The ad tech renaissance

http://bokonads.com/the-ad-tech-renaissance/

by taylorbuley • 10 years ago

114 77 10 years ago

dedalus2• 10 years ago

really nice article detailing some nuances

dedalus2• 10 years ago

really surprised by the downvote without any reason. so much for tolerance of opposite views. The author is an authority in adtech (CEO of App Nexus). I expressed an opinion of the piece (which you are free to disagree with and maybe the disagreement is downvoting??)

soared4• 10 years ago

Very interesting read, thanks OP! I've started using some platforms with integrated ml, and it seems to be much better. Its difficult to get used to starting a campaign, and instead of meticulously setting up targeting (males, $50k income, denver, into football and skiing, etc) the ml lets you just .. upload an ad and a web page. No targeting. Click GO and it will find your customers. If Google or facebook can get into this space they'll succeed greatly because they have so much data and users already trust them.

mars4rp• 10 years ago

can you please name those platforms ???

soared4• 10 years ago

I'm at an agency and have access to some closed betas, but I've been pretty impressed with StackAdapt for their native. They just added video and display I believe but I haven't used them. You do a little bit of manual targeting but their ml really does well.

Tossrock• 10 years ago

Quantcast does this - they train a model based on your converters and then find more people like them. It's quite effective. Disclosure: I worked there for some time.

petercooper• 10 years ago

I know it's not for everyone but I hope more publishers can work out a shift to a no-graphics-needed-to-render-this "advertisers<->publishers" approach.

Are your readers the sort of people advertisers want to connect with? Great! Sell space and support to them. Or is your audience so diverse and ephemeral that advertisers don't care? Move into publishing stuff that's useful to an audience advertisers value, because when everyone else is slipping down the ladder, it's a great time to try climbing it.

intrasight• 10 years ago

I've come to believe that this isn't a technology problem. It's a people problem - specifically a "publisher people are lazy" problem. That lazyness made them hand their value over to Google and Facebook, and now there's just no easy way to get it back.

oxymoron• 10 years ago

I'll concede that the analysis isn't completely without merit, but having spent the last few years in ad tech, I sincerely hope that there won't be a revival. It's a race to the bottom. Publishers are struggling and are increasingly willing to accept ever more outrageous ad products. Advertisers are desperate for advertising that actually works, but will mostly only do what agencies tell them, and the agencies are only interested in maximizing their own margins. In the middle we've got any number of middle men scrambling for some pieces of the cake, sometimes but usually not providing some value, leaving the publishers with a pathetic fraction of the advertiser spend.

So essentially we've got a whole bunch of companies with no growth desperately vying for the attention of 23-year old media buyers who in turn are mostly interested in getting someone to take them clothes shopping and picking up the bill. These companies are doing it mostly by doing ever more intrusive things, since advertisers can't accept that the reason their ads don't perform is that nobody wants their stuff and keeps looking for a silver bullet.

I've come to believe that the only reasonable justification for most advertising is that it's in some sense a way for other industries to subsidize journalism. Since that's going away, I'm looking forward to the inevitable ad tech carnage ahead, and if a potential next wave actually brings higher quality advertising and better end user experiences I'll happily eat my shoes.

vosper• 10 years ago

All of this, plus the vast amounts of bot traffic that no one wants to look too closely at, because everyone except the advertiser is making money off of it...

ec1096853• 10 years ago

Bot traffic is accounted for in the price advertisers pay for ads. Advertisers don't run unprofitable ads.

rjbwork2• 10 years ago

On that note, HN Community: Thoughts on extreme disintermediation between Advertiser and Publisher?

bcoates3• 10 years ago

It's bad.

Ending it is necessary and possibly sufficient for Internet ads to stop being awful for both advertiser and publisher.

