ad advertising online marketers new companies time
The Evolution of Ad TechOnce upon a time the marriage of advertising to media was a simple party fortwo. And even when the traditional media landscape expanded to online,marketers continued to work directly with publishers’ sales teams to buyadvertising space. After all, the golden rule was “media as proxy foraudience.”But then the scale of the Internet exploded exponentially. One hundred billionad impressions (each time an online ad is displayed is an impression) reachthe market every single day, presenting 100 billion opportunities to placethose ads. According to comScore, that added up to nearly 6 trillion displayad impressions delivered in 2012.Something else happened as a result of the Internet’s growth: voluminousamounts of data appeared and so did the opportunity to use it for finding andtargeting specific online consumers. At last, marketers delighted; the rightads could be delivered to the “right” people, anywhere they appeared online.To do this, marketers would analyze the data to determine patterns of consumerbehavior and pinpoint what products or services the user was most likely torespond to in order to influence sales.With all this new online advertising inventory inevitably came unsold adspace, so called “remnant inventory.” Around 2001 ad networks emerged to helpfacilitate the purchase of that remnant space in bulk from publishers, and thesale of that space to marketers. But there were problems. The networks did notallow much room for transparency upfront, making it harder for marketers todetermine who was really seeing their ads. When some of the weaknesses of thenetwork model started to become exposed, the marketplace reacted byintroducing ad exchanges and real-time bidding (RTB) in 2007. Ad exchanges andRTB allowed advertisers to bid for advertising space via an auction model anddeliver the ad impressions that were won in milliseconds—all behind thescreens during the time it took for the online user to download a webpage. Italso created new opportunities for targeting, as more data about the audienceviewing the ad was being shared with the marketer in order to create demandand thus determine a fair market price for the ad space.The big promise of real-time bidding in online advertising is increasedefficiency, increased effectiveness, and ultimately, increased profits for theadvertiser and a tidy sum for the publisher as well. And it’s that promisethat has poured so much cash and attention into the ad tech space.“It’s about getting marketers closer to their customers. The ability to givethem more information about their audience so they can make more informeddecisions, both with regard to when and where they deliver their message, andat what price,” said Edward Montes, CEO of Digilant.Kirk McDonald, President of Pubmatic, added, “It’s not art or science or goingfrom ‘Mad Men’ to ‘Math Men’. It’s about balancing art and science forbalanced decisions.”Both Pubmatic and Digilant are players in the complex new system of ad techcompanies facilitating RTB. With the scale of online advertising and thevolume of data growing so dramatically, it’s becoming a technically intensivegame to compete with one another. Companies require better, faster machinelearning, smarter people, and a solid backing of cash to get up and running.However, beckoned by potential opportunity, new companies are entering anincreasingly crowded field, eager to take part of the roughly $2 billion andgrowing annual pie.“The difficulty is everyone jumping on the bandwagon at the same time. Thereis a beguiling set of companies you have to be familiar with,” said Jon Slade,Commercial Director for Digital Advertising at The Financial Times.The competition “is almost like an arms race,” said Scott Neville, ChiefMarketing Officer at IPONWEB.In a new industry with little in the way of standards and great variationamong companies supposedly in the same category, a clear picture of the spacecan be elusive. In particular what can get lost is who gets paid for what, whodoes what, and which are the most effective and honest players currentlyoperating in the market.Tom Hespos, founder of Underscore Marketing and among the more critical voicesof the industry, said, “For many, digital advertising has become a black boxwhere they dump money and hope for the best.”And with so many hands trying to get a cut of the industry, there are growingcalls for more consolidation and more transparency.Historically, trends tend to swing from one extreme to the other beforesettling back in the middle. At this time the industry is still swingingtowards the machines. But, there is a drag on the pendulum back to requiringhumans to interpret data, as ultimately ad placement is still not aboutmachines selling to machines, but about humans selling products to humans.