Ad Tech Isn’t Dead; Long Live Ad Tech

Ad tech and its constituent parts have taken a bit of a beating of late. It’s not been easy for the digital advertising industry, with many high-profile issues claiming all the column inches. There’s almost a collective sense of schadenfreude manifesting itself in certain areas of the industry and it’s not difficult to see why. However, promises Gareth Davies (pictured below), founder and CEO, Adbrain, it shouldn’t all be doom and gloom and the bad actors are gradually being weeded out. Here, Davies explains why, in a world where business outcomes are being favoured over scale, the new seeds of ad tech and martech are starting to sprout.

Ad tech has seen easier times. Wind the clock back five years and if you mentioned ‘programmatic’, ‘real-time-advertising’ or ‘machine learning algorithm’ in a VC pitch, chances were you’d get funded. Now the bulls have become bears and there’s a near daily torrent of attention-grabbing headlines prophesying the demise of ad tech. It’s become de rigeur to hate on ad tech these days.

True, VC funding slowed dramatically in 2015 and 2016, and if you listen to the likes of Fred Wilson it doesn’t look like it will improve in 2017. Shaky arbitrage-junky business models, undelivered growth and valuation promises, ad fraud, click-bait, fake metrics, and the dominance of Facebook and Google – and that’s the good cohort. Yet the marketer’s demand for tech has never been stronger. Engaging with consumers via relevant, automated and effective channels hasn’t shifted as a top demand from marketing departments at companies across the globe. In fact, never before has the marketer needed technology and data to understand and engage with consumers. Call it ad tech, martech or a derivative thereof, there exists a not so shabby USD$120bn (£82.1bn) software and data opportunity helping the enterprise understand and engage with customers. This says nothing of the multi-trillion dollar commerce opportunity that results from more intelligent customer engagement.

Needless to say in ad tech land, the Facebook and Google duopoly are winning the tried and tested arbitrage ad network game. The IAB’s Internet Advertising Revenue Report for 2016 found that Google and Facebook claimed 64% of a record USD$59.6bn (£40.8bn) US online advertising revenue whilst the rest lost market share. Look elsewhere and it’s a bleak picture. As CPMs have fallen over the years, accelerated by the rise of programmatic, publishers have had to get creative to deliver sufficient scale to make money from digital. This ‘race to scale’ has become a race to the bottom of clickbait nonsense, slideshows, unskippable pre-roll video ads delivered below the fold, and other low-quality content and ad experiences. Advertisers are rightfully asking questions about the quality of the served impressions. How many real, live humans on the other side saw all those impressions? Moreover, how long were those ads on the screen for people to notice?

Gareth Davies, Founder & CEO, Adbrain

Even with the gold standard duopoly, we just don’t know. How many social clicks and likes are coming from bots? Facebook was caught with its hand in the cookie jar on video metrics when it was found to have overestimated a key video metric for two years. Sir Martin Sorrell got it spot on, saying, “It is an example where the player and referee cannot be the same person or where you cannot mark your own homework.” Facebook recognises the scale of this challenge and has retrenched from providing a full ad stack, favouring instead proprietary black boxes focused on monetising inventory Facebook can control. Google’s Quality Score algorithm has long allowed it a veil in price setting, and its ad network, AdSense, is arguably one of the biggest culprits in providing poor user experience given the incredibly low publisher barrier to entry. Nowhere is safe.

We should however take solace in the realisation that a Facebook/Google duopoly only makes sense for the market when you value scale (and impressions) above all else. Fortunately, these metrics are becoming less relevant as advertisers’ campaign goals focus on demonstrating improvements in business outcomes rather than impressions and clicks. Many business results are tough to measure; for example, how can you record the number of brick-and-mortar sales made by users who have viewed a digital ad?

The walled gardens are ill-equipped to help marketers in these areas. Marketers and advertisers want the ability to bring their own data, and follow the customer journey across the relevant devices a customer owns, as well get data back to inform the whole process. The duopoly cannot be trusted to report or deliver on this, and the marketer with their increasing arsenal of first-party data and access to rich, scaled, authenticated third-party data sets begins to yield the upper hand.

The next wave of mar-/ad tech will therefore respond and deliver on the needs of the marketer and the market, not the marketplace. Those guilty of black box arbitrage will die. Transparency, authenticity, and accountability will prevail, and the knight in shining armour will be technology and data. We just won’t call it ad tech. And that’s OK. It’s time then for (ad) tech to harness the innovation, scrappiness, and smarts it’s always had and take the battle to a ground where it can win, creating an integrated ecosystem focused on putting the marketer in control of delivering real life business outcomes. Businesses and consumers will thank us for it, and perhaps maybe then we can stop talking about how the duopoly killed ad tech. As Sun Tzu deftly put it: “Thus the expert in battle moves the enemy, and is not moved by him.”

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Via ExchangeWire

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Lars is Google’s Head of Marketing across Singapore, Malaysia, Pakistan, Bangladesh and Sri Lanka. With nearly two decades of international experience in the Internet and media industry, his passion lies at the intersection of technology and marketing. His career spans across the globe - from Europe to the emerging markets in Asia - from early stage start-ups to large organizations, providing him with an in-depth understanding of marketing, sales and business development across cultures and industries. In his current role he is responsible for local B2B and B2C brand and product marketing across all Google and Youtube services and devices.

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