(I've worked in the space buy-side)

imbeau• 10 years ago

I too used to be in ad tech and I agree. It's a race to the bottom with no real upside. The business model is often broken with ad tech companies. Rather than sacrificing profits for long-term growth, they're essentially selling a dollar for 99 cents. It can never be profitable.

manigandham5• 10 years ago

selling a dollar for 99 cents

They are definitely not doing that. The sheer amount of profitable arbitrage proves that point. Ad networks remain one of the best business models around, this is what Facebook is. The main problem is that there are no real barriers to entry or oversight which leads to thousands of poorly run, unscrupulous, spam/malware infested networks which make an outsized impact on both the market and consumers.

bambax• 10 years ago

The article only mentions Google and FB as "winners", but what about Amazon? For products sold on Amazon, PPC ("Amazon Sponsored Products") are very effective and therefore make a lot of sense.

It would be interesting to know what proportion of total advertising spending this represents.

lcw• 10 years ago

I feel like another piece missing from why these companies are "flat" year over year is the fact that they are running into a wall of what people will tolerate. I don't think that there will be a renaissance like the author concludes. As a guy who worked in ad tech these tricks have been exhaustively tried. I think right now the industry trend is to pay for premium content rather then be inundated with Ads especially when it comes to games, video and music. I imagine we will see this pattern continue especially with the mobile gaming industry figuring out the key to everyone's wallet: in app purchases.

na852• 10 years ago

The internet needs an ad tech renaissance, one based on creating real value for publishers and marketers,

Could not disagree more.

Advertising as a whole needs to die in ignominy. Obviously that'll never happen, but we should be working towards ways to make advertising obsolete or unprofitable, and we should be ostracizing people like the author who try to or want to make things better for advertisers.

The promise of the internet was users as first-class citizens, not users as mindless consumers of hostile advertising.

SerLava4• 10 years ago

Hostile advertising and advertising in general aren't the same thing.

I'd be the first to point out that advertising has motivated a wide array of terrible things, especially in the last few years. But advertising at its barest sense can be and usually is a net positive force.

na852• 10 years ago

Hostile advertising and advertising in general aren't the same thing.

Are you sure?

tomp2• 10 years ago

Advertising is manipulation. All advertising is hostile. It's mind garbage, pure and simple. (As opposed to informing people (without bias or intent to manipulate their choices for your gain), but hardly anyone does that any more!)

manigandham5• 10 years ago

Advertising (and the greater concept of marketing) is a major part of the economic engine of business.

The implementation of it online definitely needs work but advertising itself is just fine.

fieryeagle• 10 years ago

Very good read that highlighted the current state of the industry - G and FB reign as kings. I'd expect the fraud cycle to restart in gaming industry seeing that display and mobile are essentially saturated.

djur• 10 years ago

I don't see any mention of ad blockers. Are these seen as having a significant effect on the online advertising industry? Are there any serious proposals to deal with them other than continuing the ad-blocker-blocker-blocker... arms race?

It seems that there's an increasing understanding among publishers that low-quality and intrusive ads encourage their visitors to use ad blockers or another site. Several relatively high-profile sites (like The New Yorker) have stopped using networks like Outbrain and Taboola. (Obnoxious ads from the latter, along with autoplaying video ads on numerous sites, resulted in me finally installing an ad blocker after resisting for years.)

Adblock Plus offered a way forward with its "Acceptable Ads" program but it seems like that has been roundly rejected by both advertisers and blocker users. Maybe publishers and advertisers could work together to develop a stricter set of advertising guidelines that show respect for users? I suppose such a program is essentially doomed without cooperation from Google and Facebook, and I don't know if they'd be willing to work with the little fish (or each other).

It seems like an intractable problem. I'm not convinced technology (machine learning! the solution to all problems!) is capable of providing the solution.

nl• 10 years ago

I don't see any mention of ad blockers. Are these seen as having a significant effect on the online advertising industry?

They are one of the many things driving advertisers to Facebook. (In-App ads in FB aren't blocked of course.)

jgalt2122• 10 years ago

It takes two clicks on a FB ad to get to my site. One click to product page on FB, another click to get to my site. Too many steps.

aggronn• 10 years ago

The blackmailing scheme that Eyeo calls "Acceptable ads" is untenable because it is simply blackmail. Pay us protection money and sell our approved goods or sell nothing. Google will pay it because they have the money and there isn't an immediate alternative for shareholder value, but there aren't many others who are willing to subsidize ad blocking at the expense of content creators. That all said...

