Category Archives: Predictions

The Fifth Wave Of Ad Tech: Privileged Programmatic

By Eric Picard (originally published on Adexchanger.com Friday, March 10th, 2017)

The first seven years of the programmatic revolution were driven by three major efforts.

It began with the creation and propagation of the massive new infrastructure needed to support real-time bidding. That was followed by the connection of all demand to all supply in the programmatic infrastructure. New ad products, formats and platforms then emerged, built on top of this new infrastructure.

This was a significant revolution – what I’ve called the third and fourth waves of ad technology. We’re now entering a fifth wave: privileged programmatic.

As the programmatic ecosystem matures, we’re seeing massive adoption of these new tools and technologies by the largest advertisers and media agencies now spending at scale. During the first seven years or so, many ad networks procured and resold media and some large marketer early adopters broke ground – many of which are now reaping the dividends.

But the very largest budgets are now coming into programmatic, and the game is changing. To illustrate the change, let’s talk about the historical evolution that the financial markets went through as they hit their maturity threshold during the rise of electronic trading.

Lessons From High-Speed Traders

In the highly recommended book “Dark Pools: The Rise of the Machine Traders and the Rigging of the US Stock Market,” by Scott Patterson, there is a clear narrative that will start to feel familiar to those working in programmatic media.

When the electronic markets were created, the early winners were typically hedge funds established and managed by the same humans who built the electronic market infrastructure. They knew that traders that responded the fastest to auctions could get significant advantage over other participants. Thus began the high-speed trading (HST) revolution. High-speed traders made millions of dollars a day on high-volume trades at very high speeds.

As the market matured, large traditional stock market players entered the electronic trading business and had their lunch eaten by the upstart high-speed traders. They found this to be unacceptable. The basic logic was, “If I’m spending billions of dollars a year on your electronic exchange, I need some privilege that gets me ahead of these little upstarts who have ‘know-how’ but are tiny players compared to me.”

The biggest players went to the exchanges and demanded privileged bidding mechanisms to allow them to win in the auction even if another player bid higher or bid first. They removed the advantage built in by the high-speed traders.

Nobody warned the HST companies. Within weeks in some cases, many simply went out of business. They had no idea what happened, but knew they suddenly weren’t winning in the auction. Eventually a few found out that the unpublished bid mechanisms that allowed them and the large brokerages to win in the auction had been uncovered and made available more broadly. But most of the damage was already done.

Privileged Programmatic

Privilege in an auction environment is not necessarily a bad thing. Much like the RTB exchanges in advertising, the electronic markets were seen as the great equalizers – fair unbiased auctions – but the reality is that the HST companies had their own type of advantage based on infrastructure knowledge. A real business argument can be made that buyers spending vast amounts of money should be able to negotiate for privilege with the sellers. That’s exactly what is happening in programmatic advertising.

Have you noticed that many of the biggest early players in programmatic have come upon hard times? Suddenly algorithms that were designed to provide advertisers with performance while still stripping off big dollars via an arbitrage model stopped working. Why?

Over the last few years we’ve seen the massive adoption of new privileged mechanisms in programmatic. Whether we discuss private marketplaces (PMPs), header bidding, first-look or programmatic guaranteed, they are predictable artifacts of the maturation of the programmatic marketplace. And don’t let any early knowledge you’ve gathered on these mechanisms create a false sense of comfort – PMPs from three years ago often look nothing like the configuration seen today. These mechanisms are not created equally.

For publishers, this maturation is very good news. Many large publishers viewed programmatic as a “rush to the bottom” in the early days and now see programmatic mechanisms bringing balance back to the marketplace.

Many publishers expressed frustration as programmatic created for the first time in digital media an information asymmetry that favored advertisers. Publishers had no idea why advertisers bought media from them over the open exchange, and now with these privileged mechanisms, the conversation has moved back to media buying and sales teams are empowered to negotiate and structure deals that drive customer value.

The hallmark of the first seven years of programmatic was a bottoms-up reinvention of buying based on data-driven decisioning and performance – and the biggest lever on performance was price of inventory. Early adopters were astounded to find their desired audiences for a low cost on the exchanges, even at the same publisher sites where they were simultaneously executing direct buys at much higher prices.

But those same savvy early adopters who realized huge discounts by buying the same users on the same publishers over the open exchange saw the writing on the wall. They recognized that prices were rising on the best users as the competition in the auction rose – since unsurprisingly, the same users seemed to be of interest to all advertisers in the same sector.

The savviest advertisers went directly to publishers and made PMP deals to access inventory with mechanisms that gave them advantage over their competition – which is also known as privilege. By putting their PMPs in increasingly higher priority within the ad server, setting up fixed-rate, variable and hybrid-rate deals and using new tools like header bidding, the most knowledgeable buyers stayed ahead of the competition. Publishers saw that these new mechanisms drove much higher CPMs, in many cases higher than direct buys, and importantly gave them insight into why advertisers bought from them. Eventually, the very most desirable audiences on the largest and best publishers evaporated out of the open auction.

The market is tipping over on itself – with open auctions being relegated more and more to purely direct-response advertisers that are not selective about which publishers their advertising runs on. For large brands, especially those spending large budgets, which also tend to be those that care deeply about running ads on high-quality publishers, things have gotten a lot more sophisticated.

Programmatic is no longer about low-cost inventory; it is now the infrastructure for transaction where the buyer and seller are handshaking and establishing connections to the consumers that brands need to reach. Programmatic is the mechanism to bind together the new tools that empower the advertiser to take control of their audiences and apply real science to the art of advertising. Publishers now can gain insight from working through these mechanisms rather than being left in the dark.

Sophisticated publishers already know this – and are driving programmatic elements or line items in their core I/Os as part of their direct business. On the buy side, the trend is for agencies to blow up their trading desks and embed programmatic buyers into direct buying teams.

This is a clear wake-up call for publishers that are still not treating programmatic as part of their direct sales or which haven’t changed sales compensation to remove channel conflict. Same for advertisers and media agencies who are segregating their programmatic buyers from their direct buyers.

Deal design has gotten extremely sophisticated, and the trend is toward increased sophistication, not simplification. If you are driving programmatic sales at a publisher and your deals are very one-dimensional, you’re probably missing something.

If you’re buying programmatically today and haven’t analyzed the core audiences you’re reaching over the open exchange, broken out by publishers that you’re also buying directly from, you’re behind your competitors.

And if you’re a marketer, question your media partners about all of these things. You have time, but not very much.


4 Comments

  1. In effect, were seeing “networks” appear that advertisers use. Yes! ad networks are back but the publishers are acting like their own middleman. The buyers can now group together publisher networks and create their own ecosystem of their own choosing. Tis a fun time to see the same philosophy repeat itself
    • Gerard, it’s not quite the same thing, neither philosophically nor structurally. Ad networks were arbitrage mechanisms designed to extract money from the ecosystem. This is a direct relationship between buyer and seller. The seller and buyer pay only technology fees and deal with the negotiation costs.
  2. Eric,Great piece. We definitely live in interesting times. The pace of change is such that the costs of both technology, talent, and training to keep up, may out weigh the benefits gained. Are we as an industry encouraging brands to sit on the sideline and wait for the dust to settle? Also, and most importantly, what do you see as wave six?

