We are just three weeks away from Europe’s ad tech week. Our ten-year anniversary of ATS London kicks off the week on 9 September.
As ever, we have a serious selection of big name Madtech speakers, including Sir Martin Sorrell, Insider Inc's Jana Meron, ITV's Lara Izlan, Xandr's Michael Rubenstein, as well as the best minds from agencies, publishers and brands. We are very close to selling out - so make sure you get your ticket today.
ATS London is followed by Europe’s biggest ad tech trade show, Dmexco; the biggest congregation of Madtech companies across Europe. With all the turmoil in the space right now, many Dmexco attendees will be trying to figure out what’s going to happen next.
In my traditional Dmexco predictions piece, I will address these concerns, and frame things in a more positive light. I have rated each prediction out of five (in Steins of course), indicating the likelihood of it actually becoming reality.
Things are going to get a little crazy, but it will yield massive opportunity for those that stay the course. Look forward to seeing you all at ATS London.
1. Independent ad tech continues to thrive
I have never seen so many ad tech companies actively pivoting to become the ID that rules them all. Everyone wants to be that first-party cookie layer that knits all the disparate 20% supply together. I call this new wave of ad tech ‘the ID crowd’.
It’s easy to be dismissive of it all, but I think this is a promising start to the next cycle of ad tech. We are going to see innovation around workflow, login infrastructure, measurement, attribution, data activation, and targeting in this privacy-first era.
The imminent demise of the third-party cookie will have casualties, but we are going to be left with some great innovative companies.
We will jettison cookie arbitrage for solutions that solve real-world problems.
I could rhyme off about 50 companies here doing some amazing things in madtech right now. I am excited about ad tech’s future - and so should you be, reader.
Probability of ad tech enduring and thriving in post-cookie world: 5/5
2. Google introduces open sourced Chrome ID; Apple removes IDFA from devices
While ad tech scraps to become the universal ID, Google will blindside us by releasing the Chrome ID.
The Chrome ID will be open to all, ending the ID wars. Acting like a device ID, it will make basic targeting, measurement, and frequency-capping functionality possible. Ad tech will hate it, but sellers and buyers will love it.
Google will give users the option to opt out of the Chrome ID with its ITP roll-out. Why would Google open source its key asset?
In short, it will be a sop to anti-trust investigators. Google is desperate to hold on to key assets, so this will be seen as a good solution to an on-going regulatory headache.
The flip side of Google introducing a chrome ID will be the removal of IDFA on Apple devices. One problem solved; another exacerbated. Why am I so confident Apple will do this? Firstly, they have form for going all-in on privacy. And more importantly, Apple does what it f***ing wants regardless of ad-industry protestations. Get ready.
Probability of Google open-sourcing device ID: 2/5
Probability of Apple deleting IDFA capabilities: 5/5
3. Google dumps its ad tech stack to save core assets like YouTube and Chrome
Big tech is getting broken up. It is going to happen. And GAFA knows it is coming. They stifle competition and make too much money. And everyone is pretty pissed about it.
To counteract this, Google will make some painful concessions. They need to hold on to YouTube. It’s a USD$25bn TV ad business - and it is key to their Stadia solution. It will also want to hold onto Chrome, the window to the open web and key Google tracker.
In exchange for keeping YouTube and Chrome, Google will HAVE TO do the following:
- Sell all its ad tech assets
- Open up its media supply to third-party ad tech
- Shutter AdX, Admob and Adsense
- Agree to plug AdWords demand into third-party sources outside its O&O
Google’s future is in the balance. Something will need to get sacrificed to keep its media empire intact.
Probability of the aforementioned concessions: 3/5
4. After a 20-year hiatus, context (once again) becomes the only scaled proxy for 20% buying
This is a no-brainer. In a world where hard opt-ins will be necessary for the processing of user data, context will win big in the open web. Expect to see major ad tech pivots to contextual targeting. It’ll be like stepping back in time. Dumb contextual targeting will become the proxy for scaled buying.