There's actually a great deal of effort towards improving quality and dealing with ad blocking at a high level in the industry. One recent effort this year is https://www.betterads.org/ but there are other initiatives lead by new adtech companies and other organizations.

As a result, I'm confident that ad quality will increase over the next few years overall. But like you say, its an intractable problem. Its not as simple as improving quality on the already reasonably good 75% of adverising that isn't so bad.

The bottom of the barrel inventory is likely not going to rise with the change of the tide, for example. If you're trying to stream pirated TV shows or watch porn you're dealing with the North Koreas of the adversiting industry--they're already cut off and live in their own world, and won't follow industry initiatives that publishers like NYT will want. Unfortunately many, many people have no problem with advertising generally but install ad blockers in order to access these sites, and the sites no one had an issue with are just collateral damage.

Moreover, many people install ad blockers because, lets be honest: why not? No more pre-roll video. Faster page loads. More premium consumption experience (most) everywhere you go. How do you address those users with better ads?

And the cat is already out of the bag anyway. 25% of people on the internet use ad blockers. If you improve ad quality, how do you get these people back? I think we're going to see a radical, unequal shift in the next fews years around the perceived value of content because of the growth of ad blocking. If you told me 10 years ago that everyone was going to be paying $10/mo for music, I wouldn't have believed you, yet here we are. I think if you ask me this time, I'd say in 10 years people will be more inclined to pay for digital content than they've ever been, because as ad blocking grows, the "anti-ad blockers" are going to grow too. More messaging to users about ad blocking, more paywalls, more access control requiring equitable value exchange across the internet. Eventually the middle will get squeezed out by the high cost of ad blocking. Users will choose to whitelist or subscribe for premium content, and the lowest cost publishers who steal, copy, or lie to generate clickbait are the only people who can survive when they've lost half their inventory.

It seems like an intractable problem. I'm not convinced technology (machine learning! the solution to all problems!) is capable of providing the solution.

You're absolutely right. This is not going to be solved by machine learning. Ad blocking is an economic and political problem, and will only go away when publishers, advertisers, and users are able to come back into equilibrium. Publishers need more leverage to fight for user experience against advertisers' demands, and users need to understand the value exchange that occurs when they get targeted apple adaptor ads while they read articles about the latest iPhone. Publishers need to offer users more diverse but more firm and equitable options that make quality content sustainable and appealing to even the most privacy oriented audiences. Eyeo need to realize that profiteering on a protest movement is not a ethical business model. Easylist maintainers need to realize that they are not profits sent from god to punish publishers for protecting the value of their content.

bluetwo2• 10 years ago

I agree that the real solution is that there has to be a pay model that works. I don't want to pay $99 per year for every newspaper site I might visit, but I would pay $99 per year for some consolidated and trustworthy news source that gathered the news I needed from the places I need it.

There has to be better content tools rather than better ad tools.

Paying zero dollars for news and content is a failed experiment.

mnm1• 10 years ago

Ad blocking will never go away. The time for that has passed; the trust has been lost. Regardless of what the industry does, you will never convince anyone who has discovered ad blocking--which can now be properly known as a part of malware blocking--to open their computers to these same people that fucked them (or people like them) over already. This is purely fantasy.

smcnally• 10 years ago

2017 is projected to be the first year ad spend on digital ($US77BN) is greater than ad spend on television ($US72BN). 2015 was $60BN digital vs $69BN TV.

https://www.emarketer.com/Article/Digital-Ad-Spending-Surpas...

The bottom of the barrel inventory is likely not going to rise with the change of the tide

Agreed. There are crap players in adtech. There are crap ads and crap tech. There are shady advertisers, publishers, creatives. There are good players and opportunities in each of those.

We're working to get DFP to filter out creatives that are too fat or complicated. That's not yet simple.

