“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Neil Sweeney, founder and CEO at Freckle IoT.
In today’s unpredictable environment, the unconscious belief that the current state’s pace of change will reflect the future state is now more inaccurate than ever.
Change is not only constant, but accelerating at a pace that is hard for most to comprehend in their day to day. Over the past five-plus years, we have seen programmatic move from a nascent, long-tail methodology to the dominant approach being used across all media.
Along the way we have wiggled, pivoted and innovated in ways that have arguably made a bigger impact on the media world than ever before. I see three trends that will significantly shape the next five years:
Mass Consolidation And Retraction
The word programmatic has dominated these pages for the past five years, and there have been enormous improvements in how the industry approaches it. We have moved from the open exchange to a more balanced approach which includes private marketplaces, programmatic direct and a futures model of automated guaranteed. At the same time, we have increased fraud detection, made great strides in viewability and leveled the playing field via the header tag.
So, what’s next? I believe it will be consolidation. Unfortunately, there are simply too many undifferentiated platforms currently in the space, and in reality, the winners have already been determined. The ad tech space has now evolved into a share game where the big will get bigger and the small will continue to get smaller – either through market contraction or consolidation. Add into the mix the acquirer’s need for efficiency and the picture isn’t pretty.
After all of the banter over the last few years about the overcomplexity of the Lumascape, this will be the year that the congestion will begin to contract exponentially – with the unfortunate consequence of a lot of industry people out of work. This will accelerate in Q1 as many in the space are expecting Q4 to save their year. It won’t, which will force a long-overdue recalibration in January. This shedding has already started but will accelerate in Q1 and continue throughout the year.
But not all is lost. While change is constant it also creates opportunity. The largest beneficiaries will be data firms and agencies. Over the past few years we have seen a mass exodus of talent from the agencies over to the vendor side, leaving the people at trading desks and holding companies scrambling to fill roles with specialized skills. But the consolidation and contraction of ad tech vendors will create an opportunity for holding companies to bring back into their organizations talent who possess a much broader and comprehensive view of both the vendor and agency side of the business. I think this is a good thing for everyone in the ecosystem. Intelligent well-rounded debate leads to intelligent dealing.
Programmatic Will Take A Back Seat To Data
Programmatic isn’t going away – it will continue to dominate the media landscape. However, now that the core platforms have been determined, it's time to take a closer look at how data is going to be used to differentiate.
Of course, data is currently being leveraged quite heavily in the equation, but the “new new” is going to focus on a more granular use of unique data. Recent deals for companies like Arbor, Circulate and Krux a few weeks ago represent the breadcrumbs we need to follow to see where things are going.
Data is the new differentiator and any firm without a unique data offering is asking for trouble. “Unique” is the key word here, and it is important for people to understand that not all data is equal and an amalgamation of readily available data does not constitute “unique,” no matter how you market it.
In 2017 and beyond, the focus will be on unique data that has the highest fidelity. This data will be extremely rare and have a huge premium placed upon it by marketers looking for differentiation. As the data industry grows so will the standalone data company. The trend of decoupling media, platform and measurement is only going to grow in 2017. Firms will find it increasingly difficult to measure, sell and provide platforms as a one-stop shop. This is the equivalent of marking your own homework, and the industry is getting wise to this.
The need for trust will trump convenience and this separation will accelerate. This has already begun as viewability has become a third-party measurement tactic and moved past the standalone publisher to now also service the walled gardens of FB and others. This trend is only going to continue.
We Need A Solution For Privacy
The insatiable appetite for data will attract a slew of new players into the space. An unavoidable outcome is that this will also draw a lot of people that we don't want. As the industry increasingly relies on data to make buying and planning decisions, the need for validation and privacy are going to grow in prominence in 2017.
The distance between PII and data usage will shrink in 2017 and eventually someone will get greedy and cross over. When that happens, dubious players (not all) will exploit the opportunity, putting the industry on a collision course with consumers and the government alike. If there is one thing I can absolutely guarantee, it's that this is not going away.
Hence, the industry would be wise to play offense and get out in front of it before the genie is out of the bottle. If there is a lesson that we have learned from programmatic, it's that eradicating issues such as fraud and viewability after the fact is a difficult and sometimes impossible knot to untie. Solving privacy before it becomes an issue is in my opinion the largest to-do for the industry in 2017.