    Reply

    • Eric Picard March 20, 2017
      Hey R.J. This is a trend that is finally culminating after a long incubation. I don’t see it as a time for anyone to sit on the sidelines – this is the holy grail we’ve all been waiting for: Publishers are empowered to sell and build value-based relationships with buyers. Advertisers get value from their customer data investments and the ability to intelligently decide who to reach, at what frequency, and how much to pay for that exposure. Wave six? I just got Wave five out to you – let’s start there.
Advertisements

Why Do Web Pages Load So Slowly In A Broadband World?

By Eric Picard (Originally Published on AdExchanger.com – Wednesday, September 30th, 2015)

If you ask anyone, anywhere, if they like advertising, the answer will likely be a laugh and quick “no.” From a small number of people, you will get a virulent “hell no!”

But most people recognize that the content they consume is free because of advertising, and they have been willing to accept the quid pro quo of free content funded by advertising for nearly all media, for nearly all time. That’s changed over the last few years, and the easy installation of ad blockers – which frequently improve the experience of viewing web pages – has negatively impacted the ad-supported Internet.

We’re in this situation as an industry because we’ve abused our relationship with consumers. We’ve failed to design pages with the user experience optimized around the content first, with the advertising experience seamlessly incorporated into that content. That is not a call for native advertising. It’s a call to actually design the advertising and content experiences together – and to ensure that both work well and satisfy consumers’ need of great content for free.

What I mean here is that the page needs to load quickly, with the content loading first, followed by ads and then invisible code to track users. In addition to loading quickly, the page needs to be beautiful and have high utility for the user.

We all have had the horrible experience of tapping a click-bait link in social media that leads to a web page with a photo gallery of 20-plus images, each of which require as many as three clicks to move to the next image. Each click also leads to a new load of advertising. That’s the most egregious example of what is frustrating consumers today. It should be equally frustrating to advertisers and agencies – who are basically footing the bill for terrible experiences and likely getting no value from those ad impressions. 

Unfortunately, the mean load times of nearly all content pages on the Internet is not much better than these “bottom-of-the-barrel” sites, with a few notable exceptions. Once you move beyond the very best publishers, the cliff over which the consumer stumbles is pretty high. The vast majority of sites don’t load much faster than the very slowest.

Why has the web become a wasteland of user experiences, and why do web pages take almost as long to load today as they did back in the days of dial-up? Is this fixable?

A History Lesson

As I’m finding more often these days, we need to look back in order to look forward.

In 1997 when I started Bluestreak, one of the first rich media advertising technology companies, the bandwidth available to nearly all Internet users was dial-up constrained to either 56K baud (that’s bits audio) or even 14.4K baud. That’s worse than your worst mobile data connection today. Yet we were able to deliver amazing ad experiences. But that was almost 20 years ago.

Bluestreak’s technology was Java applet-based and designed to support the needs of low-bandwidth users at a time when publishers had extremely conservative file size restrictions on advertising.

Our initial load of image and code was less than 1 kilobyte (KB) of data, which would render an ad on a page with a message that read, “Loading.” A subsequent download of less than 5 KB would get an initial image onto the screen. The total subsequent load of a rich media banner would be less than 64 KB. And these were rich media ads – not static banners.

In 1998 we rolled out expanding banners, rich media applications with multiple pages and all sorts of “special effects” and various interactive behaviors. The following year, we launched some of the first video ads online. We made wonderful things happen for advertisers and consumers within the very tight constraints of bandwidth and file-size limits.

With bandwidth basically unlimited today, why do pages load so slowly when we proved almost 20 years ago that great ad experiences could be loaded on dial-up connections?

Solving The Problem

Publishers really own the bulk of this problem because slow page loads relate to how pages are coded. Software for delivering web pages must be optimized such that the site’s visual components and content load very quickly. This is not an overnight change – it may require entire web experiences to be recoded. Finding quality engineers in the publishing space who understand how to code pages properly is a challenge. But this is a critical and almost existential issue for publishers, and we’ve repeatedly seen how good user experiences drive up the value of pages.

To that point, advertisers and agencies need to hold publishers accountable for the user and advertising experiences. They should stop buying advertising from publishers that don’t solve this problem, or at the very least push hard on publishers to ensure that they design pages that load quickly and are not bandwidth hogs. This last part is particularly important for mobile – where the user’s data plan is being impacted by all the content being loaded on the page, including the advertising.

When buying ads programmatically, advertisers and agencies should use a technology provider like Trust Metrics or Integral Ad Science to determine if the advertising experience being provided is high-quality and brand-safe. The technology provider can scan a web page to determine if there is quality content and page layout, with a small number of ads and sufficient white space, or if the page is an “ad farm,” with dozens of ads.

Creative agencies need to design ads that load quickly and optimize file size. This means building teams with coding skills to build fast-loading HTML5 ads and working with rich media vendors to build optimized ad experiences.

Similarly, rich media ad companies need to embrace the idea that desktop web users need fast-loading ads – even if they are on broadband – and that rich experiences don’t require massive file sizes or bandwidth.

And agencies should vet these companies and ensure that they are following best practices. While desktop users typically have “all-you-can-eat” data consumption plans, that’s not the case for mobile. Many of the pages we visit on mobile are non-optimized desktop sites that load even even more slowly over mobile devices. If the consumer’s data plan takes the hit of all the ad content loading, it’s injury to insult.

Users are not blocking advertising because they hate advertising. They hate the horrendous experience of visiting terribly coded and designed web pages with too many and slow loading ads. If the experience of viewing the web using an ad blocker is significantly better because pages load faster and look better, this is purely a problem that publishers, creative agencies and rich media companies need to fix.

Our industry is the problem, not the consumer. So let’s fix it.

Why Programmatic Budgets Will See Massive Growth

By Eric Picard (Originally Published on AdExchanger.com – Wednesday, June 3rd, 2015)

There was a time when advertising was a game of statistical assumptions about the types of people who were consuming media. Television had four networks and there were only dozens of mainstream magazines, typically one local newspaper read by a large percentage of adults and various radio stations in each market.

In what is possibly the most basic truth of the media industry, the fragmentation trend has continued with a constantly growing number of media vehicles against which smaller slices of people’s time are applied.

Even when media-buying teams were specialized by media type, such as TV buyers and magazine buyers, the fragmentation problem still faced an unmanageable outcome. But digital media has blurred the lines between channels. Digital media buyers are now responsible for buying display ads on PC web, mobile web, digital video on both and, increasingly, audio ads. Channels, like in-game ads, and format variances, such as native ads, increase the complexity.

