eXelate Panel Brings Doomsday Prediction From NY Times' Nisenholtz

eXelate PanelOnce again there was a strong turnout for a vendor-driven, industry event -this time courtesy of data exchange, eXelate, who produced, "Data Wars: The Publisher Strikes Back" at the Union Square W Hotel in New York City.

A panel representing a broad cross-section of industry mucky-mucks tilting towards the publisher world was ably guided by Forrester analyst Emily Riley. On the advertiser side, MediaMath's ubiquitous CEO Joe Zawadzki and Omnicom Managing Director Todd Curry represented the interests of advertisers. AdMeld CRO Ben Barokas advocated for the interests of publisher-side technology companies. IAC President Greg Stevens, United Online VP of Ops Amy Lehman and The New York Times SVP of Digital Ops Martin Nisenholtz brought varying view points from publishers.

Overall, publishers seemed stressed about the new data-driven world but, for the most part, open to solutions. In fact, United Online's Lehman stated that her company had been building solutions in-house for 2.5 years.

In the interest of potentially finding a solution to appropriately compensating publishers for their data, inventory and audience, IAC's Stevens offered to "open the kimono" on publisher data in a limited test as long the buy side agreed to do the same. From the buy side, MediaMath's Zawadzki also appeared willing to "open the kimono" and find a possible solution as audience members were left to gasp at the visualization of panelists in kimonos, etc. Nevertheless, a limited advertiser-publisher partnership is intriguing but would seem complicated as hell. Who's gonna referee? Some VC could end up funding that ref/new startup.

Arguably, the highlight of the evening came from The Times' Nisenholtz, who appears to have had enough of the data-driven world as it exists today and said the following:

"I think that there is going to be an implosion in this marketplace in an 18-month timeframe. I think that this marketplace reminds me of the financial marketplace that existed prior to the bubble bursting. There are far too many players. There are a lot of people spouting a lot of crap that nobody really understands. I don't think they even understand. I hate to say this because I've seen this 5 or 6 times during my career and it always ended in ruin. It always ends with peoples' careers unfortunately ending. I sense that we are at that place in this marketplace."

Schwing! Snap!

In response, Zawadzki pressed Nisenholtz a bit saying internet marketing hasn't gotten smaller in the recent past, why would it happen now. Nisenholtz clarified that he's just talking about the data-driven business (how's eXelate feeling at this point?).

As eXelate's thought-provoking panel illustrated, no question about it: valuing data and audience across the web remains a huge challenge as does appropriately compensating buy and sell-side players. Yes, regulation will come around data -hopefully, self-regulation. But, technology is and will continue to bring increasing efficiency and transparency to advertising, which will eventually make its way to the big tuna: Television.

It's not about putting "the genie back in the bottle." (Cliche #94622) It's about opportunity!

By John Ebbert

13 Comments

  1. I love how it is the guy whose business model is most threatened at the moment who is predicting other companies demise. Beautiful irony

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    • I certainly don't see myself defending the Times, but the will agree the signal-to-noise ratio out there today is far below acceptable levels. I think there is too much religion and not enough pragmatism. I'm hopeful as the realization that everything is not simply going to relent to a new evolution in one glorious rebirth of digital ad operations, that technologies will begin to address the gaps rather than simply declaring success stipulated on step that everyone change the way they do everything.

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    • Interesting discussion, but it seems more emotional than pragmatic. Traditional print media will have to evolve and adapt sooner or later, without a question. The Times is doing some soul-searching at the moment and their frustration is understandable. But should they jump into fully digital format head first? Doubt it. Print is not dead yet.

      Reply
  2. J. McFarland

    Generally speaking, I'd never look to a premium publisher to predict the future of audience-based advertising.

