2012 DSP Sector Predictions!
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| Eric Simon |
Happy New Year! It's time for another edition of predictions about the DSP space by the industry veterans at [x+1]. We've been cranking away in our media department since the inception of the DSP and at the risk of invoking memories of Al Gore, we did invent the DSP model back in early 2008. That said, here are some big trends and bold predictions that I'm feeling for 2012.
1) Agency Trading Desks under the microscope
It was only a matter of time before this thin layer of additional value (and cost) to the client became more closely examined, and 2012 will be the year clients start digging in deeper to the DSP selection process as well as the associated costs. Historically the agency trading desks (ATDs) and agencies in general simply chose which DSP tech partners they want to work with and clients were in the dark about both the selection process and many of the associated fees. Clients require transparency and want to know exactly which DSPs their ATDs choose, and what evaluation criteria were used for that selection. "We just went with Invite" won't cut it anymore, especially when Invite is going direct to many of the clients that were introduced to them through an agency. In many cases, this entire selection process will start again from scratch and instead of clients giving the power of this choice to their agency, they want to manage it directly; some will have a strategic plan for bringing the entire skill set in house within a reasonable timeline. So we will start to see acceleration in the form of RFPs from major marketers sent directly into the marketplace soliciting responses from both DSPs and Agencies. Did someone say frenemies?
2) Talent will shift from ATD's to Marketers
As part of this shift, we will also start to see talent shifting from ATDs to the corporate marketing side. In the past couple of years we saw key employees from DSPs, (especially from analytics and operations) move out of the dingy ad-tech office spaces and into the plush surroundings of ATDs. Now that honeymoon period is over and personnel will shift to their final resting places, the client organizations themselves. One real challenge here will be physical location as many marketers are not located in major urban centers and cannot offer the city lifestyle agency folks crave no matter how attractive the compensation package offered by marketers. Clients that have their offices in or near major metros, or those willing to open up satellite offices in urban-villes will fare the best here. Real estate in Brooklyn may get another boost as clients hire more display media hipsters for their outpost.
3) Yahoo's Display "exclusivity" Strategy gets Crushed by Google, Facebook, and AppNexus
In a bizarre move in early December, Yahoo decided to shut down every single ad network from buying Yahoo "secondary premium" inventory and has required individual seats for all buyers of their inventory. The move was lauded by display industry veterans as "smart" and "it's about time." Were members of the Yahoo exec team sleeping during the audience buying shift over the past two years? Or maybe they don't care and have simply had enough and are suffering from post-traumatic cookie abuse syndrome. Either way, DSPs, ATDs and marketers in general are not looking to buy Yahoo-specific content as much anymore; they are simply looking for users and audiences. And users of Yahoo services like email (one of the only real drivers of their traffic) can be found in other environments. The bold strategy is the equivalent of media Russian roulette, with Google, Facebook, and AppNexus standing to gain the most from the new walled garden that now looks eerily similar to AOL. And we all know where that business is going.
4) The AOL/MSN/Yahoo Secondary Premium Conglomerate
This is an easy prediction. Scheduled to go live in Q1 of 2012, it won’t happen then or any time in 2012. This is a classic example of how strategy meetings near golf courses hit brick walls when it comes to actual execution. Parts of the idea might sound good but the impossibility of execution looms even larger as a newly created three-headed display media monster tries to execute against this pipe dream. Why will it fail? Just ask any sales rep from any of the three organizations if they are willing to cede exclusive relationships in the name of efficiency. And while you're at it, ask someone at any of these organizations who is going to provide the technology platform for the proposed venture. If they tell you it will be a combination of Yahoo's Right Media Exchange and AppNexus, then you know for sure it will never launch.
5) Yesterday’s DSP becomes today's DMP
The market is slowly waking up to the fact that a DSP isn't a business, it's a technology. You can't be a DSP; you can only possess or use one. Either way, a DSP is a means to an end and not an end in and of itself. Enough philosophy. The Forrester Wave™ in 4Q 2011 gave the market insights into which companies that own a DSP have data management capabilities. These are the companies that will become winners in 2012. Executing media buys using RTB with huge capacity are table stakes at this point. So are many other components of DSPs as these technologies become next-generation ad servers. But what about your ability to do data ingesting and aggregation? What about tag management and universal container tags? And don't forget audience management and subsequent syndication! These are not just buzz terms for 2012 – they are real functions no matter what acronym is used to describe the underlying technology, and they are all critical components of a next-gen platform.
6) People + Tech
The more things change, the more they stay the same. Countless ad tech start-ups have beautiful names for algorithms that promise unprecedented optimization for media and dizzying descriptions of data management capabilities. But clients have real business problems to solve and most are still interested in how the people who are sitting behind these software solutions can help them and their company be successful. That won't change this year. Our business is about helping clients scale their digital media to the right audiences, as well as and understanding the nuances of a client’s brand and how their prospects move through a purchase cycle. Applying a technology solution to client problems is what makes this business special. Even in this world of automated audience buying through RTB and data management as a whole, it's still more important than ever to get face time, grab a drink and listen to the person sitting across the table from you. Technology doesn’t solve problems; people do.
