Jeremy Ostermiller, CEO, Altitude Digital and Manny Puentes, CTO, Altitude Digital provide an up close and insightful look at what’s been going on at the “IAB Annual Leadership Meeting: The Next $50 Billion”.
Q: What’s the most common topic of conversation at IAB this week? What marketing challenge is on everyone’s minds?
On the supply side of the business, the industry is moving full steam ahead toward creating a pristine and brand safe environment for brand marketers. As a result, there are lots of changes to prominent company’s policies, procedures and compliances. The days of Wild Wild West antics are behind us.
On the demand side of the business the most common topic of conversations were about attribution and cross screen reach. Brands and advertisers are continually trying to reform their approach to reach the right person on the right device at the right time. Last click attribution should be a thing of the past.
Puentes (left): The industry is focused on finding the right and most effective ways to reach consumers. Marketers want to reach the right person at the right time in the right context–and create an ongoing relationship with their customers. As an industry, we have an abundance of data at our fingertips, the next challenge is how we transform that data into creating meaningful experiences for consumers.
Q: The theme this year is “The next $50 Billion: winners and losers in digital media’s next growth wave.” In your opinion, who will be the winners and losers of 2016, and beyond? What puts certain types of companies in each category?
Puentes: There’s no question that the advertising and marketing technology sector is consolidating. There’s been a burst of innovation over the past ten years, and now we’re seeing major acquisitions, combined with layoffs at companies that grew too big too fast. The companies that will succeed are those that simplify the programmatic buying process and bring publishers and advertisers closer together, rather than creating more middlemen that take a cut of CPM.
In the wake of increasing ad blocking adoption, the winners will be those that best understand their user and their customer, and know how best to reach them–whether that’s through video, native advertising, or influencer marketing.
Ostermiller: I will add that the winners will need to be profitable or show a clear route to profitability. They will also need to add value with sustainable and recurring revenue models to sustain margin pressures over time.
Q: Video is one of the hottest commodities in digital media. Are the IAB and publishers ready for video to become the dominant form of digital revenue growth?
Puentes: Absolutely. Consumer video will account for 90% of Internet traffic by 2019. There’s no question that publishers see video as their primary growth channel. Publishers are getting smarter about their video strategies, and they have a better understanding of which kinds of video content their users want to engage with–and they’re finding innovative new ways to create and distribute that content.
Ostermiller: Publishers understand that video has the highest CPMs and it is the most impactful form of media. Unfortunately, most publishers have limited resources and are still living off of legacy practices. Because resources are limited and video production is expensive, the industry still has a long way to go until the Internet looks more like TV and less like a newspaper. I would say the Internet as a whole is in the third inning of a nine-inning ballgame when it comes to a video-first content model.
Q: What are the key challenges standing in the way of video and that projected growth?
Puentes: A lack of quality video inventory continues to be a pressing challenge. As Jeremy said, video is still expensive to produce, and even publishers who have a dedicated video strategy are finding their video inventory consistently oversold. Solutions like in-content outstream players and syndicated video content will need to increasingly be employed by publishers as a way to grow their video inventory ad revenue.
Ostermiller: There is also still a lack of expertise on the publisher side about how to maximize video. Video is a lot more complicated then display advertising, with far more moving parts (i.e. players, CDN, content production, and knowledgeable staff).
Q: What key challenges are publishers talking about and how will they impact advertising in 2016?
Puentes: Publishers are aware now more than ever that traditional buyers now want to buy programmatically. Publishers are investing in solutions that let them take advantage of the programmatic pipes while still maintaining control over where their inventory is seen and how much it sells for. In 2016, we’ll see growth in programmatic escalating as publishers find the right tools and solutions to let them control and package their inventory.
Q: What’s the most important trend in programmatic at the conference? Are DSP’s and SSP’s on the same page when they talk about challenges and opportunities?
Puentes: In 2015, DSPs increased their emphasis on brand safety, quality, and transparency and are demanding higher standards. The frustration on the SSP and publisher side isn’t the quality, but the lack of standards across the third-party vendors and verification methods, whether we’re talking about fraud, bots, or brand safety.
We talked to a premium publisher last week who is frustrated because they’re using five or six different spreadsheets from different vendors every day, because different advertisers each demand the use of a different vendor. Quality and transparency are essential if we are going to make programmatic work, but the industry absolutely needs to find new efficiencies and standards with regard to brand safety space to be truly effective and scalable.
Q: How is mobile impacting your experience at IAB this week? How is it changing the digital media landscape?
Puentes: I think we can finally move beyond talking about the “Year of Mobile.” Smartphones are another central device used to consume content. Mobile is part of our daily lives and is absolutely a growing part of the advertising industry, but the bigger strategy is to reach the right user in the right context, regardless of the device they happen to be using at that moment. Developing a full omni-channel strategy will be the real key for any marketer.
Ostermiller: 2016 will be a watershed year for mobile. You will see companies as a whole move to be mobile first-focused and the dollars are going to real and substantial as a result.
Randall Rothenberg, President and CEO of IAB, talked about how much he hates for-profit ad blockers. We must create significant new advertising standards. LEAN (Light, Encrypted, Ad-supported, and Non-invasive ads) is the basis for a sustainable advertising ecosystem. His full speech is here.