
  4. 4. Huge and Fragmented Ecosystem Worldwide – Approximately 6,000 Advertisers account for >80% of all ad spending (~5,000 in US account for >90% of US ad spending) Most of the WW ad spend controlled by 5 major agency holding companies (6 with Dentsu) Omnicom WPP Interpublic Publicis Havas Hundreds of vendors across thousands of implementations, and thousands of internal IT solutions – few of which communicate with each other Media ownership rolls up to approximately 60 companies WW – with thousands of holdings American Media Inc. Belo Corporation Bertelsmann AG Cablevision CanWest Global Citadel Broadcasting Clear Channel Comcast Community Newsp. CBS Copley Press Cox Enterprises Cumulus Media Dow Jones Corp. Emmis Fisher Freedom Gannett General Electric Hachette Filapacchi Hollinger Journal Register Knight Ridder Landmark Lee Enterprises Liberty Media Lin TV Corp. McClatchy McGraw-Hill Media General Meredith Corp. Morris News World News Corp New York Times Primedia Pulitzer Reed Elsevier Rogers Scripps Sinclair Standard Radio Stephens Media Time Warner Tribune Company Advance Publications Cisneros Corus Entertainment Entercom Hearst Liberty Group Media News Group Pearson Sony Corporation Viacom Vivendi Universal Vulcan Inc. Walt Disney Washington Post Young Broadcasting 4
  5. 5. Number of Media Types (1700 – 2005) 5
  6. 6. Number of Websites 6
  7. 7. Number of Blogs (03-07) 7
  8. 8. Internet User Growth 8
  9. 9. Media Fragmentation Changes Power Base 6,000 Advertisers 6 9,000 Advertisers Agencies Millions Publishers 1977 2012 Hundreds Publishers 9 >500,000 Advertisers >400,000 Publishers Google Search & GDN 1 Google $750B $6B
  11. 11. Manual Buy/Sell Process for premium Reporting & Analytics Associate Media Buyer Media Planning & Buying Workflow Ad Operations Campaign Management & Trafficking Workflow Billing & Reconcilliation Inventory Availability & Reservations (Sales Tools) Campaign Management Workflow Reporting Billing Media Research Tools Media Buyer Associate Media Buyer Ad Operations Billing Coordinator Sales Executive Sales Planner 1 2 3 3 5 7 Account Manager 6 8 1. Buyer decides what web sites to buy 2. Buyer and Seller negotiate deal 3. Hand off to internal teams for workflow 4. Buyer ad ops sends ads to publisher 5. Seller ad ops inputs ads 6. Buyer reviews results, compares reports, compiles 7. Seller sends bill to buyer 8. Buyer reconciles the bill and pays 4 11
  12. 12. How Impressions are Bought in RTB It works on a auction based model (think ebay). Each party makes their bid, the highest bid wins, and pays $0.01 more than the next highest bidder. Bid Which bid will win the impression? Bid Amount #1 $.50 Bid Amount #2 $.65 Bid Amount #3 (Winning Bid) $.80 Price Paid $.66
  14. 14. Publisher revenue against inventory 14 Hand Sold Sponsorships Hand Sold Premium Inventory Hand Sold Audience Targeted Inventory Targeted Inventory sold via Ad Exchanges Remnant “Wholesale” Inventory sold to Ad Networks Inventory Packages are made up of inventory from each layer in the ‘layer cake’.
  15. 15. Purchase Funnel to Display Advertising Volume & CPM Low CPM High CPM Category Awareness Brand Awareness Brand Consideration Brand Preference Purchase Intent Purchase Customer Retention Customer Advocacy High Imp. Volume Low Imp. Volume 15
  16. 16. Brand vs. DR by inventory and revenue $$$ $$ ¢ Brand DR Brand DR Paid Search DR Inventory allocation of Online Advertising within the purchase funnel Ball Size Represents Proportional Revenue 16
  17. 17. Advertising Ecosystem Impression / Dollar Flow 5% * Includes: Ad Networks, SSPs, Private Exchanges, and Ad Rep Firms ** Includes: Media Agencies, Creative Agencies, Trading Desks *** Includes: Ad Exchanges and DSPs This slide represents Display, Video, Mobile – based on Rare Crowds Analysis of Marketplace FLOW OF ADVERTISING IMPRESSIONS (US) Note: Ad Servers, Yield Management Systems, Analytics, DMPs, etc… Take out about 8-10% of spend in total as they pass through the ecosystem 20% ADVERTISER AUDIENCE Agency** Keeps 5-25% Large Publisher (Direct Reserved “Premium”) Keeps 75-95% Large pub (Remnant) Keeps 40-80% Publisher Aggregator* Keep 10-80% (May include multiple vendors) Small-Med Publishers Keeps 20-60% 65% 25% 20% 25% 25% Percent impressions 40% 35% 40% 35% Ad spend 100% Exchanges, DSPs *** Keeps 10-20% (may include multiple vendors) FLOW OF AD SPEND (US) Percent Dollars Captured (in yellow) 25% 5% Per Impression Price Drops 17
  19. 19. Consolidation must happen 19 Hundreds of vendors in the ad tech ecosystem • Each sector has significant number of competitors • Probably not enough ecosystem scale to support more than 3 vendors per category • Consolidation will happen quickly once it starts Ultimately there will be a handful of platform ‘stacks’ • One will be Google • The others will be some subset or consolidated mix of the following: • Yahoo • MediaMath • Adobe • IBM • AppNexus • AOL • Facebook • Amazon • SAS • SalesForce.com • Experian • Accenture • Ebay • Rubicon Project • Pubmatic • Etc…
  20. 20. 20 Agencies Buy Side Technologies Liquidity Pools (exchange types) Supply Aggregators (Networks types) Sell Side Tech P U B L I S H E R S M a r k e t e r s
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  23. 23. Key Technology Players in the Market Buy Side Ad Servers DSPs / Buying Tools Exchanges SSPs / Selling Tools Pub Side Ad Servers
  24. 24. The Google Stack Ad Networks Ad Sense AdMob Mobile Publishers DFP DFA Google Ad Words AdSense Advertisers Ad Agencies Data Companies Other Vendors Other vendors 24 AdMeld / EDA Invite Media / DCLK Bid Manager Google Display Network Google / Doubleclick Ad Exchange
  25. 25. We're just at the beginning of the digital revolution • Tablets may be the biggest driver we have ever seen of transition from consumption of media (especially print) to digital delivery • Connected Televisions are another huge driver of digital consumption • This includes Xbox, Roku and other set top boxes • Different media are good at different things, we’re still trying to determine what new media types are good at • Traditional media companies have intentionally slowed adoption of digital because they get so much more money per ‘impression’ in traditional media • The floodgates are opening up, and traditional media companies are embracing digital completely • The world is moving toward a programmatic media future! 25