Agencies, advertisers, media owners and investors will all benefit from consolidation in the ad technology industry, writes Ryan Jamboretz, international managing director and chief development officer, Videology Group.
Buying digital media is incredibly complex. The number of vendors and technology firms in the chain between advertiser and publisher is large. And that’s before you’ve got your head around the different chains for display, video, mobile and social advertising.
This complexity has been funded by a massive investment in technology - hundreds of millions of dollars have been pumped into start-ups as well as existing companies to help develop new and more efficient ways to target consumers when they use digital platforms.
An incredible effort has gone in to developing a functioning technology infrastructure that allows us to really make sure messages can reach the people marketers want them to reach.
However, it’s reached the point where agency digital offices have to work with three or four different targeting platforms.
It may now be time for the industry to change its development path. Rather than adding to the complexity of this digital advertising infrastructure every time a new digital channel emerges, the time has come to simplify it.
In short, after years of proliferation and complexity, the time may now have come for consolidation of the ad:tech universe.
Consolidation will bring benefits to every party in the chain, the venture capital that has funded this infrastructure, the agency groups that work with it, the publishers that monetize their content through it and the brands that use it.
It’s easy to see why venture capital has come into this market - the returns from the Admeld deal, for example, which sold to Google for $400m last year - demonstrate that this has been a profitable investment for many.
Consolidation will enable the people who have paid for the construction of our business to earn a rapid return on their investment and encourage them to continue to fund new technology start-ups.
The big agency groups will win in two ways. They will benefit from lower costs from the simpler back office infrastructure that will be required in a consolidated market place.
This will enable them to invest more resources and expertise into generating smarter campaigns and developing strategic possibilities for their clients.
For publishers consolidation will enable them to sell smarter. They will be able to sell ad space around their unique content regardless of device or format, enabling them to focus on the benefits of their audience.
Clients will also benefit from consolidation. For a start they will only have to get under the skin of a smaller number of platforms. This will give them greater confidence in digital advertising as a whole and reduce concerns that this is a black box industry.
Advertisers will also be able to focus on their overall marketing objectives, rather than having to break down them down into potentially conflicting video, display and mobile objectives, for example.
The big win for both agencies and clients from consolidation, however, will be the ability to measure and compare performance across formats and devices in a guaranteed consistent manner.
Where video and display are targeted by different platforms, for example, even if the same source data is being used, effectively different strategies are being used as a result of the unique algorithms being used on each platform.
And because consumers are now consuming the same content on a range of different devices, consolidation that creates a device neutral way to reach consumers will maximize both efficiency and effectiveness.
In the consolidated market of the future, it will be possible to change parameters in a fluid manner during a campaign to optimise between formats, platforms and devices, all the while using a consistent targeting system.
Ultimately consolidation will help advertisers deliver on their marketing goals, not simply their media goals. And if they can demonstrate better business results then the whole digital advertising ecosystem will benefit.
There is already a sense of a blurring of the lines in the ad:tech space; companies have become collaborators as well as competitors.
Ultimately the platforms that will thrive in the new consolidated world of the future will be those that are the most flexible, the most effective and the simplest to use.