Today’s column is written by Jay Friedman, chief operating officer at Goodway Group.
A big milestone hit me recently and unexpectedly: Ten years working in ad tech? It feels like I started just yesterday.
But actually, the past decade has taught me a number of lessons that I think are helpful to forecasting what the next 10 years hold in store.
For example, I saw how long it takes for the market to mature and technologies to be adopted, what digital marketers have over their nondigital counterparts and how a company’s management affects its performance and bottom line.
Six, Eight, 10
From my experience, moving from innovation to $1 billion in revenue takes about six years. Scale occurs around eight years, and maturity around 10.
RightMedia created the first ad exchange (RMX) in 2005. I remember loading ad creative into RMX in 2006 and setting the targeting and dCPM. Programmatic and real-time bidding reached the $1 billion mark in 2011. While the audience reading this has been transacting programmatically for some time, I think most of us would agree programmatic is just now starting to deliver on some of its original intent: buying an audience and publisher combination with solid forecasting and market rules around the buy.
As we all look forward to bringing TV into the programmatic space, we’re still early on. Next year is forecasted to be the first $1 billion year, which means we’re a couple of years away from scale and a few more until maturation. And let’s not forget that the majority TV inventory is not available programmatically at all right now. I expect future innovations to follow this approximate timeline.
The Digital Battle-Scarred Will Run Marketing For Many Years To Come
I remember the first digital sales rep I worked with asking me, “What is your objective with this campaign?”
It was like he was speaking a foreign language. I had planned and bought traditional media my entire career and no rep had ever asked me that. Nothing was measurable so no one asked. From the moment someone had the terrible idea to measure the click-through rate on a banner ad, digital suffered the double standard requiring everything to be measured or “we might as well just spend our money in TV.” This is just now letting up in some parts of the US and still exists in other parts of the world.
Today digital veterans argue about attribution methodologies because we have the knowledge of how it works. We argue about discrepancies because we know exactly how many impressions were served, to each device, user, geo and so on. Compared to offline media, digital problems are distinctly trivial, first-world media problems.
Winter is coming to nondigital media measurement, and when it comes digital veterans will be well-positioned to take them on.
Stability > Sizzle
The ad tech graveyard is full of companies who built top-line revenue but not a sustainable business. This is the real problem with our ecosystem. Marketers who used those companies likely saw their data and historical knowledge buried in the graveyard alongside the company’s last P&L.
Today, agencies use dozens of different partners but don’t realize that each new company a marketer uses means they must provide free education about themselves and their category to each new digital vendor and their team. In high-turnover companies, employees take that knowledge with them when they leave, often to a competing ad tech company or marketer.
If you’re a marketer reading this, when is the last time you asked a prospective partner for their year-to-date turnover percentage and how long they’ve been profitable, if at all? It’s not as sexy as a brand-new targeting mechanism, but it’s the “diet and exercise” antidote for your long-term ad tech health.