And why not? Context could easily beat a cookie window of thirty days. Problem is, we have no way ever to know.
Probability of contextual becoming the only scaled way of buying the anonymous web: 5/5
5. The service layer becomes even more crowded, as middle-to-middle man arbitrage becomes impossible
On a recent visit to a local ad tech watering hole in Farringdon, London, I witnessed the oddest congregation.
Sat around the table next to me was a holding group, an ad net, a consultancy, and a brand - all happily supping pints and discussing their weird four-way business.
It all seemed very cordial until someone explained the convoluted client/consultancy/agency/ad net relationship. Some were involved in programmatic execution; others (the ad net) actually sat in the client’s office helping them with their in-housing strategy. Very messy indeed.
Welcome to the future of the service layer - where ad net, consultancy, and hold co compete for brand spend. All have similar capabilities. There are no red lines anymore. And as that middle tech layer becomes more commoditised, expect ad tech companies to morph into QUAD NETS.
There is also going to be a ton of new opportunity around data and media activation. The number of walled gardens is only growing by the day - as is the complexity for marketers.
I expect to see so many more companies chasing brand RFPs going forward.
Probability of the service layer getting even more congested: 5/5
6. European publishers pull content from ‘distribution’ channels, taking control of their core asset
In the next 12 months publishers will realise the value of their content, restricting access to ‘distribution channels’ like Apple News, Google and Facebook.
I expect premium publishers in the UK and elsewhere to build their own news aggregation app - similar to the Axel Springer app, UpDay, sending traffic to publisher sites without any cost.
In the UK, Ozone could easily do this for publishers; they get FREE traffic and 100% of ad revenue. It is a no-brainer. Expect to see this in 2020.
Probability of European publishers pulling content from distribution channels: 4/5
7. Data-driven buying comes to OOH (but let’s not call it programmatic, people)
OOH is a billion-pound business in the UK - and about USD$10bn in the US. It’s big. The industry has had its problems convincing buyers of the ROI.
But recent innovations around measurement and attribution are attracting data-driven spend. Tying in simple KPIs, like website visits and shop footfall, around attribution, is driving new spend.
You know things are shifting when programmatic agencies are winning RFPs ahead of traditional OOH buyers.
Traditional OOH supply vendors too are sensing the opportunity: many operate quasi-exchange solutions allowing automated guarantee on inventory.
But careful now, don’t call it ‘programmatic’ as you are likely to get the vitriol of the old OOH guard. Let’s call it automated, data-driven buying, shall we.
Probability of data-driven buyers crashing the OOH party: 5/5
8. CTV finally takes off in Europe, as new direct-to-consumer media brands emerge
CTV has had a very slow start in Europe. The usual broadcasters and streaming services dominate the landscape. Ad-funded solutions are sparse on the ground. In the coming 12-24 months we will see an explosion in CTV start-ups across Europe.
Pluto TV and Tubi have provided a three stage blueprint for media entrepreneurs: 1) content licensing; 2) user acquisition; and 3) monetisation via video ads. Some would call this AVOD. Regardless, there is room in the media landscape for smart, verticalised media solutions.
The only caveat here is the capital to make this happen. European VCs are not renowned for media investments.
Probability of seeing a thousand Pluto TVs and Tubis in Europe: 2/5
9. Netflix launching an ad-funded model
Netflix is hitting a ceiling for growth. For the first time in a decade its US numbers dropped, and it's international growth which is helping keep global subscriber numbers up. This a the key KPI for Wall Street. Even if Netflix kept growing within expectations, Netflix cannot justify its lofty valuation. At some stage it will be expected to juice revenue and profits.
Ads are coming to Netflix, and will likely come sooner than you think. It will never happen in the US given the competitive streaming landscape.
Instead we will see a freemium, ad-supported offering for the international market - a market that has mostly been raised on free terrestrial TV.
In an age when most people have hit peak subscriptions, Netflix et al are going to realise that there is nothing wrong with an ad-funded model. This pervasive opinion that advertising will only be for poor people is utter bullshit. We are all poor. Especially when you work in an industry controlled by GAFA.