    But I tend to agree with him in this case. He's not saying all players will implode -- just a lot of them. I mean, take the facts around the myriad data layers:

    - most buyers have no idea what they're getting, no idea how it works
    - the data is overpriced (3-10x the cost of media)
    - the find rates are abysmal
    - the decay rates are massive
    - the agencies aren't measuring whether the data led to lift (CTR, VTR, intent-to-purchase, etc.)
    - and, there are a hundred players now, all trampling over each other, psuedo-partnering, and muddying the waters

    I love the smell of Napalm in the morning.

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  3. I totally agree that the process will be disjointed and messy. It always is. We have been working to push this change forward for almost a year and a half now and it is hard work. I am sure we have lots of hard work ahead of us.

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  4. Jason Kelly

    I completely agree with Martin.

    There are WAY too many intermediaries between publishers and our clients at agencies and advertisers.

    I thought Tolman's comments at IAB last week captured this well:

    "The market complexity has gotten ahead of itself," said Tolman Geffs, a co-president with The Jordon, Edmiston Group. "There is no question it needs to simplify to continue scaling."

    "Data needs a day job"

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  5. Zach - I was there last night, and I have to say I agree 100% with Martin on this one. At the end of the day you'll have 2 intermediaries playing: one on the publisher side - call it an ad network, an exchange, whatever (might as well call it Google... ;-). And one on the advertiser - call it an agency, a DSP, whatever.
    It's impossible that in the current ad spaghetti, each new layer is adding 30%+ value in the chain. I think that is what Martin was referring to - the chain will have to seriously simplify (aka - implode) soon as this is unsustainable.

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  6. ...and btw - eXelate - kudos on organizing a terrific event. Emily Riley did a great job moderating it, and the discussion was very good (unlike most panels). Looking forward to the May event!

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  7. Yaron, there is a fundamental difference between implosion and consolidation. I think you are right that there are too many players in the chain at the moment, that is the normal outcome of a platform shift where a new generation of companies coexist alongside the old models for a little while during the shakeout process. But that will be easily addressed with consolidations of the stack and the certain demise of players who don't make the transition.

    I would also argue that the fragmentation of the status quo of publisher direct purchasing, RFPs, IOs and trafficing over fax machines and email, fragmented data, lack of global frequency capping, fragmented report consolidation and on and on is even more broken. The change underway is not simply adding 30% incremental improvement to a very broken process, its a platform shift for the entire stack of buying, selling and managing display media.

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  8. I love attending anything with a Star Wars analogy. Great points and interesting euphemisms all around!

    Thanks panel and exelate.

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  9. I guess Martin will not be invited back.

    Jerry Neumann had a great post responding to Michael Walraths post here on this subject.

    My take:

    With all the VC, exit and competitive pressures too many companies are forced to play whatever hands they can to generate revenue while representing to hold the interests of certain other parties. You can only fake it for so long.

    The value here is the media - your ads are not the media - your audience is not the media. The more you decouple these things the more layers you add to the stack and the further removed you are from pricing and delivery platforms that can create a true market with equitable valuations for exchange.

    JN: http://reactionwheel.blogspot.com/2010/02/duck-duck-goose-on-demand-side.html

    MW: http://adexchanger.com/considering-digital/rise-of-the-demand-side-service-layer/

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  10. Alan Edgett

    Way too much confusion and too many players. Part of the problem, the Agencies missed Search and are rushing to bring Brand dollars into this new space. As a result, there has been too little Direct Response testing the data. DR always helps set floors. Plus everyone "has data", we need to sort through who has "good data" or better yet "data that works"! Time for some DSP case studies, if you ask me.

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  11. I sympathize with the "too many middlemen" observation, but I would note that data has been a legitimate segment of the direct mail industry for some time, so I don't see why it can't last in display advertising as well, which is increasingly becoming a direct channel.

    Anyone looking at a full picture of the display ad technology landscape would be moved to predict consolidation and attrition, but my sense is that data is a relatively independent category.

    The real overlap is among DSPs, optimizers, and tech-powered ad networks, all of which seem to have the same value proposition just with different interfaces (self-serve vs full-serve) and different billing (% of spend vs fixed price).

    Reply

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