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Display Advertising Industry DisruptionIndustry disruption, projected winners and new developments                        ...
Goal and agendaGoal•      Inform about recent disruption in the industry and the changes it will produceAgenda1.     Indus...
Industry moving to automated buying via exchangesIndustry going through a similar transformation as the one that occurred ...
Industry moving to automated buying via exchangesThe online advertising ecosystem is changing                             ...
Industry moving to automated buying via exchangesThe agency account exec is being replaced by a data geek and software    ...
Brands moving to more targeted advertisingMarket conditions and new technologies driving advertisers to use targeted adver...
Projected Developments (1/2)Google likely to be the big winner in the industry                       • Exchanges are high ...
Projected Developments (2/2)Google could use search data to improve display adsGoogle search/       • Google could share i...
Risks                 •Currently Google RTB Exchange has under 50% market shareGoogle gaining   •However, 70-80% of invent...
APPENDIX   - 10 -
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Display deck v7

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  • Transcript of "Display deck v7"

    1. 1. Display Advertising Industry DisruptionIndustry disruption, projected winners and new developments -1-
    2. 2. Goal and agendaGoal• Inform about recent disruption in the industry and the changes it will produceAgenda1. Industry moving to automated buying and selling via exchanges2. Brands moving to targeted advertising3. Winners and predicted developments4. Risks -2-
    3. 3. Industry moving to automated buying via exchangesIndustry going through a similar transformation as the one that occurred in the finance industryFinanceindustryDisplay 2002 2011 2015Advertising Buy and optimize via real time exchanges Buy and optimize via real time exchanges Buy directly with networks (Old Way) Buy directly with networks (Old Way) Old wayData Sources: Econsultancy “DSP buying guide” , Forrester “RTB hits mainstream” -3-
    4. 4. Industry moving to automated buying via exchangesThe online advertising ecosystem is changing Advertiser Ad Network Pub 1 BENEFITS of the RTB Pub 2 ecosystem Pub 3 The current system Pub 4 Agency Ad Network media buy • Efficiencies/ cost saving – bidding BIG Publisher allows for efficient market • ROI on ad spent - more targeted ads produce better ROI Targeting Technology Yield Optimizer Agency • Transparency - The RTB (real time bidding) ecosystem Quantcast, (AdMelt, Rubicon, BlueKai,Rapleaf, Pubmatic) advertisers knows where ads will run • Flexibility - Advertiser can quickly change DSP Exchange campaign if needed (tradedesk, (Google, Advertiser Publisher dataxu, Media Yahoo, Math) OpenX) -4-
    5. 5. Industry moving to automated buying via exchangesThe agency account exec is being replaced by a data geek and software The Old Way The New Way • Snazzy account reps negotiate •Buyers and sellers enter bids for ad inventory buys on behalf of the inventory into an exchange advertiser • The exchange find matching bids •Lots of phone calls and determines what inventory will •Lots of negotiation be sold at what price Inefficient • Just like the NYSE -5-
    6. 6. Brands moving to more targeted advertisingMarket conditions and new technologies driving advertisers to use targeted advertising Technologies Market TrendsBehavioral Blue Kai• Targets based on user’s previous comp browsing behavior anies• Often called “lookalike” modeling as Quantcast •Soft economy forces brands to be careful with advertisers can target users that their ad budgets. Brands can no longer afford “lookalike” their customers “machine gun” advertising approach.Re-targeting Re-targeter • Users becoming trained to avoid and mentally•Display ads based on what action compuser has performed on advertiser Ad roll block display ads that are not relevant to them anieswebsite Fetchback •With the rise of social media and web 2.0 sites users are revealing much more data about themselves.Search retargetingTarget users who have searched compfor certain product on a search Chango aniesengine MagneticSocial Media Targeting Compass LabsTarget users based on their social Graph Sciencemedia activity comp anies -6-
    7. 7. Projected Developments (1/2)Google likely to be the big winner in the industry • Exchanges are high margin businesses since they serve the role of “middle-men” between buyers and sellers. • Tough for new competitors to come in as creating the technology and building a network ofGoogle well publishers is quite costly. • The other large players (YHOO, MSFT) have not executed well due to exec changes andpositioned for a strategy shifts. Most recent shift is that the two firms will partner on a common Ad Exchange.home run • Combining forces will help YHOO/ MSFT, however, integration efforts are still unclear, and there are several question marks about how exactly partnership will work. • Google – has executed well, has shown strong commitment to display, has consistent strategy, has significant resources to back the strategy. • Large publishers likely to resist giving inventory to Google in order to maximize ad revenue.Opportunity for • Many publishers are upset about the large power Google has in search and are afraid ofwhite label Google gaining similar power in display.exchange • Thus larger publishers will be keen on licensing tech and running their own exchange. • DSPs help large publishers with their own exchanges as advertisers can run ads on multipleproviders exchanges via same DSP. • Unique “look alike modeling” technology creates huge value for advertisersQuantcast well • Slow economy driving more advertisers to be more targeted increasing demand for Quantcast • Value of Quantcast tool is tangible and easy to measurepositioned for a • Tough for competitors to duplicate Quantcast; network of publishers create significant barrier tohome run entry -7-
    8. 8. Projected Developments (2/2)Google could use search data to improve display adsGoogle search/ • Google could share its search data with its RTB exchange allowing advertisers to target users based on their Google search history e.g Expedia could buy Hawaii hotels ad on CNN.com fordisplay a user who has searched for Hawaii flights on Google.convergence • Such well targeted advertising creates enormous value for advertisers.could rattle the • If the above happens the industry will be rattled once again.industryFirms will look • Proliferation of Social Media use among consumers creates a slew of new data that can be used to better target ads across the web.for ways to use • Increased use of FB connect by publishers (80K+ sites use it), allows for targeting of userssocial media based on FB profiles data.profiles to target • Compass Labs is leading the charge in this area however others are likely to follow.ads • Competition is high and likely to intensify as there are not strong barriers to entry DSP’s likely to • SEM advertising companies likely to enter space (efficient frontier already has) further see margin intensifying competition squeeze • DSPs are having trouble coming up with differentiating features thus forced to compete on price ( Triggit only firm has made some progress in differentiating features) -8-
    9. 9. Risks •Currently Google RTB Exchange has under 50% market shareGoogle gaining •However, 70-80% of inventory is not traded through exchanges – “up for grabs”too much power •If Google has too much power other players in the ecosystem will see their margins shrink •Legislation that limits user tracking on the web currently being mulled by government •Such legislation could kill the targeting technologies described here“Do not track” •Some point to the success of “do not call” list as reason why this legislation will succeedlegislation -9-
    10. 10. APPENDIX - 10 -
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