Billions of dollars have been invested in the next generation of media-buying technology over the past 10 years. As expected by those investors, the digital media space has grown incredibly.

The amount of money spent on digital on PCs has almost caught up to the amount of time spent by people consuming digital media – which means that spending “growth” is slowing on a year-over-year percentage basis. But spending is still growing at incredible rates. Mobile still has a massive growth opportunity that looks much like the “Internet” looked 10 years ago, as you can see below in Mary Meeker’s most recently updated “% of Time Spent” chart.

ericpicardchart

The New Planning And Buying

When planning and buying was tied to a small number of media channels and publishers per channel, it was reasonable for planning and buying group of 100 people to execute large budgets against a relatively small number of publishers. With fragmentation, the complexity of executing in any one channel makes this approach untenable.

And yet, the vast majority of ad dollars spent today are still spent against media that is bought the same way it was 10 years ago. Meanwhile, programmatic media-buying platforms have exploded on the scene and made it possible for one buyer to effectively input buying rules that allow for hundreds of billions of buying decisions per day. Each impression is evaluated in real time, valued against the campaign goals and only purchased if the value of the impression is higher than its price. This revolution puts the advertiser/buyer in control of defining, evaluating and valuing the ad inventory – a highly desirable transition to advertisers.

Although this is a technological miracle, these programmatic buying platforms have been relegated to only a small percentage of overall digital media budgets. Yes, programmatic is a rapidly growing percentage, but still has been largely limited to direct-response budgets until relatively recently.

It makes sense that direct-response budgets are directed toward the programmatic channel – buying platforms can evaluate audiences and apply explicitly identified audiences to a specific set of criteria, measured against explicit ROI goals. For direct-response campaigns, it’s easy to justify spending more than 20% of the media budget on programmatic because first-party data is such an obvious leap for marketers.

However, we have these amazing platforms with immense capabilities for evaluating enormous numbers of impressions per second and making intelligent decisions about which impressions to buy. And we have all sorts of bridging technologies and measurement models, such as Nielsen’s OCR and comScore’s VCE, to help drag budgets that need to move evolutionarily from the panel-based model approach to TV buying to more automated buying models. But there’s a chicken-and-egg problem that hasn’t been resolved.

While programmatic buying platforms are orders of magnitude more advanced than the old ways of buying media, planning methodologies for allocating budget ahead of the buying process simply haven’t kept up with the buying revolution. Under the current model, planners divvy up the budget to different buying teams, sending large chunks to “traditional” digital media buyers (an oxymoron if ever there was one) and smaller chunks to the programmatic buying team.

This is despite the fact that programmatic buying methodologies can execute both budgets equally efficiently and effectively. Buyers can just as effectively execute their budget for direct buys programmatically. The difference when a programmatic buying platform is used is that every impression can be evaluated against the campaign goals expressed by the planner, and either be bought or rejected. This “outcomes-based” buying actually puts the planner’s objectives right at the center of the buy – and pushes the media toward an even playing field between brand and direct response.

To execute a media plan using only direct buys today means that the old-world scale issues apply: A media-buying team of 100 people typically buys from between 50 to 60 publishers. This ratio means that in a world with millions of websites, a tiny fraction of available inventory is considered. And buying teams that only buy direct are unlikely to evaluate publishers outside of their personal experience, as is human nature. This is not to say that there is no place for direct media buys – they absolutely serve a purpose. But there are many other ways to run after any campaign objective, whether the desired outcome or goal is to drive an immediate sale or to reach a specific audience, or to reach a more general audience.

The Role Of Direct Buys In A Programmatic World

Programmatic buying teams now use mechanisms like private marketplace deals to execute direct buys with publishers, which enables buyers to establish more controls over how impressions will be selected or rejected than a direct buy. In a standard direct buy, every impression must be consumed. In a programmatic-first world, only impressions that match the campaign goals are purchased. And the role of a direct buy has more to do with ensuring that an advertiser can purchase inventory from a specific publisher that may otherwise be unavailable or in short supply over the open RTB inventory channel.

In a programmatic-first world, campaigns are begun over just open RTB. Using white lists and evaluating which publishers saw impression volume periodically can show how much inventory is available on that publisher over the exchanges. A private marketplace should be considered if a publisher is determined to be valuable and inventory volumes do not respond to increasing the bids on a CPM basis for available impressions. One way that programmatic-first buyers will make evaluations regarding private marketplace buys or even direct buys is to test on the exchange first to see if the inventory can be bought there. If standard bids aren’t finding the inventory desired on a publisher, and raising the bids doesn’t open up inventory, a private marketplace buy or direct buy is the answer. But there is a lot of value in finding that inventory on the exchange if possible.

It is sometimes the case that various business rules will render a publisher or set of desirable inventory inaccessible to a specific advertiser over the exchanges. In those cases, the issue isn’t bid price – the inventory is simply not accessible to the advertiser over the exchange without a private marketplace buy in place. These private marketplace deals will eventually replace direct buys. But in some cases, publishers may simply require a direct buy because their operations teams haven’t sorted out how to support private marketplaces or for philosophical reasons.

This last scenario is quickly evaporating from the market – buyers are increasingly demanding and receiving support for private marketplace deals across most publishers. It is not unusual for these to be part of a standard IO. For those publishers that require vendor support, the options that support programmatic sales are rapidly increasing. Publisher programmatic vendors, including Pubmatic, Casale and Rubicon, offer support for standard private marketplace buys. Google, as always, is innovating like crazy in this space. And upstarts, such as Sonobi and C1 Exchange, are examples of a new type of publisher-facing programmatic vendor that supports more flexible inventory guarantees, using programmatic pipes by integrating directly into the publisher ad server.

We’re on the cusp of a massive revolution in media planning and buying – with new tools and methodologies. There are significant advertiser and publisher benefits to sorting these issues out. But this innovation comes at a cost. Evaluating hundreds of billions of daily impressions across all these platforms, publishers, advertisers, campaigns, insertion orders, line items, placements and creatives is technologically intensive.

And while automation is often touted as a way to increase efficiency, that doesn’t mean it reduces labor costs. The number of people needed to execute this way stays static, but the salary costs go up because team members have more technical skills and are in high demand. But over time they scale exponentially better than traditional media buys. This will ultimately lead to some interesting conversations between agencies and advertisers. The procurement-driven cost-plus model is not leaving agencies room to support these newer and better ways of servicing their clients.

The Fundamental Changes Happening In Programmatic Today (What ever happened to Programmatic Direct – or Automated Guaranteed?)

By Eric Picard (Originally Published on AdExchanger.com – Friday, April 3rd, 2015)

Media buying and selling have been on a slow evolutionary course since the late 1990s. With real-time bidding at the forefront, the industry has evolved rapidly since 2007, but relegated primarily to direct response on the buy side and remnant inventory sales on the sell side.

