These are interesting times. The industry is in a change cycle in terms of how we buy and sell media. Everyone is battling for their slice of the existing marketplace. Ad networks. Ad exchanges. DSPs. Agency trading desks. They are are all fighting hard to take business off each other - while "real" (excluding the Facebook channel) display growth remains anaemic. A lot of resource is being spent and how we can outdo each other - and it only seems to be intensifying. There are a lot of great companies in this space - and we should be collectively trying to encourage more spend in the channel. So how do we, as one astute industry exec said to me recently, "grow the pie"? Do we have to develop existing channels without cannibalisation - or do we look beyond the traditional buyers? Where is the growth going to come from? Here's some typical ExchangeWire high-level perspective - along with some pie-related scores.
Online Video Is Going To Propel Growth
Ad networks globally are piling into online video. Why? Feeling the pinch in the online display space? Probably. Looking to broaden their offering for brand advertisers? Hmmm. The reality is online video is attracting more budget from coveted TV buyers. And the metrics are much more focused around brand. So the ad nets are getting involved. Whether they can aggregate enough supply to make it work for agencies is worthy of another post. The majority of premium supply is locked up with the broadcasters, and they are going to broker deals directly. And from what I hear agency trading desks are aggressively aggregating premium supply. So ad networks will be left with mid and long tail pubs. As for dynamic supply, Youtube inventory, which accounts for over half of the video market, will soon be available through RTB on Adx. The indications from senior agency people is that TV brand money will flow into online video through the agency trading desks. Ad nets can smell the money, and clearly there will be huge growth in online video - propelling display some of the way to some of those big projected numbers thrown out by Neil Mohan recently. TV money is still where it's at.
Pie Growth Potential: Lots... online video loves pie
The SEMs Move Slowly Into The Market
There was a consensus about twelve months ago that SEMs were going to charge into the display market to challenge established players. Alas it hasn't happened - well not in huge way. Sure there are a smattering of Search players making some kind of impact in the space, like Efficient Frontier - but most have dabbled with retargetting and left it at that. There has been a renewed attempt by exchanges/SSPs to bring SEMs into the fold. They are after all sitting on some tasty search data - and some buyers have shown that display campaigns are working as well as non-branded search in terms of performance metrics. If search firms devoted enough resource to make display work we could actually see new advertisers move into display. Then again they might take existing business off media buying agency.
Pie Growth Potential: High possibility... but there is a caveat as SEMs might grab existing budget
This Year Could Be The Year Of Mobile... Or Maybe Not
The industry has been waiting for the year of mobile advertising since 1998. It's been a long wait but I guess we're nearly there. Mobile display is slowly getting its act together. The biggest problem has always been infrastructure. Agencies were fearful of where their client's ads would appear. There is a lot of dodgy mobile content out there, and without transparency or tracking it was impossible to ensure brand safety and KPIs were being met. So where are we at now? Well, Google released DFA Mobile and a number of ad servers/DSPs, like StrikeAd, have emerged to help agencies buy across a ridiculously complicated space. It's difficult to get a feel for what's going on. You do here of mobile budgets increasing - with advertisers desperate to engage audiences through the mobile channel. But then there is still hesitancy among big agnecies. Black box solutions still reign supreme - and brand advertisers won't buy into it just yet.
Pie Growth Potential: Moderate... we need a universal DoubleClick-type cookie to kick it all off
The Group Buying Monkeys Are Coming
Groupon had to release its financials in lieu of its highly-anticipated IPO. Groupon is spending a lot of money on acquiring customers and it would seem some of this spend is making its way into display. Hard to gauge how much - but I understand Groupon is working with multiple exchange buyers in Europe for re-targeting and prospecting across dynamic inventory. Doubtless others will follow them into the space as they look to win new business for retailers.
Pie Growth Potential: High... but will need to sort out their targeting as I don't need any more waxing offers
Looking Beyond The Agencies
If I was starting a service display business tomorrow, the last place I would go looking for budget would be the agencies. Reason number one: agencies are going to cut back on third party buyers, and use DSPs. Reason number two: Given that I wouldn't have any prop data/inventory and armed only with the same DSP the agency is using, my proposition would be commoditisded within twelve month by the Google stack or some other easy-to-use buying solution. What to do? Well I'd look at verticals that are not using display in their media mix, and try to convince them that data-driven display can deliver. Ask for test budget and do some A/B testing with campaigns using display as part of the media plan and media buys without. If you were doing your job properly, you can show them the lift in conversions when using display as a channel - and thus win more budget. I liked Criteo's initial business model were they went client direct, winning new display budget. But there isn't enough of it going on. If the pie is to grow we need more vendors kicking the doors down of new advertisers. As agencies ramp up their ATDs and exchange buying strategies, existing third party buyers will be forced to win new clients. This is going to bring new budget into the eco-system.
Pie Growth Potential: Very high... if only because third party buyers will have to go out and find new clients
Other Areas Of Growth
The publisher is about to become a major media buyer. I'm predicting it right here. Don't they realise they have both the inventory and data to buy on behalf of advertisers. The PTD (Publisher Trading Desk) has the potential to make some publishers a lot of money - and encourage new advertisers to spend and existing clients to increase their exposure in the channel. There are several niche players who will morph into media buyers. In such fluid space it is possible to wear both the caps of media buyer and content provider. Apart form the long-shot publisher being-an-engine-of-growth option, client direct could also generate a lot of new revenue for display. Having tapped out the afilliate and search channels, gambling advertisers are putting considerable sums through the exchanges in Europe. And it's increasing all the time. Big e-commerce players are also likely to bring buying in-house and put large amounts through whatever buying solution they chose to access dynamic inventory.
Pie Growth Potential: Considerable... especially if advertisers, in e-commerce and gambling, bring it in-house