How to survive the ad tech Hunger Games

Deshan Kumar, AOL Platforms
By Deshan Kumar, AOL Platforms | 29 September 2015

After a crazy 12 months of ad tech stocks getting hit hard, rapid growth and emerging players, the ad tech industry is in for a period of consolidation. It could turn ugly. Think Hunger Games. To survive, I think there are two criteria vital that ad tech companies need to embrace and I’ll come to them soon.

The consolidation has already started, of course. We’re seeing larger players buying up smaller, innovative companies who have done a lot of the leg work. And it’s a good outcome, because these players acquire new capabilities and a small pool means buyers can work across fewer platforms to reach their desired audiences. Frankly, the whole ad tech landscape was becoming too complicated and far too fragmented.

We’re also seeing some vertical integration. Phone companies are seeing investment in advertising technology as a way of generating revenue beyond access services. Verizon’s acquisition of AOL is a case in point, bringing extra scale and new distribution channels, not to mention the potential for integrating richer user data for ad targeting.

But what next? We might see less mergers and acquisitions. Some players might simply fall by the wayside from lack of customers. So, what are the essential elements to stay in the game?

First, content. More advertising platforms will merge with, or be acquired by content providers.

By offering unique content, you can draw more people to your platform. It’s particularly important here in Australia where premium advertising inventory is limited. This country has the third highest advertising spend per capita in the world, much of it focused on brand. We are a country screaming out for the opportunity to use online video to build a brands’ reputation, but we’re constrained because the economics of content production limits the availability of inventory. If your platform provides more premium inventory over other players, you can expect to attract more attention.

Secondly, you need to include as much inventory as possible – not just your own. People want to book as much as possible through the one system.

An interesting analogy is what’s happened in the travel industry. Airlines have been offering computerised booking solutions since the 1950s. Sabre started it all, as a proprietary system for American Airlines, but quickly realised the potential to offer bookings on other airlines when they were full. As competition between booking platforms developed most offered the same inventory, with the battle on usability, distribution agreements and ancillary revenue capabilities.

The same applies in the ad tech space. Where both a premium content and a programmatic technology stack work together to facilitate bookings (and the platform can be used to include inventory from a range of other publishers) - others will look to go down the same path because they recognise the importance of a media and technology offering to advertisers. This enables the development of campaigns through their one preferred platform – or, at least to minimise the number of systems they have to use.

It’s unlikely industry consolidation will reach the point where everyone uses the same system. Some, like Google, may restrict their own content to their own platform, but those that choose to take a more open and collaborative approach, creating more universal systems, will be able to offer a much deeper solution that delivers even greater campaign insight for advertisers.

In a nutshell, the two tips to survive the ad tech Hunger Games: content and collaboration. Now let the games begin.

Deshan Kumar

Sales director Australia New Zealand 

AOL Platforms

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