Like many around this time of year, I was asked to write a piece on what we could expect in 2016 from mobile advertising. Naturally, before even starting, I had already read many predictive pieces from some really smart people in the mobile, advertising and ad tech spaces. Instead, I decided to focus on what not to expect.
Tech unicorns and anything ad tech-related have been attracting more negative than positive attention throughout most of 2015. So the obvious question becomes: What do we forecast for 2016 that will have a positive impact on mobile advertising? How do these predictions impact the industry and the overall business strategy for ad tech companies?
To approach these questions, I am going to share what I think we will not do in 2016 and what I think will have a positive impact on our industry.
During the last 12 months, one of the social media giants has been the reference point for mobile monetization success. Yet, while the media and public markets like to reference this large and ever-present company, they ignore many of the real ad-tech problems our industry faces.
The advertising industry, and more specifically digital advertising, continues to grow. Three key topics from 2015 that will further help define winners and losers in 2016 are:
1. Market Quality
2. Data and Ownership (“data is the new currency”)
3. Demand Loaded Platforms
Before breaking down these three topics, I’d like to set some expectations. I am not going to try to convince you about value of mobile, ad servers, RTB or the SSP model. I also will not focus on some of the most important formats such as Native and Video. That has already happened and obviously there were some clear winners in those areas; however they have not grabbed the positive attention or success that everyone thought they would.
More importantly, most in the space have focused on a couple key areas and failed to concentrate on what their platform and business models should ultimately be. That has been a struggle for many. Let’s talk about how the three areas above have not received the balanced attention they need and how to solve those problems in 2016 in order to develop a complete platform strategy.
Data and Ownership
“Data is the exchange currency” is a statement used by many in the space, however, if you ask for more clarity here, there will be different answers. What we will not continue hearing in 2016 is that a Data Management Platform (DMP) or retargeting will solve all advertising-related data problems. The most important aspect of data is that those who do not own it are using it, and this will get lot of attention in the next 12 months. This is related to how data is used to find and retarget users - something that is becoming very difficult for anyone who is not the first party owner of that data to justify doing it.
The publishers/content creators will search for answers in the form of platforms and tools they can use to take better ownership of their data. The key reason for shifting data ownership back to the publisher is because they care about not only their audience and monetization of that audience, but also the experience that audience has when they visit their app or website.
In 2016, we will see maturity from platforms such as the ad servers themselves that publishers use to empower them, with controls on prices and audience packages. Most importantly, publishers will be better able to marry advertising experiences with content, based on data and controls. We will also see new data modeling techniques evolve that will define better matchmaking between advertiser dollars and audiences vs. outdated retargeting campaigns.
The rise of programmatic has already happened. Phase 1 was Adoption, Phase 2 was Scale, and Phase 3 will be Clean Up. First came the chariots, then highways with lanes, then the need for traffic control, referencing the history of traffic lights.
What we have seen in the last 3+ years is programmatic trading having gained a lot of success in mobile monetization. There was a natural fit based on where users were spending their time, combined with the fact that the industry lacked expertise in selling mobile inventory in traditional methods. Combined with the scale programmatic trading naturally creates, Real-time bidding (RTB) took off much faster in mobile than it did in desktop a few years earlier.
This acceleration also attracted fraud on both the advertiser and traffic fronts. If this were something technology could solve alone, we would have already seen a clear winner. Market quality issues have existed in the display space for a long time. It has been proven there that this only gets addressed when people, technology and processes come together. What did not happen in 2015 was a fix for market quality problems with ad blockers or any other technology that claimed to solve these issues. All those topics were a great distraction on product roadmaps and integrations, and I am hoping this will not happen in 2016.
What we will see in 2016 is maturity and adoption. Both are driven by the need to take better ownership of data and leveraging of that data to create a better experience around content in the form of native advertising. I would not call it ‘native’ innovation, because dynamic creatives have existed for long time; however the need for buying audiences based on data is at a stage of maturity, as programmatic gains adoption.
The timing is perfect for real market quality solutions, as this will only get solved when advertisers will not buy anything without data, and publishers will leverage tools that give them better control of their data, advertising and formats.
Demand Loaded Platforms
If you look at the entire ad tech LUMAscape, not much has changed in the last five years. We are still seeing the consolidation of demand-side platform (DSPs), supply-side platform (SSPs), RTB exchanges, networks, DMPs and other component players. In 2016 acquisition or consolidation will not be the measurement of industry success.
All this cross-pollination creates a lot of challenges for both buyers and sellers of media. Imagine being an advertiser who has to buy on 20+ exchanges and a media buyer who needs to run 30+ PMP Deal ID’s across multiple exchanges. This creates complicated stacks that publishers and advertisers need to manage, while worrying about data and fraud.
In 2016 the industry will recognize the need for a true platform that comes loaded with demand and allows a publisher to manage content, formats, data and price across all partners. We will also see the need for advertisers to access a platform with audience discovery, based on data across multiple exchanges, as opposed to individually connecting to them all.
I am very excited about 2016 and what it will bring for our industry, valuations and growth prospects. More importantly, I personally will start the year by highlighting what not to do in 2016 vs. any sort of New Year’s resolutions. Ad tech is a great space and it has brought lots of visibility to advertisers that did not exist, and we should be proud of what we all have achieved. I am excited how data will bring more maturity to capturing larger advertising budgets. Data will help Programmatic gain more adoption outside the US. Data also offers transparency to advertisers and that will help us address Market Quality as a topic, because the image of mobile, ad tech and adoption is the responsibility of everyone who works in this industry. We should proactively both solve and defend it.
By Ajitpal Pannu, Chief Business Officer, Smaato - @ajitpalp