Yup, Yup I got a few emails asking me about why I’ve not updated my blog. Its been a transformational quarter for me; in a new role.
Okay so 2010 has been the year of ad buying power where ad buying has undergone intense creativity with technology pushing towards real-time bidding. DSPs, SSPS and Data enablers have all crept into the limelight but where does that leave the publisher? Kind of like a victim around a few large muggers….!
Publishers have felt the barrage of change in 2010 but that change has not even fully evolved yet. 2011 I believe will be a tipping point for the publisher.
Does the publisher succumb to the DSPs and utilise them or does it shut itself off from real-time bidding and push for its sovereignty. It all depends on the clout each publisher has in the industry and of course whether it can maintain that clout.
What’s making the eco-system interesting is at the height of all these changes on the buy side we’re also seeing similar changes on the supply side.
Take for example social media and its growth. Not only has the leader of the pack; Facebook seen massive growth around the world; its seem ridiculous growth in APAC. Clearly; the world is becoming smaller as we all connect onto one platform and abandon the small social websites that once were Kings (e.g. Friendster).
This growth in social media is so alarming that its ensuring its competitors; Portals and content aggregator sites are losing ad dollar share and market share.
As users, we are spending longer time on social media sites and in doing so creating hundreds of ad units for Facebook which is leading to so much ad inventory that it has to make an impact on large publishers to a degree.
I’ve used this example many times but let me reiterate it again:
Consider your daily internet usage. Let’s use mine. I get to work log on to http://www.yahoo.co.uk, then http://www.telegraph.co.uk for news then perhaps some more Yahoo Singapore and add in a peppering of Twitter, Facebook and some TechCrunch and the odd search term.
I am the same user that went to all of these different websites and if some of these websites are selling their excess inventory onto the ad exchange and then DSPs – it means that an advertiser can at differing points of my journey purchase me at different price points.!
So on Yahoo I might be worth $4CPM, on twitter I may be valued by the exchange as .50 cents and on FB perhaps .25 cents. Technically you can buy my view or eyeballs for that specific ad buy on RTB at the cheap price of .25 cents.
Why then would the advertiser want to still pay $4CPM for the same person?
Well its a little more complicated than the above scenario because as you know with ad exchanges like RMX et al your impression is calculated based on its activity and its propensity to click or convert so it’s decisioning and prediction modelling kicks in to justify that a cheap impression coming from a user who is also accessing premium websites may not be hitting an advertisers ROI goals.
That’s easier to explain in my interaction with each website:
1. On Yahoo I may click on ads as I use this as a portal/aggregation of news, interests and email.
2. Twitter I go in to post a url and comment and come straight out.
3 On FB I interact longer (rarely, as I don’t have time) but never click on anything on the right hand side (where the ads are) because I’m interested in spending time catching up with family or friends.
So the predictions/learning models within ad exchanges/DSPs have an ability to capture this type of association and then value the eCPM of those impressions; but that and history building takes time so there is a chance that I can still be purchased cheaper than paying $4CPM on premium site.
So coming back to my original point; publishers will see major disruption in ad dollars as DSPs come to the fold in 2011 but they can still hold out and push back on entering RTB.
Is that wise?
RTB is still a utopia as no one single exchange or DSP can serve 100% of its inventory in real-time bidding. The only one I know is RMX but that is with approximately an hour or so delay from actual real-time bidding. So when it does arrive, will publishers be pushed down this road?
In my opinion; Yes you can’t stop it.
Publishers tried hard not to work with ad exchanges (well 80% is usually unsold! so its a no brainer they eventually did) but reluctantly had no choice and utilised them in order to avoid sales channel conflict. Publisher power is diluting because the large social media website Facebook is taking such a foothold of market share that reach numbers are fading with the major publishers and actual time spent on publisher sites is declining across the board.
Hopefully crowd sourcing can save the day and content creation from the crowd can help offset the greater decline; its unlikely.
Publishers will dilute their power but they will have to add creativity and differentiation in order to hold onto the ad dollars. It will surely be a 2011 year of discontent where the onus is on each publisher to work harder and show advertisers why they should choose them. In an age where users are loyal only to themselves and their hardware; publishers will have to come up with some compelling sticky content to keep the ad dollars coming in.
What is more likely to happen is that publishers are fearing the dawn of the Data Enablers (some call them DMPs – data management platforms) because most publishers have been sitting on their own data for some time and not thinking about its core value. In an age where data segments are now trading between advertising value chain players – they should be in fear because a publishers own data is extremely valuable – only when used. Publishers still will only be able to manage their own data… or do Publishers actually think outside of the box and start paddling the ad exchanges to become a large data aggregator/ or audience extender themselves?
Now that would be a sweet spot for the smart large publishers – to see the fear of the mid-sized publishers and to round them up and start buying/selling and data trading amongst them while at the same time with the ad exchanges. This way those ad dollars will still roll in and maybe just maybe the large publishers will still have a strong enough publishing power….