December 15th, 2009
The online advertising industry at large is sprinting towards maximizing efficiency. Overall, the working theory is that smart aggregation and assembly of various technology providers will create a unique solution for display advertising, and one that combines audience targeting, procurement, arbitrage and media trade. However, if, as Randall Rothenberg, CEO of IAB, states: “technology succeeds in driving the cost of reaching the perfect audience down to zero” in his latest post titled “Is Marketing a Strategic Resource or a Procured Commodity?” then the industry might be fumbling towards false ecstasy, with “the same low costs, the same perfect efficiency, for doing the same exact thing.”
Allow me to explain. With all of the aggregation and consolidation of publishers, networks, and exchanges, in many instances, an overlap occurs with publisher inventory. Think about a typical web publisher in today’s ecosystem. Think about how many ad networks that publisher works with. Now think about how many ad exchanges those ad networks work with. Then think about how many Demand Side Platforms those ad exchanges work with. The result? The tail wags the dog: when you bid on an impression, in all likely hood, you are bidding on yourself, for the same piece of inventory. This overlap and inconsistency in many cases results in decreased efficiency.
Here at Lotame we call this concept “Macrotization” wherein you try and optimize results at the macro level but have built algorithms and processes that can’t ultimately be supported by the disparate supporting systems and components. Many of the components in these new advertising platforms don’t necessarily complement each other, even though it may seem as if they do, and complementary buzzwords often connect ephemeral dots that don’t belong. In time, the foundation for macrotization will settle, but for now, tremors still abound.
The truth is, there are few companies out there that successfully manage all pieces of the “macrotization” process. Those that can will deliver true efficiencies for their clients because they can seamlessly connect and control all pieces in the value chain—from audience identification through media delivery and resulting insights—in a completely transparent manner.