Most media sales – about 80% of digital dollars – have still been done over the direct channel, with RFPs, negotiations and inventory purchased well in advance of the campaign’s “go live” date. Despite significant growth in programmatic mobile and video, programmatic still represents a tiny fraction of dollars spent in those media channels.

While we’ve heard a lot about “automated guaranteed” over the last few years, the sector hasn’t grown as quickly as many would like. Analysts have been bullish about its growth, with Magna Global estimating that 83% of digital display spending will be “programmatic” by 2017, largely driven by the adoption of automated guaranteed and other types of “programmatic direct.”

We see the kind of growth expected in the RTB space, but not in the automated guaranteed space. Although some were gaining traction, vendors had trouble making money and several leaders were acquired last year for fairly low prices.

The amount of traction has been debated behind closed doors, with the quiet consensus emerging that automated guaranteed isn’t really taking off. The question is: Why not?

Automated Guaranteed’s Biggest Hurdles

Until a few years ago, publishers were a bit squirrelly about RTB. Sales-driven organizations doubted that RTB could provide the value that direct sales have produced for 20 years, and there was a belief that RTB drove prices downward.

Five years ago, new vendors entered the fray to focus on solving an old problem: automating the convoluted process of buying and selling direct ad campaigns. They sold publishers on this idea and created pipelines that allowed publishers to create packages that could be pushed over an API to buying tools, and would automate and streamline the human interactions that take place during a media buy.

This is a very logical path to go down – billions of dollars are spent on these direct media buys and everyone agrees that this space is incredibly inefficient. So why not just build some automation and have the whole thing streamlined and driving growth of the market?

Several factors have limited growth of the automated guaranteed space. One is that publishers have treated it like a new sales channel to shop inventory packages, not as a means to replace the standard RFP-driven direct channel. Publishers use automated guaranteed as an intermediate sales channel between direct buys and remnant sales. They have tried to use it to open up more direct buys – effectively money that was never on the table before – and entice buyers to pick up inventory packages directly instead of using RTB.

But analysts, vendors and many sales executives didn’t envision this for automated guaranteed. The goal was to push direct sales into this automated process for selling and for buyers to adopt buying tools that streamlined the RFP process. While there has been some success with this model – particularly with dedicated buying tools in the direct space – overall it has been sluggish.

To exacerbate the problem, publishers tended to package inventory for this channel in ways they’d never do if they were responding to an RFP. One media buyer I talked to about this debacle laughingly said, “They’re creating media packages and pushing them through this channel that they can’t even sell with their sales force involved. Why do they think anyone will buy it over this channel if they can’t sell it with people?”

The implication is that most buyers aren’t interested in publisher-defined inventory packages that aren’t tailored to the specific campaign goals. And what most publishers have missed is that buyers have complete control over the inventory definition when buying over the RTB channel, which has been as much a growth factor as reducing waste or lowering average CPMs. Control always wins for buyers.

These various problems with the automated guaranteed channel have slowed adoption and growth of the programmatic direct space and produced a chilling effect on investment, leading to some of the vendor exits. But this is only in the automated guaranteed portion of the “programmatic direct” channel. There are many ways the market is beginning to improve and reinvent the media buying and selling process, and automated guaranteed is only one of them.

The final major issue here is that automated guaranteed is solving an old problem without changing the nature of the thing it’s trying to solve. It has made direct buys more efficient, rather than producing radically better direct buys.

As the automated guaranteed space was inventing itself, the RTB channel evolved much faster than anyone expected. Publishers began to begrudgingly admit that RTB wasn’t a “race to the bottom” as many feared and instead was driving significant revenue at a significantly lower cost of sales. As skepticism and suspicion evaporated, publishers have become open to bigger and broader uses of RTB.

RTB Growth

RTB has given us more value than direct buys and helped us find ways to radically improve upon direct buys. The largest vendors in the space, particularly DoubleClick and the closely related AdX exchange, rapidly innovated and released technologies like Enhanced Dynamic Allocation (EDA), leading publishers to experiment with the way they allowed direct and RTB demand to compete with each other over impressions in real time.

The result has been a significant increase in yield and overall rising CPMs in the RTB channel. In many cases, demand coming from RTB yields higher than direct buys. Using tools like EDA has not led to underdelivery or undercutting of direct deals.

And while “standard RTB” has grown rapidly and is now encroaching on inventory that traditionally was reserved for direct deals only, private marketplaces have been a real winner in the RTB space. While Deal ID as a mechanism for instituting a private marketplace buy has been somewhat vilified in the industry trade press, complaints are mostly unfounded. Private marketplace deals over RTB have grown incredibly fast and are poised to accelerate. We’ve also seen buying and selling tools rapidly advance and processes are becoming streamlined.

Buying teams within agency trading desks (ATDs) use various flavors of private marketplaces to enact one-to-one deals with publishers that largely replicate direct buys. They’ve also completed more extensive global deals with publishers that take advantage of the total demand they represent as an agency and share the supply among their clients. They are even using these broader deals as differentiators with their competitors.

Similarly, the demand-side platforms are creating differentiated supply deals with publishers that put them toward the top of the queue within the ad exchanges and, in some cases, help them bypass the exchange infrastructure altogether using RTB-based buying tools.

We’re now seeing that the ATD model itself is fracturing as media agencies pull the resources and capabilities of the ATDs in-house and push their media buyers to incorporate programmatic mechanisms into the standard buying process. Executives at nearly every large media agency and most holding companies are privately or even publicly stating that programmatic – primarily RTB mechanisms – will be incorporated into mainstream buying teams starting this year, if they haven’t done so already.

One major area of investment needed in order for media agencies to begin adopting RTB at large are tools for planning and executing buys that support the needs of a more “standard” media buyer. Specialists will certainly be helpful for the tools of today, but media planning and buying as a discipline is missing a significant window of insight and execution capability that could be coming from this channel. Tools for planning buys across direct and programmatic channels (RTB, private marketplaces, automated guaranteed and across various differentiated vendors) are desperately needed in our space.

As you might expect, vendors connected to the exchange infrastructure get access to data about all impressions defined by all criteria – including publisher, contextual, geographic and first- and third-party data segments. That data has yet to be unlocked for broad media planning and buying but soon will be. You might imagine this is an area where I’m spending a lot of my time.

I believe that success will be driven by broad shifts in the programmatic space, faster adoption of RTB-enabled buying and selling mechanisms, new programmatic offerings beyond RTB and tools to help less specialized buyers to be successful in programmatic.

The Digital Advertising Industry Needs An Open Ecosystem

By Eric Picard (Originally published on AdExchanger Tuesday, November 4th, 2014)

Thanks to amazing new offerings from Facebook, Google, Amazon and others on deeply connected identity and tracking solutions, we are seeing two major developments. For the first time, connected identities across entire populations are available for targeting, tracking, reporting and analytics. But these identity pools exist within walled gardens, siloed to just one provider.

