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Mike Nolet - Automated Trading: Beyond the Hype. #ATSNL

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  • 1. Automated Trading: Beyondthe HypeMIKE NOLET"CTO & CO-FOUNDER @ APPNEXUSwww.mikeonads.com
  • 2. I Have Three Messages for You Today 1 Programmatic trading is real; Time to get on board 2 Hype makes this seem much more complicated than it is 3 Time for action is now2
  • 3. 1 A technology with a new market and value networkDisruptive " 2 Different set of consumersTechnology 3 Often the “least profitable”Shifts 4 Ignored by incumbents 5 Eventually technology becomes “better” than existing market
  • 4. VOIP PHONE
  • 5. Classic Disruptive Technology Superior cross-device audio, video compared to the telephone. Skype is PERFORMANCE becoming the business standard. Video Basic chat and conference calls “Free” international calls5
  • 6. Ok, so what does that have todo with online advertising?
  • 7. Let’s take a trip back in time…
  • 8. “Original” Ad Model – Direct Sales A Advertiser Publisher P A Advertiser Publisher P CPM Based Negotiated Adservers as “delivery engines” Focused on “premium” inventory8
  • 9. The Problem with Traditional Media Sales Relative to the corresponding1 Operationally difficult media budgets, the high- volume, low-dollar, high-2 Doesn’t scale past the top-100 publishers complexity nature of Digital3 Low sell through programs makes it the most labor intensive medium " in the advertising Industry SOURCE: Joe Burton, MCCANN WORLDGROUP, AMERICAN ASSOCIATION OF ADVERTISING AGENCIES, INC., 20099
  • 10. Enter the Ad Network Ad Network A P Aggregators of supply SELL BUY & demand who try to A N P solve the “remnant NETWORK monetization” gap. A P ADVERTISERS PUBLISHERS10
  • 11. The Ad Network Problem1 No standardized way A of trading results in N daisy chains2 Serious ad quality P N N problems N P3 Deep channel conflict issues N A11
  • 12. Right Media: “Exchange 1.0” A P ADVERTISER 1 PUBLISHER 11 Adserver for ad N networks NETWORK 12 Link networks on one E platform to provide EXCHANGE balanced liquidity A N N A ADVERTISER 2 NETWORK 2 NETWORK 3 ADVERTISER 3 P P PUBLISHER 2 PUBLISHER 312
  • 13. Classic Disruption in the Making… A NEW " Trading between " MARKET networks A NEW " Trading + eCPM" TECHNOLOGY in the ad server “LEAST PROFITABLE” customers (Networks) Focused on “LOW QUALITY” (remnant/unsold) inventory13
  • 14. Competition Fast Followed…1 Other ventures quickly follow Right Media to build exchanges2 All exchanges acquired by major media companies in 200714
  • 15. Enter SSPs & DSPs N A P P A PUBLISHERS N ADVERTISERS DSP SSP P SSP A PUBLISHER ADVERTISERS “Ad Trading Specialists” (ATS)15
  • 16. The Challenges The SSP Challenge No full insight into the demand pool Prices are estimated High latency All the same problems with ad networks: channel conflict, ad quality, malware, etc. The DSP Challenge Operational overheads Lack of centralized budget/frequency control Lack of transparency/visibility Inconsistent targeting Difficult to buy behaviorally16
  • 17. Enter RTB
  • 18. Enter RTB"a.k.a. “Interop”
  • 19. Welcome to today’s world ofprogrammatic trading…
  • 20. Exchange 2.0 1 Operationally more efficient: less manpower 2 Enables buyers to leverage their own data and effectively remarket and frequency cap 3 Gives sellers control over price, quality and better transparency and visibility Programmatic trading is starting to be better than traditional hand sold: higher revenue for the seller, higher ROI for the buyer
  • 21. Classic Disruptive Technology PERFORMANCE SSPs & DSPs gain market adoption + RTB Yahoo adopts SSPs & DSPs starting to bring more premium supply/ exchange trading; demand Adx long tail Right Media: Automating trading between networks21
  • 22. If exchange trading is so good,why does it seem so damncomplicated?
  • 23. Let’s talk about "Venture Capitalists…
  • 24. 1 They are on a constant quest for How do the “Home Run” VCs 2 They look for three things: §  A growing or “hot” industry invest §  Category Leaders capital? 3 §  Technology Companies Tend to not truly understand the technology24
  • 25. Result: Continuousinvestment in new“feature” categories
  • 26. Let’s Look at the Latest “Eye Candy”26
  • 27. Let’s Make This a Bit Simpler.. Features / If lucky a standalone “delivery system / tool” Irrelevant27
  • 28. Look at This… It’s Not Complicated at All! Data Providers R.I.P. R.I.P. Buyer Buyer Seller Buyer & Seller Seller Buyer Technology as a service Technology as a service Buyer Buyer Data Data Seller Provider Provider28
  • 29. If you do notunderstand whatsomeone is saying,"it’s probably not real.
  • 30. Ok… so what should you bedoing?
  • 31. 1 Educate yourself and be able to cut through the hype. Let’s start 2 Start doing something. Sell simple… 3 something. Buy something Learn by doing.31
  • 32. But that doesn’t feel bigenough does it?
  • 33. There is Hope in Sight… 33
  • 34. 1 We are riding a seven year wave of disruptive innovation in automated trading We have a hyped up market mapLet’s 2 fueled by the VC industryRecap 3 The real value prop is simple: §  Operational efficiencies reduce costsQuickly §  Buyers can use their own data/tech §  Sellers have more control for reduced channel conflict and increased quality 4 Now is the time to do something!
  • 35. Thank you!MIKE NOLET"CTO & CO-FOUNDER @ APPNEXUSwww.mikeonads.com