It seems to the be question of the month for me from lots of players in the ecosystem in APAC….
What do you think of the Ad-trading unification of Microsoft, Yahoo and AOL inventory and why has Right Media decided to move to direct advertisers?
Just like the French News Publishers join forces to compete against the automated ecosystem of RTB it seems that larger publishers in North America are uniting and pooling inventory to a 3rd party agnostic platform; AppNexus. Has the horse bolted and the barn door shut after the fact? It really depends on where they are uniting – it is just on unsold inventory that has been manually carved out as these specific ad units on these specific pages that are unsold or is it a true case of unsold inventory? Will AppNexus leverage their data or will those three publishers still keep that at arms length? How does AOL and Yahoo value the AppNexus model since its partially funded by Microsoft but works completely independently of that.
AppNexus recently announced their Apps marketplace which actually seems impressive and specifically caters for those who are interested in deeply embedded technology provision.
In a nutshell; the trio-unification is most likely to survive the eco-system shift. I don’t just mean the shift to automated buying but also the drivers behind it. Essentially we have fragmentation to blame. Fragmentation of users, fragmentation of hardware, fragmentation of inventory and fragmentation of technology. That’s a mess in a world where advertising; at least online advertising is growing in popularity with advertisers specifically as it ties back to ROI in a more streamlined direct way. Can we say the same for offline radio, newspapers, tv?
Publishers are constrained by their own thoughts; resources and certainly the eco-system shift has left them perplexed. The days of milk and honey are slowing becoming dry days and the eCPMs of previous years are declining because we have more publishers who are highly specialised; more advertisers who are pressing for better ROI and more technology expediting the need for automation. The influence of agency lunches to bring in demand are out-dated and even APAC is starting to feel this.
What does a publisher do when it knows its core audience is not loyal and shops around for the latest news, weather or e-commerce deals? On one hand its losing the value from lower eCPMs of its inventory and on the other hand its losing its users to more specific developed content across other publishers? How does a Yahoo survive when users are distracted to other sites whose value is lower than Yahoo eCPMs? Why would an advertiser pay for that premium price if they can buy them realistically cheaper elsewhere but still tied back price to the value of the impression? (RMX optimisation)
So its easy to understand why the big three are getting together. Its also a response to the potential threat of Google dominating the display market as it strives to build out its DoubleClick AdExchange and its Invite Media DSP. Its a very real threat; Google has executed very well and has bundled in youtube inventory into AdX and is also adding very interesting features to bolster the growth of the DC AdX. The real point is that it may just be too late.; the horse has bolted.
Rightmedia has had a challenging ride and one that is a close one to my heart because of where it once played the leading role in ad-exchanges; indeed it was the pioneer. It has now become the submissive one to the Google Ad Exchange and also AppNexus which make no mistake is a technology player that has an extremely large network of inventory; just recently CPX Interactive moved over from RMX to AppNexus. In essence RMX had to move to direct seat-holders for various reasons; one being that most networks were now using their own technology or others to become their own DSP; it could also be that inventory has started being pulled out of RMX and RMX has direct advertisers it needs to strategically protect so it has to take off those large arbitraging ad-networks. RMX has to identify what it has evolved into because it is becoming more clearer that it cannot be seen as a ad exchange alone; it may very well become a DSP.
The real question is – are direct advertisers ready to handle this new way of buying? Most DSPs are actively using their technology, their managed service or a combination of both to help direct advertisers so will a direct advertiser seat achieve any difference? I think it will be a lot of hassle for advertisers to seek their own seats; then these same advertisers will hand over access to the managed services team at the DSPs – what will change is those arbitrage ad networks are looking less likely to arb under this model; there will be complete transparency between the DSP and the advertiser but will anything else change?
So in the short term its going to cost RMX money and hopefully in the long term it makes sense but given the propensity to want to understand the automated buying process from direct advertisers or agencies; I’m not certain that much will change. This will only give the upper hand to the likes of AppNexus and DoubleClick AdX to scale up and build a better reach. Both are extremely excellent at what they do; the edge for now sits with Google in amassing towards a full ecosystem in the display world.
Its certainly a big risk on the part of RMX but sometimes the highest risk strategy offers the best rewards.