Third Party Ad Serving: Whither now?

Posted by David Smith on December 17th, 2012 at 9:51 am

Ten years ago, Ad servers represented the total or at least the vast majority of agency tech budgets. Today, this component is less than 10% of the total media tech spend for most digital agencies.

This is the LUMAscape we are all familiar with. It shows the complexity of the digital display marketplace

Adserving today is a small part of this overall pie.

Innovation came slow to this category while pricing dropped. Standalone companies began to crop up that should have been ad serving features

There are a number of companies that have cropped up that arguably could have been introduced as features of the third party ad server (3PAS) had they innovated. Most notable is the DSP. For many agencies, the DSP has 10x or more of the spend of the ad server. Some of the categories of companies that could have been 3PAS features include:

Rich media: major companies like mediamind exist only because 3PAS companies did not sufficiently develop rich media. This includes not only the creative vendors, but survey vendors, integration of survey data into the cookie stream and creative content management systems

Attribution: connections between disparate sources for web display, search, social, site side is still an expensive effort affordable to only the largest advertisers from companies like Marketshare, VisualIQ and MMA.

Tag Management: Tagging systems were virtually invented for 3PAS, yet we need companies like BrightTag to bring this capability to fruition

Optimization: It took the advent of DSPs like Mediamath to give us advertiser side optimization beyond the click. We still cannot share view through with sites for optimization on regular buys. And we still need creative auto-optimizers. Many media directors will admit that they find optimization by people still superior to automation.

Verification: This whole category exists only to establish if the ad was served correctly. 3PAS should have done this. It is a feature, not a business. Companies like DoubleVerify, Adsafe, Adometry, Media Trust and now comScore do this for us.

DSP: The 3PAS company was, for the most part, our exclusive technology vendor. They could have brought real time bidding interfaces, bid management systems for SEM, etc. to us. Instead, the DSP (along with media management companies) have the largest part of our tech budgets. Again something that could have been a feature. MediaMath, Invite Media, DataXu and Triggit are all good examples here.

Targeting and Data Aggregators: targeting information is collected every day from companies using social or lookalike targeting tags inserted within the 3PAS envelope. Companies like Quantcast, Media6degrees and 33Across are good representatives of the new targeting capability. Companies like BlueKai and Exelate are leaders in this category

Retargeting: Invented by Doubleclick with Boomerang. Perfected by other companies due to Doubleclick’s failure. Now everyone does it.

R/F and GRP metrics (Measurement and Analytics): The third party ad servers were at the table but failed to follow the lead of the ARF in the early part of the last decade, (the advice to fuse data with panel companies) . This has left GRP development to traditional research companies like Nielsen and comScore. They have taken over the GRP calculation from the 3PAS, the only source of census data on a campaign.

RFP/workflow (Media Management Systems): still a major pain point for many agencies. Sites fill out agency RFP spreadsheets and too much insertion into the 3PAS trafficking is done manually. Systems started by 3PAS to do both this and publish site side specs and standards were never kept up to date. Mediaocean is a solution only available affordably to the largest agencies. Although their mBuy division shows promise for smaller agencies.

Content: No reason why site side CMS cannot be powered by and ad server like technology to personalize site experiences. Companies like Zite are doing this today. In addition, companies like Peer39 and proximic assist in contextual targeting.

Here is the same list graphically. A large percentage of the overall LUMAscape is covered by this list.

Here is the look of the LUMAscape if there were consolidation under the 3PAS. While this is a simplistic look at this, you hopefully get the point.

What’s next? Will the DSP or the media management technologies take over as the primary agency tech partner? Will Doubleclick reemerge as a factor due to the acquisitions and roll-ups being created by their now owner, Google? They have at least maintained strong market share of publishers despite the fact that Google bought them. And Atlas may be sold for virtually scrap. Still, a great deal of the ad server function today seems to be trafficking, cookie distribution and management/tag distribution. Will the need for ad serving disappear as newer technologies include ad serving as a feature rather than the other way around?  What will a roll up of services look like and who will drive it? Should be an interesting time seeing what happens next.

4 Responses to “Third Party Ad Serving: Whither now?”

  1. Nick Talbert says:

    Dave -

    I think you are taking what an ad server does to literally. Anyone can serve ads, I agree. However, there is no other place in all these technologies that you mention that will allow you to control all the various management capabilities that an ad server provides. The value is certain and clear especially given the fragmentation of the entire digital industry. As along as agencies and advertisers want to use multiple DSPs, publishers, data sources, measurement systems, etc. you need a place to manage and maintain and organize all those server calls along side the distribution framework. Most of categories of companies in the Lumascape could not exist if they weren't all adhering their tags onto a Mediamind or Doubleclick or... (to a much less extent these days) ... Atlas distribution network of server calls (tags). There is no other single entity that connects at the information that exists at the time of media inventory call and pairs that with a specific and pre-defined piece of creative ( however elaborate or simple the execution) across all digital media.

    The specific price per basic impression served has indeed fallen because of destruction of TRUE third party ad-serving. Publishers that now own ad servers wanting you to buy their media sources have decreased the value of ad serving to place the value on their inventory and offering the tech behind the media baked into the price you pay. But this comes at a price you lose an agnostic view of your media expenditures the same tech isn't being applied to all media unilaterally. You only have a few choices overall ( one clear one) if you dont want to buy and measure the effectiveness of that budget from the same provider( Google) or work with someone that is a one trick pony, like so many of the niche players (Pointroll, Innovid, etc.) in the industry. Either gives the agency and advertiser a limited view and perspective of their digital media activities.

    Ill agree that the adservers have had trouble calling out their true value in ecosystem, but sit in any ad ops meeting at an agency for a Tier 1 advertiser and you'll quickly get the picture of how valuable and needed the campaign management part of ad serving is. Saying that adservers have no value would be a kin to removing the computer from a fuel injection system of a modern engine or a traffic cop from controlling a busy intersection after concert just let out. Everything comes to a screeching and chaotic halt.

    • Dave Smith says:

      I understand and agree with what you are saying. My point is that the ad servers could have included DSP, retargeting, etc. as features, lessening the complications we face today. They failed to innovate and have left it open for someone else to drive the truck. Yep, whoever does this will have to do more than serve ads. We use campaign management tools every day. But we need more and we need it better integrated.

      • Nick Talbert, AVP Platform Products, MediaMind says:

        Have you looked at what we offer lately? Happy to chat, if not. DSPs, retargeting, tag management, targeting, dynamic creative logic and optimization...take your pick. While we cant develop the full set of features to the extent of niche providers, but the basic and core needed functionality is already there. For the extreme use cases that is what the niche players are for.

  2. Have to agree with Nick on this one. Dave, you haven't kept pace with the evolution of demand-side ad technologies over the past several years. I agree that large, established companies don't have the same risk tolerance as VCs for innovation, but they DO innovate, and if not in specific areas you demand, they will often execute a fast-follower build, acquisition or partner strategy. Most of the leading ad technology providers (DoubleClick, Mediaplex, Atlas, Mediamind, etc.) have either built or partnered to provide ALL of the capabilities outlined here. Sucks that our industry, especially agencies, can't invest the time to understand what's happening right now outside the sacred LUMA-boxes.

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