As programmatic trading continues to gather pace, Noel Penzer, managing director at AOL, looks at what needs to happen to cut out waste and make advertising technology more efficient
How many of you remember the summary slide of the digital advertising industry that appeared in every conference speech a couple of years ago? The one with a confusing myriad of logos, vendors and technology that seemed to serve a dual purpose – to confuse, and to scare.
Can you imagine what that same slide looks like today? I can, and I never want to see it. If you work in digital advertising, there’s no escaping the sheer number of vendors who are operating in the space.
The fast-paced nature of the industry, and the growth of programmatic technologies, have led to an explosion of companies offering solutions and clients are quite rightly frustrated with how to make sense of the confusion and get the return on investment they need. Waste and duplication are rampant. So much so that for every pound a digital advertiser spends on a placement, a publisher only receives around 39 pence.
So what’s happening to the remainder of that investment?
More often than not, it’s lost amongst trading desks, DSPs, exchanges, networks, data suppliers, data aggregators, ad verification vendors, tag management vendors, retargeters, optimisation vendors, SSPs and more. It’s not that none of these services are valuable, but as more and more specialist solutions are added to the mix, the "technology tax" involved in moving ad spend from Point A (the advertiser) to Point B (the publisher) is only going to increase.
This is not how our industry is supposed to work. Advertisers want to be able to reach the right consumers, at the right time, and get the best return on investment. Publishers want to earn more from their inventory. Advertising technology is supposed to help these two sides come together and realise their objectives as efficiently and cost effectively as possible. It sounds simple enough, but this purpose is being undermined by a technology landscape that has grown too complex and chaotic.
With this in mind, there are three areas we should focus on to become more efficient and deliver the value that advertisers and publishers deserve:
1) Less specialisation, more consolidation
Advertisers and publishers invest in technology to gain greater efficiencies—through automation of previously manual activities, by leveraging data analytics and algorithms that drive better and faster decisions, or through systems that help them access increased reach. But the efficiencies gained will be lost if it requires too much time and too many resources to manage new technologies. When a typical media buy has to involve a dozen or more specialist vendors, it’s a clear sign that the advertising landscape is ripe for consolidation.
2) More transparency, less "trading on mystery"
In the current landscape, crowded with hundreds and hundreds of solution providers, vendors all too often trade on confusion. Advertisers and publishers are working with an ever-growing list of companies, each pitching highly technical "necessities." A few pence of that goes here, a few pence goes there, and overworked media planners simply don’t have the time or resources to figure out which relationships actually result in a solid return of investment.
But all those small transactions are adding up, and advertisers and publishers are rightly starting to ask, "What am I really getting for my money?" More and more, vendors that don’t offer transparency to their clients—by delivering objective, verifiable metrics—are going to fall by the wayside.
3) Innovation at scale
Innovation is key, and at AOL it’s something we strive for. However, the industry needs to start directing its innovation less towards developing questionable bells and whistles that seem designed solely to snatch a few more pennies of advertising spend and more towards building smarter solutions that add legitimate value for end users—at a scale that makes a significant impact on their business.
Optimising a single aspect of an advertising buy is one thing. Optimising the entire process from end-to-end? That’s innovation at scale.
Now is the time for an ad technology tax cut. Too much specialisation, too much duplication and too many confusing claims are leading advertisers and publishers down a path that’s simply not sustainable. At AOL, we’re committed to being more open, and to overcoming the confusion with transparent technology.
Alongside Google, we’re providing one of only two end-to-end technology stacks in the market that allows customers to both streamline buying and execution, and extract meaningful data that informs "in-campaign" execution and post campaign evaluation. An open and simplified ecosystem is coming. And it’s a good thing for our industry.
Noel Penzer is managing director of AOL UK
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