Probability of Netflix becoming ad-funded in international markets: 4/5
10. Hold cos forced to write down expensive (and soon-to-be redundant) data-asset purchases
The post-cookie era has arrived. Ad tech and everyone else needs to adapt accordingly. What I can’t figure out is why holding cos would spend billions on third-party data merchants to bolster their data offerings. In Europe these solutions are going to attract the unwanted attention of every DPA for use of this data. When GDPR-style regulation comes to the US in 2020 it’s going to get really ugly. Expect to see some really big write downs on this ‘tech’.
Probability of big write downs on holding company data assets: 5/5
And 5 MadTech M&A deals you sort-of-never saw coming...
1. IPONWEB gets picked up by Amazon
Dr. Boris Mouzykantskii has been building ad tech for the guts of twenty years. His company, IPONWEB, has built everything from Right Media Exchange to Invite Media. The company still builds a lot of bespoke solutions for large media companies, ad tech companies, agencies and brands. Lately the company has been focusing on specific areas, like TV and video, productising tech for bigger clients. Its specialism in TV ad monetisation, as well as the domain knowledge of ad tech within the company, will attract the attention of large players looking to own a tech stack. Amazon seems the most likely to buy. Its opening up of Amazon Fire inventory to third parties is a signal of the company’s intent to monetise O&O. Amazon will eventually build its buying stack for its CTV assets. But why build when you can buy the best ad tech company in the business? Boris had better get used to writing those Bezos six-page memos.
Probability of Amazon buying IPONWEB: 3/5
2. ITV gets acquired… by RTL or, wait for it, Apple
ITV is so cheap right now. At a £4.2 billion valuation it is still really good value. The broadcaster has an unrivalled catalogue of TV hits as well as a conveyor belt of TV hits. Its revenue has taken a bit of a dip - but that is to be expected as TV viewing becomes more fragmented. With consolidation being the key driver, RTL will likely buy ITV to bolster its revenue and content base in Europe.
A left-field prediction is that Apple picks up ITV for its content hub - with the TV channel being spun off. With Apple TV about to be launched, the only reason Apple would buy ITV is for content. I expect it to hoover up the last remaining studios in HollyWood. ITV would be a solid addition.
But then, ITV has put together a solid strategy around data-driven selling, its streaming solution and content production - so it’s likely the company has a solid media proposition.
Probability of ITV being acquired by RTL or Apple: 2/5
3. Next wave of walled gardens, such as Activision Blizzard, Pinterest, ByteDance and Snap, buy sell-side ad tech
I could have chosen any large scaled media company here, but Activision Blizzard seems like a solid example, given the growing importance of incentivised video, as it becomes a core revenue asset. There will be bargains to be had, and having solid ad tech IP built to your own requirements is a handy thing to have, especially when ad tech partners aren’t moving fast enough.
However, what is more likely, is that walled gardens with logged-in data, such as Pinterest and ByteDance, are going to be snapping up more budget. They need ad tech, and ad tech needs them. I expect to see some M&A in the coming months.
Probability of new walled gardens buying sell-side tech: 2.5/5
4. Data-rich brands realise their opportunity in the new privacy-first era by acquiring ad tech
On the buy-side there are a few decent opportunities to buy ad tech. Given what’s happening with GDPR, ITP, and privacy in general, a data-rich brand could activate data via a buying platform. Again it could divert attention from core products.
Probability of brands buying ad tech: 1/5
5. Oracle buys Liveramp
Oracle’s data business has been gutted with privacy. Its AddThis and BlueKai businesses are practically dead in Europe. They do have context covered off with Moat and Grapeshot, but is it enough? To bolster its martech credentials, Oracle will buy onboarding market leader, LiveRamp, for USD$5bn. If it’s not Oracle, it will be Salesforce.
I look forward to discussing all of the above with you at ATS London and Dmexco. Enjoy Europe’s mega ad tech week.