A Few Home Truths for the Adtech Industry

Every company that operates in the programmatic advertising sector is facing big challenges. Reacting to market forces and staying relevant is tough in any industry, but programmatic may unique in its ability to distort or avoid the reality of the current situation. In this piece, Irfon Watkins, CEO Coull, outlines four big issues that innovative, tech-focused companies could easily solve together if they put their minds to it and sucked up a bit of pain in the short-term.

Programmatic video adspend is set to see strong growth over the next couple of years, grabbing $3.84bn of spend in 2016 and $7.43bn the following year (eMarketer). This superficial reading of the health of our sector is simplistic, as anyone who’s had a meeting with an investment banker over the last six months will know. Advertisers are still pumping money into the channel but if you’re a vendor there’s never been more scrutiny of the value you offer and where you fit in the stack.

Creaking infrastructure

There are exchanges out there built using PERL, which should be enough to convince anyone that the infrastructure we’re relying on to deliver $3.84bn of spend next year isn’t up to the job. Over the last ten years big platforms have evolved their stacks by bolting on new services and products to systems that preceded them, creating Frankensystems that are slow, unintuitive and inaccessible.

The market trend towards consolidation inevitably brings with it a wave of integrations that drag on for years, not months, and cause chain reactions throughout the supply chain. The seemingly infinite Matryoshka dolls of publisher waterfalls combined with hundreds of ad trackers on page load have put enough strain on user browsers to cause a revolt against advertising in its entirety.

The connection between the advertiser and the consumer should be as direct as technically possible, lightweight and super-fast, enabled by purpose-built technology. Delivering on that promise sometimes means starting fresh, not dragging the last dying breaths out of legacy systems that are past their sell-by date.

Walls growing higher

Regardless of the size of the portion of your revenue as a vendor that’s tied to one of the big players, there’s no escaping the fact that walled gardens make ad buying less efficient for advertisers, and this in turn has a long-term impact on the value of our industry.

Walled gardens create segregated audiences that exist in a vacuum from one another, accessible only by using proprietary ad formats, bought through bespoke platforms and generating reporting that’s a nightmare to factor into a holistic view of attribution.

The tools available to advertisers to engage with users do not match the way users engage with media, and that is a structural problem with a limiting impact on spend. Providing one holistic view of a consumer across devices and channels should be the goal.

Rules? There are no rules

In a market as vast and complex as programmatic advertising transactional standards are the catalysts for increasing spend by streamlining operations and creating an environment where the value you add as a company is immutably quantifiable. We’re not there yet, and the slow evolution of standards around metrics like viewability is a huge frustration.

Looking at video specifically, agreeing a transactional metric everyone from brands to publishers can agree on is only the first step, the onus then is on agreeing how to measure it. Multiple techniques are used by black-box verification vendors who currently compete to be that de facto standard, creating huge discrepancies between technologies.

The fact viewability is a metric against which impressions are valued shows the immaturity of our nascent industry. The sooner we can get to a stage where viewability is considered a given because only viewable inventory makes it to a bidding scenario, the better. Then we can start valuing impressions on the things that really matter to brands.

Polluted waters

Ad fraud is big news at the moment and with good cause. Some claim that we will never truly eradicate fraud from our marketplaces and that’s true, fraudsters will always find ways around the technical safeguards we put in place. However, the big problem right now with fraud is not a technical one, it is a matter of willingness.

For too long ‘transparency’ has been a word for marketing collateral rather than action, with talk of blacklists and pattern detection masking the day to day reality of questionable inventory being sold en masse while elements of the supply chain look the other way.

This inertia will not last much longer, a couple of years maximum perhaps, but it should and quite easily could be quicker than that, it just means taking a hit in revenue in short-term. Easier said than done, but with advertiser trust at an all-time low, I believe these companies will reap the rewards on the other side.

In summary

Viewed in isolation the issues I’ve listed above may seem insurmountable. However, ours is an industry in its adolescence and as we know, what can seem insurmountable at that stage usually works itself out in due course. That’s not to say it will be an easy process, but for companies with a singular focus on building innovative, relevant technology and bringing it to bear on our market, the potential upside is phenomenal.

Advertising, programmatic or otherwise, is in its purest form a crystal-clear means of communicating with a consumer. The bloated, fragmented complexity of our current version of that ideal is often more akin to a weak, scrambled, static-riddled radio signal in a hurricane.

Modern systems and infrastructure that are built for speed; open and interoperable platforms; widespread adoption of transactional standards and measurement methodologies and a willingness to address the problem of fraud head on. These are the criteria against which adtech companies will stand or fall over the next two years. These are the areas of opportunity.