From a tactical and strategic point of view, I completely understand why companies create these walled-garden identity solutions. And to some extent, they will open their walls – metaphorically allowing outside vendors and partners to enter through checkpoints, accompanied by security and wearing clearly labeled badges. Nobody can fault a company like Facebook or Google for being careful about allowing entrée to their walled gardens. The potential for a PR backlash is significant, and that could cause the overall value of their offering to decline. So yes – it’s good to be cautious.

But it does create a significant issue for every publisher outside the top five or so because their first-party data pool is limited to the activity on their own site or apps. They don’t get access to cross-site activity, nor do they have a way to compete with the efforts of the biggest players on their own. It will be hard for publishers – even the large ones – to resist the momentum that will build to plug into these walled gardens, forcing publishers to effectively commoditize themselves in exchange for access to identity, targeting and analytics data.

I’ve long been a proponent of open approaches in the ad-tech space, including open source, open architecture or open APIs. I also am a big fan of well-considered and coordinated industry or consortium efforts. I believe that efforts like OpenRTB, which is pushing for an open API standard for real-time bidding, will be key to helping the industry grow.

Open efforts like this help ensure that the biggest players don’t create huge competitive moats like we saw with paid search, where Google AdWords’ creative, functionality and APIs became the effective industry standard. As a result, any time Google makes any change, all other paid search players must immediately copy Google because of its massive dominance in this area.

Even the biggest players should support these open initiatives because regardless of any disproportionate boost one or two players may get, we’re in a massive growth phase and an open approach has proven a better way to expand industries and sectors. Building significant traction is easier with scale – and by pooling scale, the whole space has the opportunity to accelerate growth.

That said, it’s highly unlikely that Google and Facebook will take a completely open approach on their key initiatives. For one, they have enough scale to catalyze efforts and markets on their own. But more importantly, it’s not in their self-interest to be open. Remaining closed gives them opportunity to maintain control and position in the market while marginalizing smaller players in the ecosystem.

I predict that we will see more industry consortiums created around areas like identity, directly in response to the very large walled gardens that are being built now. It’s really the only way that everyone else in the industry can protect against commodification and ensure a level playing field.

Programmatic’s place at the top of the marketing funnel

By Eric Picard (Originally Published in iMedia – October 11, 2014)

For decades, modern marketers have developed significant marketing plans with detailed analysis of target audiences. Often before products are designed, significant amounts of market research have been developed and applied against the product or service development process.

When a brand decides to spend millions of dollars to create a product or service, it typically then spends tens to hundreds of thousands of dollars on market research and product planning to get ready to launch it.  And then hundreds of thousands to millions of dollars to market the product.

Most of that market research and product strategy folds over into the marketing plan. And as part of that process, typically very detailed marketing personas are created — sometimes a handful, sometimes more than a dozen. These marketing personas are decomposed into the marketing plan and drive many of the media mix decisions that are used to divvy up budget among channels. And often these do get distributed to the media agency as part of the marketing plan’s translation into media planning and strategy.

But in my experience, it is fairly common that by the time the media buyer gets the media plan from the planners, the marketing personas have been stripped off. And this is even more true when we bring programmatic media into view. As an example, consider a conversation I had this past year with a media buyer at a major trading desk.

This trading desk handles the media buying for a major home improvement retailer. And when I talked with the trading desk buyer about how the company approaches this customer’s media buys over its DSP partner, the buyer looked a little puzzled. To that person, it was about only two things:

  • Buying the “home improvement” segment
  • Setting the rest of the budget to optimize spend against CPA on its web pages and letting the DSP figure the rest out

The problem with this approach is that it’s extremely one dimensional — and loses much of the value that exists within the systems used. It’s like using an F-16 to commute to work. Or an aircraft carrier to run to the store.

I haven’t seen the marketing plan for the client, but I can imagine (having seen a lot of them over the years) that the retailer has several different ones. I’ll make up a few that probably exist in part, and explain how I’d have approached the campaign using a DSP.

Persona 1: Reggie is a 28-year-old single male who lives in a major metropolitan area in a condo that he owns. He makes more than $50,000 a year and mostly shops at the client’s stores to buy décor items, fans, DIY project materials, and probably will buy things like air conditioners, painting supplies, hand tools, etc.

Personas 2 and 3: Sophie is a 35-year-old stay-at-home mother who lives in the suburbs of a major metropolitan area and is married to Tim, a 35-year-old executive who works in the city and commutes. Together they own a house that is more than 4,000 square feet and has at least half an acre of land. Tim is a weekend DIY warrior, who takes on various home improvement projects. He’s likely to take on light construction projects, buying building materials, painting materials, plumbing and electrical, and lots of landscaping tools such as riding mower, blowers, etc. Sophie is an avid gardener who buys numerous plants and gardening materials, and takes frequent courses on design and gardening at the store.

Persona 4: Arthur is 65 years old. He is retired, lives in a modest home in the suburbs, which he owns outright. He is in the process of getting ready to sell the house as he and his wife are looking to move to a smaller place or a retirement community. But he has three adult children who own homes nearby, and he frequently putters and does projects around their houses. He’s likely to buy building and painting materials.

Although I just made up these personas, they’re fairly typical of the kinds of personas I have seen over my career — if anything, they’re a bit light. Additional information that would typically accompany a persona includes the numbers of each of these personas that exist in each DMA in the U.S., perhaps even broken down by ZIP code within each DMA. And then marketing teams typically will use whatever tools are at their disposal to begin matching against mechanisms like PRISM clusters and do some media mix modeling about how to reach these audiences.

At the handoff to media agency partners for digital media, the planners at that point begin using various tools to determine what sites have traffic that matches their target audiences, and an overall media plan and strategy is devised.

Once the plan is handed off to media buyers and their trading desk partners, the thinking is usually quite distilled. Buyers going directly to publishers will send over an RFP that simplifies the media plan (they may also send the media plan) for sending to publishers. They then wait to hear back regarding what inventory is available. The trading desk partners typically decide what audience attributes align against available data segments for their goals.

Now let’s go back to the example I used above about the trading desk with a major client in the home improvement retail space. Given its customer personas, I’d have recommended a few other ways to engage and find audiences.

Perhaps it could target users who own homes of a certain size or homeowners who have been in their home for a certain number of years. It could target each of these segments by age and geography. It could differentiate both creative and offer by each of these. It could vary what products to highlight in its advertising based on some of the criteria, such as age, gender, and other elements. It could target households with children differently than households with adult children not living in the home. It could even target based on the age of children, assuming parents of college age students might be moving kids into apartments or dorms at the end of summer or fall. Or it could target urban apartment dwellers with fans in the summer and suburban homeowners with leaf blowers in the early fall, snowblowers in the late fall, and lawnmowers in the early spring.

