Mobtown Labs

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So all of this buzz about DSP’s and Realtime Bidding has gotten me thinking.  Why exactly are we so obsessed with these standard IAB sizes?  What’s the deal with banners anyway?

Anyone who knows anything about programming, flash, html, and javascript knows that the size and shape of the banner really doesn’t matter when it comes to scheduling and the technology behind adserving.  It’s probably the business people and management that are so detached from the technology and mechanics of online advertising that have painted us into this corner.

Well Facebook is not so dumb.  I guess that’s one of the benefits of having a twenty something developer as a CEO.  For what they lack in big business management experience they sure are creating a massive revenue and profit machine.

“The biggest income stream seems to have been performance advertising, which likely accounted for more than half of Facebook’s 2009 revenues at $350 million. Next was brand-based advertising, which accounted for an estimated $225 million in revenue. Microsoft advertising came in at $50 million and virtual good income was only $10 million according to these numbers.”

From Mashable Article - Facebook Could Surpass $1B… http://loca.ly/bfA3ho

So why are all of these data companies like Blue Kai, eXelate, and DSP companies like Invite Media, MediaMath, Turn, Triggit so obsessed with the banner?

It sounds like the real value is outside the banner!

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So last week I attended the Admeld RTB conference along with a lot of former co-workers who have gone on to many different segments of the industry.  It was good to catch up with old friends and also good to see what a lot of exciting startups are doing in the space.

The ad network space is evolving and what used to be contained in one company or one ‘stack’ is now being unbundled and the innovation that is going on on each level of the stack are opening up a world of debate and excitement.

This is maybe my current best guess as to what the stack looks like right now:

Publisher -> SSP -> Data Segmentation Engine/Provider -> DSP -> Agency -> Advertiser

This could probably look a thousand different ways and there are many different types of each  and larger media companies and agencies are bundling some of these pieces together but at the end of the day there are 4 value components that technology can benefit.  For those marketing majors, you can think of this as the 4 P’s of display advertising.

• The Media - content in which everything shows up on
• The Data - attributes of the site, content, user, history, frequency
• The Ad - the actual piece of creative
• The Sale - the product being sold to the consumer, how much it’s worth, how much the advertiser can afford to pay to achieve the sale of their product or the brand value and equity of that product.

At the end of the day this stack right now is most focused on trading of The Data and The Media.  Why is that?  Well because there is more money to be made in an efficient, scalable manner on trading media and data than on any other piece of the marketing mix.

The ability to show up on the right piece of media is the pinnacle of importance and the power of The Media!  That’s why media companies are worth billions of dollars.  If you can’t reach consumers and have your product show up to them…..you could have the best data in the world, the best ad in the world, and the best product but if you can’t get it in front of the consumer’s face, all is lost.  And it’s massivly scalable.  The more we make the more consumers consume and the more ads we can show.

Next in line I think is The Data.  Showing up is the most important thing but showing up to the wrong user is a waste of money.  So having data attributes on that user is probably the next most valuable thing…….at least that’s what we think right now because data can be sold in a scalable manner like media.  The scale here is more limited than media as there are only so many users and the only way to scale is to further segement those users and increase the value as the segment gets more granular.

The Ad is a place where the advertising industry has placed a lot of value in the past with high priced creative consultants and creative agencies but this has taken a back seat in the online space.  It could be argued that the industry is peaking it’s interest with the acquisition by Google of Teracent and the current buzz in the industry of companies like Dapper and Tumri.  But the creative and the ad itself cannot be scaled as easily as media or data.

Finally there is The Sale.  The Advertiser or the CMO, or the agency still really owns this process which limits scale value and innovation in the space.  Only with Landing Page Optimization and deals like Accenture/Adchemy to really understand The Sale side of the equation and plug that back into the rest of the online marketing mix can you use technology to improve this piece of the equation….at least so far.