The "thoughtful inventory curation" noted in the article is not yet simple. Helping people combine stories, ads, and readers who care about both needs work. And there is money to be made.

Publishers need more leverage to fight for user experience against advertisers' demands, and users need to understand the value exchange that occurs when they get targeted apple adaptor ads while they read articles about the latest iPhone.

Good advertisers, marketers, publishers want good UX because users leave without it.

when publishers, advertisers, and users are able to come back into equilibrium

Indeed

tomjen32• 10 years ago

The problem is that most ads suck. Facebook knows more about me than I do, but they can't come up with ads for things I want. What possible chance does a random newspaper have?

monochromatic2• 10 years ago

Even google's ads are garbage, and google should be able to read my mind by now. The closest they ever come to showing me something I might want is the occasional ad for something I recently did buy. Swing and a miss.

zeta0134• 10 years ago

I've always been baffled by this race to target ads to me directly. Sure, you can get a general idea of my interests, but even those change throughout the day, and advertising something to me on Facebook that you gleaned from my GPS or my contact list just creeps me out. It has the reverse effect; I'll go out of my way to block it out.

No, I remain convinced that the most effective advertising I see regularly is the "Deals" type posts on Gizmodo. Those are written by the journalists, guaranteed to capture some of my interests or I wouldn't've visited the site in the first place, and difficult to block because they're real content. I actually read them, and am usually genuinely interested in the products, and this requires no tracking or privacy invasion whatsoever to accomplish.

pascalxus2• 10 years ago

I completely agree. 99.99% of the ads I see on facebook are for things I don't want. They really need to get more AI and more information about the user for better targeting. They may have world class targeting, but it still sucks compared to advertisement that can read my mind (doesn't exist yet).

monochromatic2• 10 years ago

We don't need an ad tech renaissance. We need to burn it to the fucking ground.

HugoDaniel• 10 years ago

^ this.

niftich• 10 years ago

The end of impressions and banners in favor of views and "publisher rendered" (aka native) creative

Native advertising, which I'd re-phrase as 'sponsored content' or 'content placement', I can actually enjoy, if the sponsorship is made clear and the topic is genuinely relevant to the audience. After all, who better to tell what kinds of content readers want to see besides the publisher who puts it out there? But it has to fit -- out-of-place content will be painfully obvious, and cause further user aversion for ads.

But the thing is: all of this can be accomplished without ad networks that track your travels through the web. The client can engage the publisher directly or through a broker. Where does that leave today's adtech?

andygates• 10 years ago

That seems unduly optimistic. The content will be uploaded from the same old terrible content farms, and be the same old rubbish only with a heavier local server load.

cm2012• 10 years ago

85% of new ad dollars are going to fb and google. Everyone else is fighting for scraps.

kirso2• 10 years ago

Not actually true, these scraps are still worth billions => google AppLovin

majewsky• 10 years ago

The tracking tech renaissance

FTFY

awongh• 10 years ago

This is a space I wish I knew more about- but it seems like it has it's own sub-culture that to me, is hard to parse.

Can someone tell me what some of the things are that he refers to in this article?

- dfp, dsp, ssp, gdn, dbm, adx, dcm, dfp

Is there a good technical-minded rundown of all the players in the ecosystem and what they do? Internet ad industry information is impossible to google because it mostly turns up spam.....

wastedhours2• 10 years ago

I've tried to find a long form piece on it (ideally a physical book as reference), but failed.

DSP: Demand Side Platform, is the tool agencies and advertisers use to buy the ad spots automatically based on tracking profiles.

SSP: Supply Side Platform, is the tool publishers use to sell their ad spots (publishers push an impression to an SSP, a DSP will evaluate it and an agency will buy an ad on it - Google is main SSP and DSP [I think?] so people are wary about them.)

DFP: DoubleClick for Publishers perhaps, as in, ad tech for media sites to manage the display process (guess it could be called Google's SSP).

DBM: DoubleClick Bid Manager, is Google's DSP

ADX: guessing just an ad exchange, so a place advertisers and publishers do the deal.