In programmatic, we far too often fall into the trap of only feeding the portion of the purchase funnel that is focused only on CPA at low costs of media plus data. As a market, we need to expand how we see programmatic media and really try to dig into the market for data and the use of sophisticated DSP platforms.

Programmatic: A Rising Tide

By Eric Picard (Originally published in AdExchanger October 1, 2014)

While we’ve been sitting in the progressively warmer water of the “programmatic kettle” without noticing the heat, the world has changed. The incremental changes have been small, but they have been happening constantly and quickly. Taken together, these changes are significant.

The term programmatic has gone mainstream in the last year – at least in the ad industry. Chances are, if you mention to anyone in our space that you work in programmatic, you won’t have to explain what that means anymore. This is true even if you’re talking to a typically “out of touch” executive, because every major company in our space is not only engaging in programmatic, it’s a significant portion of their spending or revenue. They’re likely either hiring or have just hired an executive to manage it, and may have already had turnover in their executive roles in programmatic.

Publishers are finally facing the reality that this isn’t a fad and they’re not treating it like a bad thing anymore. They’re not only selling “just some” of their inventory on programmatic and they don’t just see it as a source of revenue from remnant inventory.

Most major publishers have moved toward selling premium inventory over a programmatic channel. They’ve either sold inventory over a private exchange, adopted a programmatic direct vendor to offer premium inventory over an API, adopted a vendor to help with yield that incorporates programmatic (like Maxifier or YieldEx) or they’ve just rolled the dice and allowed Google’s Dynamic Allocation algorithms to let the exchange compete with sales on premium inventory – and from what I’m hearing, they probably had great success with it.

I’m hearing people talk about programmatic in ways that are very mature. There’s discussion of programmatic channels instead of channel, and there’s discussion of programmatic outside of the context of the concept of “channel.” There’s an understanding blooming among both buyers and sellers that taking a view of their media processes through a programmatic lens opens up bold new opportunities.

Publishers are investing in programmatic heavily – and it is getting deeply ingrained in their business processes. Previously publishers thought of their inventory in a pretty simple way: sponsorships, tonnage and remnant. Today they think about inventory and channel relationships very differently:

  • Direct relationship: old-fashioned sales
  • Programmatic direct: publisher-packaged inventory offered over API or through a self-service tool
  • Private exchange: DSP buyers can buy inventory with a “first look” ahead of it getting passed to the open exchange – and possibly ahead of other partner relationships
  • Vertical network: direct relationship with a vertical network that either buys direct or through a private exchange
  • SSP: Some publishers have a partnership with an SSP that divvies up inventory between ad networks and various ad exchanges
  • Open exchange: Some publishers skip the SSP and remnant wholesale deals to old-school ad networks, and drop it directly into the exchange

Agencies are moving programmatic into the mainstream. The trading desks started out as small dedicated businesses, and are either growing radically and becoming more than just centers of excellence, or they’re being primed for integration across the whole agency model. Expect to see very significant changes in every major media agency over the next few years – this is coming, and fast. Expect the changes to be about efficiency and driven as much by their client’s requests as finally accepting that the trading desk model, where the agency arbitrages their own clients, is nearing the end of its life span.

Agencies are investing in technology, not just to “bid on the exchanges” but to (finally) automate media buying. And the programmatic umbrella is being used as a catch-all for these conversations – whether it means investing in buying infrastructure that automates the RFP process or automates bidding. And the vendors servicing agencies are bridging from the guaranteed space into the programmatic space, and the programmatic vendors are bridging into the guaranteed space. This might be the most fun I’ve had in a decade when it comes to ad tech.

Marketers are eyeing the programmatic world as they put digital marketing through the same process we saw every other major business initiative go through: the “IT-ification” of marketing. CTOs and CMOs are actually deeply collaborating. They sense an opportunity to get investment in marketing infrastructure and bring their first-party data to bear on the marketing business at large.

Ad tech vendors clearly sense this opportunity. Every vendor I’ve talked with in the last six months is gearing up for a major initiative focused on the marketer directly. Not that they are trying to bypass the agency just to “go around them” – which was the old-school unhealthy dynamic many ad tech vendors have attempted since digital marketing started. Rather, they are hearing from the marketers directly – and often are being brought into the conversation by the media agencies, which are acting as agents of the marketer at their client’s request.

This trend deserves another paragraph. Marketers are looking to integrate ad technology into their enterprise IT technologies. They want to unlock the power of their first-party data, but can’t let it outside the firewall (more metaphorically than in reality). They won’t allow the raw data to sit in the hands of their agency partners, but this isn’t about “marketers taking digital marketing in-house.” They aren’t disintermediating the media agencies – they’re just pulling the technology relationships in-house and then providing their media agencies with access to the integrated tools from outside.

The significance of this is lost on many in the market – many analysts think it means bad things for the holding companies – but clearly that isn’t the case. This may be the best news in years for the holding companies. Their clients are making significant and permanent investments in digital marketing. And their need for assistance is going up – not down.

Here’s the biggest insight I’ve had in the last six months: Programmatic media is just as labor-intensive as direct media. The work is different and much more technical (and also more insightful, honestly, as there’s a lot more data generated), but there’s more of it – all the time. And it’s growing. Media agencies aren’t going anywhere; they’re busier than ever. Marketers need the help. Publishers have whole new ways to increase yield and revenue over these channels. And ad tech vendors are consolidating and investing significantly in their technology.

Programmatic is a rising tide lifting all boats in our space.

How (and why) emerging media should plan for scale

By Eric Picard (Originally Published on iMedia – January 18, 2014)

People in emerging media spaces frequently ask me how they can get advertising into their content experiences or how they can use their technology to create value for advertising technology companies. Recently someone asked me about using bitcoin in advertising. In the past, I’ve spent hours working with clients who have hired me to help them figure out advertising models for their new emerging media products, despite my telling them early on that it’s unlikely that there’s a “there, there” related to their situation due to scale.

This is apparently hard for people to wrap their heads around, so let’s talk about this specific issue — the issue of scale in advertising. At its heart, the issue of scale is possibly the biggest and most fundamental issue in advertising — and it is frequently misunderstood. Here are my three rules of scale in advertising:

  • Advertisers need to be able to spend relatively significant budgets efficiently at a low cost per impression.
  • Advertising campaigns need to be able to reach relatively large audiences without significant complexity in managing them.
  • Return on advertising spend (ROAS) needs to be able to be calculated in some form (including, in many cases, very simple key performance indicators).

Let’s talk first about the difference between marketing and advertising. I’ll give you my definitions, as the dictionaries don’t do justice to the concepts:

Marketing is about communication; it is a commercial message to a potential or existing customer, and increasingly it is a two-way conversation with potential or existing customers. Marketing includes one-on-one conversations between employees and prospects, mail and email communications, advertising, public relations, and more.

