Microsoft, AOL and Yahoo – a publisher oligopoly?

Allthings D recently broke the news that many of us knew was likely – when one split force decides to gather to create a stronger force against a strong competitor. It sounds like physics really.

I recently read this:

http://tech.fortune.cnn.com/2011/09/15/aol-yahoo-microsoft-online-ads/

and actually the whole efficient ad marketplace has been slowly moving in this way with groups of publishers in certain markets like France gathering together to create a virtual closed marketplace. Its been active for some time it’s just now that the larger publishers have decided to band together to control the ecosystem of efficient automated ad buying and its (in the publisher eyes) inefficient pricing mechanics.

AppNexus is the most likely choice of DSP/ad exchange aggregator as it is the most agnostic in the marketplace even if heavily invested by Microsoft.

The concept of unsold inventory massed together into a closed marketplace and to have each other sell the other’s inventory is in theory efficient for a publishing business that can only see it revenues dip if its large user base are not worthy data points so this banding together suggests a deep ingrain fear of the understanding of each publisher’s inventory worth. It’s not surprising as often these large publishers have so much data they can’t efficiently manage the true insight data.

I differ in opinion that this is a desperate move – it’s a strategic move but one which comes far too late. The marketplace is now bought into the concept of efficient ad trading and the buying not of named publisher inventory but instead of audiences. So; the slick trading desks and the savvy DSPs are not really going to see this move as sensible at all.

If anything the move looks counter-productive given that all three have investments in this type of technology or dataplay. All three companies have challenges when it comes to buying technology and then integrating it into their own eco-system. It also means their own salesforce will have to become much savvier in how they sell their inventory and again; it comes down to how much of their inventory they want to sell versus the need to hold back inventory in order not to plunge eCPM levels.

After all no one publisher from the three wants the laws of diminishing returns; it most cases these three publishers will still want to manage a minimum bid price for their inventory which means it’s not a true dynamic closed marketplace.

I think the horse bolted before the barn door was shut…..  I have a soft spot for Yahoo; I worked there through Rightmedia  and I had my first email account with them at 18 but in Asia – this does not count for much as Gmail penetration in India is killing off its largest long-term indian rival; Facebook penetration and take up in Indonesia and Vietnam is indicative that the new generation will have a new relationship with these publishers and sadly the long and well established publishers are slowly losing market share.

All these changes in ad buying are great for the user as the value of their eyeballs are now more directly measured against their ROI against the ads they are seeing and relevancy kicks in to encourage better clicks, conversions and overall a better user experience for all. Engagement is the new King.

I am still in belief that the online ad market will grow in value especially in Asia and so every large publisher should see ad revenue grow not decline; the publisher just has to ensure that they make use of the data that each user brings in order to monetise efficiently against each user and that’s where the smaller niche publishers should see a very different playground to the one they see now.

 

 

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About adsolver

Ad-exchange expert with Rightmedia and Yahoo. Strategist on the evolution and ecology of the international display digital platform. Specialties: Evanglising Glocal digital marketing with outstanding experiences in Ad Exchanges, Behavioural Targeting, eCommerce, Multivariate Testing and data mashing. Have worked previously in the following industries: Internet ebusiness solutions multivariate testing Oil and Gas experience and Renewable Energy White-labelling Travel websites Telecommunications Advertising Exchanges
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