It was only a matter of time before this thin layer of additional value (and cost) to the client became more closely examined, and 2012 will be the year clients start digging in deeper to the DSP selection process as well as the associated costs. Historically the agency trading desks (ATDs) and agencies in general simply chose which DSP tech partners they want to work with and clients were in the dark about both the selection process and many of the associated fees. Clients require transparency and want to know exactly which DSPs their ATDs choose, and what evaluation criteria were used for that selection. "We just went with Invite" won't cut it anymore, especially when Invite is going direct to many of the clients that were introduced to them through an agency. In many cases, this entire selection process will start again from scratch and instead of clients giving the power of this choice to their agency, they want to manage it directly; some will have a strategic plan for bringing the entire skill set in house within a reasonable timeline. So we will start to see acceleration in the form of RFPs from major marketers sent directly into the marketplace soliciting responses from both DSPs and Agencies. Did someone say frenemies?
2) Talent will shift from ATD's to Marketers
As part of this shift, we will also start to see talent shifting from ATDs to the corporate marketing side. In the past couple of years we saw key employees from DSPs, (especially from analytics and operations) move out of the dingy ad-tech office spaces and into the plush surroundings of ATDs. Now that honeymoon period is over and personnel will shift to their final resting places, the client organizations themselves. One real challenge here will be physical location as many marketers are not located in major urban centers and cannot offer the city lifestyle agency folks crave no matter how attractive the compensation package offered by marketers. Clients that have their offices in or near major metros, or those willing to open up satellite offices in urban-villes will fare the best here. Real estate in Brooklyn may get another boost as clients hire more display media hipsters for their outpost.
3) Yahoo's Display "exclusivity" Strategy gets Crushed by Google, Facebook, and AppNexus
In a bizarre move in early December, Yahoo decided to shut down every single ad network from buying Yahoo "secondary premium" inventory and has required individual seats for all buyers of their inventory. The move was lauded by display industry veterans as "smart" and "it's about time." Were members of the Yahoo exec team sleeping during the audience buying shift over the past two years? Or maybe they don't care and have simply had enough and are suffering from post-traumatic cookie abuse syndrome. Either way, DSPs, ATDs and marketers in general are not looking to buy Yahoo-specific content as much anymore; they are simply looking for users and audiences. And users of Yahoo services like email (one of the only real drivers of their traffic) can be found in other environments. The bold strategy is the equivalent of media Russian roulette, with Google, Facebook, and AppNexus standing to gain the most from the new walled garden that now looks eerily similar to AOL. And we all know where that business is going.
4) The AOL/MSN/Yahoo Secondary Premium Conglomerate
This is an easy prediction. Scheduled to go live in Q1 of 2012, it won’t happen then or any time in 2012. This is a classic example of how strategy meetings near golf courses hit brick walls when it comes to actual execution. Parts of the idea might sound good but the impossibility of execution looms even larger as a newly created three-headed display media monster tries to execute against this pipe dream. Why will it fail? Just ask any sales rep from any of the three organizations if they are willing to cede exclusive relationships in the name of efficiency. And while you're at it, ask someone at any of these organizations who is going to provide the technology platform for the proposed venture. If they tell you it will be a combination of Yahoo's Right Media Exchange and AppNexus, then you know for sure it will never launch.
5) Yesterday’s DSP becomes today's DMP
The market is slowly waking up to the fact that a DSP isn't a business, it's a technology. You can't be a DSP; you can only possess or use one. Either way, a DSP is a means to an end and not an end in and of itself. Enough philosophy. The Forrester Wave™ in 4Q 2011 gave the market insights into which companies that own a DSP have data management capabilities. These are the companies that will become winners in 2012. Executing media buys using RTB with huge capacity are table stakes at this point. So are many other components of DSPs as these technologies become next-generation ad servers. But what about your ability to do data ingesting and aggregation? What about tag management and universal container tags? And don't forget audience management and subsequent syndication! These are not just buzz terms for 2012 – they are real functions no matter what acronym is used to describe the underlying technology, and they are all critical components of a next-gen platform.
6) People + Tech
The more things change, the more they stay the same. Countless ad tech start-ups have beautiful names for algorithms that promise unprecedented optimization for media and dizzying descriptions of data management capabilities. But clients have real business problems to solve and most are still interested in how the people who are sitting behind these software solutions can help them and their company be successful. That won't change this year. Our business is about helping clients scale their digital media to the right audiences, as well as and understanding the nuances of a client’s brand and how their prospects move through a purchase cycle. Applying a technology solution to client problems is what makes this business special. Even in this world of automated audience buying through RTB and data management as a whole, it's still more important than ever to get face time, grab a drink and listen to the person sitting across the table from you. Technology doesn’t solve problems; people do.
Posted by Mike See at 1:10 PM | 2 comments
Nice predictions, Eric. How did you score your 2011 predictions?
ReplyDeleteThanks John. 2011 Predictions were not published. They were only announced to a small group one night at PS 450.
ReplyDelete