Advertising is about reaching the largest possible audience, with the best available message, as effectively, inexpensively, and efficiently as possible, generally through distribution over a large media channel. Advertising is a subset of marketing, but it has unique properties and rules that one needs to be aware of in order to apply it as a revenue source.

The most important concept that defines advertising as opposed to marketing is scale of reach at a reasonable cost. Advertising generally requires that a very large audience can be reached at a low cost per impression. Not only must the cost to reach the audience be relatively low, but the cost to manage the buying of the advertising media must also be relatively low. In addition, the ROAS must be somewhat measurable. That said, ROAS is a fairly squishy way of discussing a variable and varied set of metrics that are generally constructed on a per-advertiser — or even per-campaign — basis to gain an understanding of results.

At this point, a few of you are probably getting ready to argue with me about some of the things I just said. The likely argument revolves around some high-CPM inventory that is bought by some advertisers for some campaigns at a very high rate. And while this does happen, my points above still hold true. The cost of the inventory is relative based on the goals of the campaign and an analysis of its results.

For instance, some inventory that is highly targeted or highly effective can sell for a high CPM, but it can still meet the ROAS goals of the campaign. This can be due to high performance or a relatively rare target audience (perhaps extremely high income or very niche interests, such as pilots, airplane owners, or sky divers). It can also be due to a highly competitive media set (e.g., auto-intenders or people who manage investments).

ROAS is a superset of all the various means of calculating performance because ROAS can be based on brand metrics as well as performance metrics. It can be as laser-focused as a tightly bound formula including cost per acquisition (CPA) and the margin on the product that the “A” drove. Or it can be as broad as understanding that for every dollar of advertising spent (using some kind of analysis that could be sophisticated or simple) gross sales increased by some amount.

The ROAS calculations can also be derivative. For instance, there may be a very clearly understood metric that has very clearly understood value that can be used as the primary goal of a campaign. For instance, in the automotive space, the value of a test drive is very clearly understood; most car companies know exactly what the conversion rate is between test drives and purchases of their cars. It’s common to use test drives as a campaign goal, which is not really the goal of the advertiser, but it is fairly measurable and clearly understood in secondary value in sales.

For those trying to roll out a new (or emerging) advertising medium — one that is based on new content models, new distribution models, or new devices or technologies — this concept of scale is critical. Until a media type can provide enough reach to be of value, it’s hard to use advertising as a mechanism to fund it. That number varies based on the makeup of the audience using the media.

For instance, if a new hand-held device for hedge-fund managers were launching, the audience size needed to be ad supported would be much lower than a hand-held device for the homeless. For a mixed-audience scenario, one that’s by nature more affluent (since most emerging media scenarios tend to appeal to early adopters, who tend to be affluent), the magic number seems to be at least in the hundreds of thousands, but it can range into the millions.

The more information available about the audience that is adopting the emerging media, the more likely early ad funding is to occur. This audience data must be collected up front. The task cannot be left until later. If it is, there likely won’t be a “later.”

 

Enterprise Adoption Of Ad Tech Will Supercharge The Market

By Eric Picard (Originally published on AdExchanger 11/5/2013)

The appetite for ad technology is just beginning to appeal to new markets in new ways. Expect to see significant growth in the sector over the next five years as marketers and large publishers invest significantly in technology at a scale we’ve never seen.

The context for this shift: Ad technology is moving from a marketing or sales and operations expense to an enterprise-level IT investment. We’re now seeing very significant interest in this space by CIOs and CTOs at major corporations – beyond what we’ve seen in the past, which mainly came from the “digital native” companies, such as Google, eBay, Amazon, Yahoo, Facebook and Microsoft. Now this is becoming much more mainstream.

Historically, digital media was a very small percentage of advertising spending for large advertisers, and a small percentage of revenue for large, traditional media publishers.  But in the last two years, we have passed the tipping point. Let’s handle the two areas separately – starting with the marketer.

Marketers

First, let’s call the marketer by a slightly different name: the enterprise.

Large corporations, or enterprises, have invested massive amounts of money in IT over the last 30 years. Every major function within the enterprise has been through this treatment – from HR to supply chain, finance, procurement and sales to internally driven traditional direct marketing (the intersection of CRM and direct-marketing channels, such as mailing lists and even email marketing).

The great outlier here has been the lack of investment in advertising, which mainly has been driven by the fact that advertising is managed for the most part by agencies. Most marketing departments have allowed their media agency partners to take on the onus of sorting out how to effectively and efficiently spend their marketing budgets. And up until the past few years, digital marketing was a small percentage of spending for most major marketers.

Since there really hasn’t been much value in investing in advertising technology at the enterprise level for marketers on the traditional side, there was little driving change here. But as the percentage of the marketing budget on digital advertising has grown, and as the value of corporate data to digital advertising has grown, a significant shift in thinking has taken place.

Now we’ve got a way, through the RTB infrastructure – and, ultimately, through all infrastructure in the space – to apply the petabytes of corporate data that these companies own to drive digital advertising right down to the impression level. And we have mature infrastructures, bidders, delivery systems, third-party data and data pipelines,and mature technology vendors that can act on all this. None of this existed five years ago at scale.

Publishers

Just as the large marketers are enterprises, so are the large media companies that own the various online and offline publications that create advertising opportunities.

Until the last few years, the very largest of the traditional publishing conglomerates were still not paying much attention to digital media since it was a tiny fraction of overall revenue. But over the last few years there has been a significant shift as executives finally realized that despite the lack of revenue from digital as a channel, from a distribution standpoint, digital media is experiencing explosive growth. And ultimately all the traditional distribution channels – from print to television to radio – are all being subsumed into the digital channel.

You need to look no further than the people who have been hired into the major media companies in the last few years with titles like VP of revenue platforms, GM of programmatic and trading, director of programmatic advertising and VP of yield operations. These senior positions didn’t exist at these companies two years ago, and generally were areas reserved within the digital natives.

The fact that we’re seeing new focus on digital media, with both senior roles and significant investments in people and technology, means that we’re likely to see additional significant investment by these media enterprises over the next few years. I expect to see the shift happen here quickly since the consulting companies upon which they and most enterprises rely to lead these initiatives already have media and entertainment practices.

Suddenly major advertisers and publishers – who are all major enterprises – are looking at the opportunity to apply their significant IT expertise to marketing in a new way. So let’s talk about the way that IT evolved in other channels historically to try to understand what’s about to happen here.

The Evolution Of IT

A major corporation will typically hire large consulting firms with a vertical practice in the area they want to modernize. Note that the biggest consulting firms – we’ll use IBM and Accenture as examples here – have developed vertical practices around nearly every department, large initiative or focus area within an enterprise. Also note that wherever these consulting firms step in to build a practice, they assemble a recommended “stack” of technologies that can be integrated together and create a customized solution for the enterprise. One interesting thing: In nearly every case, there are significant open-source software components that are used within these “stacks” of technology.