GDN: Google Display Network, posh AdSense where you can place your ads across 3rd party sites, not just the SERP.

Then we get into the world of Header Bidding (which, as far as I understand it, is even more tech to bypass your usual SSP/DSP process to get the best deal from different ad exchanges) and that whole murky world...

I've only been on the advertiser end, speccing a programmatic campaign through a specialist agency. It makes me nervy as our only marketing attribution is last touch and that rarely works with broad reach display. Retargeting is a much more valuable one to explore.

If anyone would be interested in a guide, I can look to put one together with definitions and a few anecdotes from some players? Username @ gmail.

ssharp2• 10 years ago

I think it's worth adding how DSPs and ADXs fit together. There are only a handful of ad exchanges out there -- Google ADX, OpenX, AppNexus, etc. Some brands and agencies are large enough to buy inventory directly through these but for most brands and agencies, it's too expensive and cumbersome to do so. This is where DSPs fit in. DSPs buy large batches of inventory from the ad exchanges and resell them to brands and agencies and try to add value where they can.

g10r2• 10 years ago

In the examples shown, AdX is referring to Google's Ad Exchange/Doubleclick.

manigandham5• 10 years ago

AdX is the name of Google's ad exchange, which is primarily a SSP. (All ad exchanges are SSPs anyway, since there is no such thing as an "exchange" for ads).

TheAdamist• 10 years ago

I don't know if it was due to manual ad reviewers being on holiday or what, but i was getting a bunch of ad hijacking or malvertisements over the weekend from legit websites. If even legit sites can't keep up with this then no wonder everyone is running ad blockers just to keep safe from legit sites.

keldaris• 10 years ago

Since there's rarely any widely interpretable public data available, articles like this and many others are my best gauge for noting that even the Internet advertising industry itself recognizes that it's dying. This is very pleasant to observe.

Personally, I can't remember the last ad I've seen while browsing. The combination of AdBlock Origin (with a very generous combination of various blocklists), Ghostery / Privacy Badger and NoScript effectively renders most adtech useless. The few remnants that refuse to be blocked I happily skip outright rather than enable. As far as I'm concerned, the only acceptable form of advertising consists of things like hardware companies supplying free samples to review sites without any preconditions and even there a slippery slope exists, as evidenced by the sad state of the games "journalism" industry, where corruption is endemic.

And the best part is that, unlike many political and social issues, users really do have all the power here, and it's trivially easy to exercise it. Install a few trusted browser extensions and you've helped hasten the demise of a harmful parasite of an industry, and improved your own security at the same time. And nowadays it's easy to persuade even non-technical users to do this due to how disgusting and intrusive ads have become.

kirso2• 10 years ago

Congratulations! You are in the 10% of people who have adblock :) Within the 600B advertising industry. You get the point right? Normal people think different. In addition, mobile is overtaking everything and adblocking there is more tricky, thats why Facebook is generating 80%+ of their revenues via mobile ads (fun fact, in 2010 it was 0%). You can ask your parents for instance whether they know how to limit ad tracking.

manigandham5• 10 years ago

This article is mostly bullshit.

AppNexus is one of the major SSPs (sell-side platforms) but they still have major fraud and legacy tech issues. They are also one of the primary causes of miserable user experiences across the web. They will not be part of any adtech renaissance.

Google won't flinch if margins really do go down to single-digit margins. They're already built for worse conditions than today and are just pacing the market, as seen with the whole header bidding scenario. They also have Google Cloud rapidly scaling and will likely be a bigger source of revenue than their entire ads division in a few years.

Meanwhile AppNexus can barely survive on their current margins and will be out of business if it hits single-digits. The disintermediation mentioned in this article will also apply just as harshly to AppNexus.

The lame insights about machine learning and formats aren't anything special. This is why Google and Facebook get all the money already, because they have a much faster, cleaner, more relevant, and more effective ad experiences. The renaissance is already here and it's getting increasingly harder to compete with these data behemoths. It's not impossible though and there are several niche focused ad startups, but there's no big sea change about to happen. This is all just business as usual.

The ad tech renaissance

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