When we look carefully at where they’ve developed practices that smell anything like marketing, they’re typically assembled around big data and analytics. There are obvious synergies between all the other vertical practices they’ve created and the intersection of using big data to inform marketing decisions with analytics, based on detailed analysis of other corporate data. So this isn’t a surprise. It also isn’t shocking that there are many major open-source software initiatives around big data, ranging from staples such as Hadoop to startups like MongoDB.

But nowhere in the digital advertising landscape do we see major open source initiatives. Instead we see the massively complex Lumascape ecosystem map, with hundreds of companies in it.

So when we look at the shift to enterprise IT for digital marketing, there are plenty of companies to plug into a “stack” of technologies and build a practice around. But there is very little in the way of open source, and no clear way to actually bind together all the vendors into a cohesive stack that can be used in a repeatable and scalable fashion.

We are seeing some significant consulting firms come into existence in this space, including Unbound Company and 614 Group. I’m certain we’ll see the big players enter the fray as they sniff out opportunity.

Who Will Win The Digital Media War?

By Eric Picard (originally published in AdExchanger October 17th, 2013)

Lately I’ve had many conversations about the digital advertising market and how it’s evolving.

The most-asked question: “Who will win the battle over digital advertising – Google, Facebook or Twitter?”

I’ve also recently been asked about other companies, such as LinkedIn and Adobe, and how well they’re positioned to beat “whomever.” And by “whomever,” everyone almost always means Google. But more often lately, I’m hearing about Facebook, too.

So, who’s going to win?

Well, it’s not so simple. I take a very different view of the market. I don’t believe there will ever be one winner in this space. Even from an ad-technology perspective, I don’t think all roads point to Google owning it all – although there’s little question that they dominate. And from a publisher perspective, Google is dominant in paid search but not in other areas.

I can hear your brain spinning right now. You’re thinking, “Wait – did you say Google is a publisher?”

Yes, I did. Google has leveraged a massive market share in paid search, and grown into other forms of advertising as well. But for some reason, people in our space don’t seem to think of Google as a publisher.

Google happens to be the biggest publisher of search – but, somehow, calling Google a search engine seems to mask for many people that Google is a publisher. They also are a publisher of maps with Google Maps. They publish video via YouTube. And they publish all sorts of other content related to the results of various vertical searches, including restaurant reviews and travel information.

Google’s also a technology company, and yet – amid all the excitement about various office applications, self-driving cars, balloon-based Wi-Fi and all the other efforts – they are primarily a publisher, one that makes almost all of its money from the sale of advertising. Even their massive DoubleClick business is in many ways really about building opportunities for more ad revenue flowing through their ad exchange and back to Google, tied to a percentage of media spending.

But even though they can almost legally be considered a monopoly, they are not the only publisher in search. Microsoft certainly hasn’t given up there. And beyond the two major publishers of search, there’s an entire ecosystem around paid search that Google can’t and won’t own. That opens up other opportunities.

A Range Of Opportunities – For Many Players

I see the market as a series of opportunities. Even if Google continues to be the dominant player across all forms of digital advertising, from a publisher or an ad-technology perspective, I don’t think that matters from a market perspective because the publisher space is far too fragmented for any one publisher to gain control. Any one publisher may dominate in one area, but won’t be a complete monopoly – not even in search. It’s even much less likely in other forms of media.

So when people talk about who’s going to “win” in advertising, I think it’s more complex than one winner and many losers. There are many opportunities to win here. And many of these markets are more than big enough for the “second-place” player to have a very big business indeed. In many cases, there will be a large number of big businesses in various verticals. Television is a great example of a market where there are many big players and no one player that has significantly dominated the market, at least not in the way we think of Google dominating search.

So what are the other areas we should be paying attention to? These areas could be very large – potentially as large as paid search – but at least as large as display ads or radio.

1. Consumer-Facing Social Media

Publishers: Obviously Facebook will dominate here. This means Twitter has the backup position in this market. Facebook is too far ahead for Twitter to come close any time soon. I think that Google+ is an outlier and could blow up at some point if Google keeps at it and really invests heavily, maybe in advertising Google+ rather than trying to gain share more organically.

Technology: There are tons of players, but nobody is dominant yet. And every major player wants to be the big gun here. I expect that, eventually, Google, Adobe and Salesforce will dominate, either through organic growth or acquisition. There are a lot of smaller players who could rise quickly depending on how innovative they prove and how good they are at executing.

Secondary Marketplaces: I think AppNexus will win. Others will play.

2. B2B Social Media

Publishers: Clearly, this belongs to LinkedIn. Google+, Facebook and Twitter will also play here, but it’s uncertain how much market penetration they’ll achieve. I’d guess that Twitter has a good opportunity to be bigger here than in the consumer space as a secondary player.

Technology: Again – too early to know. I like Rallyverse quite a lot, although they’re playing in several places here.

Secondary Marketplaces: Too early to be certain.

3.  Video / TV over IP

Publishers: Obviously Hulu is a standout. You can’t ignore YouTube, either. Netflix and Amazon are very focused, and Microsoft’s Xbox is super interesting. But video and television content over the Internet is very fragmented, and I don’t see one strong winner.

Technology: Freewheel seems to be getting tons of traction (quietly, too).

Secondary Marketplaces: Clearly Google’s got a good foothold because of its anchor-tenant relationship with YouTube. Tremor had a great IPO, and there are many players like TubeMogul, YuMe and Brightroll – but this space looks to be about as fragmented as the television ecosystem, or even display ads. Part of the reason is just that there’s a lot of demand and money floating out there looking to be spent on video advertising.

4. Mobile

Publishers: Mobile is not a media type. Well, sorta. But it’s not a media type that so far is significantly differentiated as one. I suppose you could point at Apple and Google (as leaders?) for their app and content marketplaces.

Technology: This part of the market is super fragmented.

Secondary Marketplaces: I’m looking forward to Google and AppNexus duking it out over this marketplace from the exchange point of view – but there are many ad networks in this space as well, including Millennial Media, which is clearly the powerhouse of the market.

5. Cross-Media Plays

Let me break out of my model for a moment and say that while the market has certainly fragmented into players focused on each of the various channels, I think we’re now starting to see a lot of investment in cross-media initiatives. These range from publishers to technology companies and marketplaces.

But the real interesting thing to me is that in the ad-technology space we’ve rarely seen the ability for companies to support multiple media types simultaneously and become a dominant player. That is changing.

Publishers: Google, Yahoo – yes, I said Yahoo – Microsoft, Amazon, Apple, AOL and a plethora of others are starting to gain real cross-media traction. I don’t see any one publisher dominating across media, but certainly there will be publishers who stand out because of their cross-media footprint.

Technology: Obviously Google stands out here. But watch out for AppNexus, which is really investing heavily in video, mobile and social to extend beyond its display roots.

Secondary Marketplaces: Again – I think it’s Google and AppNexus that are really poised to win here.