Six Predictions on Growth for Ad-funded Media

April 5, 2017
by Jeff Green – CEO and Founder

Jeff Green, CEO & Founder, The Trade Desk

The advertising world is changing. Drastically. Every day, media is becoming more fragmented—making it harder for advertisers to reach their audience. Compounding this challenge, the media buying industry, a $640 billion ecosystem, hasn’t yet automated. The result? Consumers are overloaded with uncoordinated or irrelevant messaging because media buying is happening through multiple uncoordinated specialty targeting shops.

The good news is that the industry is showing signs of awakening—and advertisers who’ve been wasting billions of dollars with one-dimensional campaigns are now seeking out holistic, multi-channel media buying strategies.

With that in mind, here’s my take on six trends every CMO and advertiser should be watching for:

We’ll be measuring effectiveness differently than ever before.

Advertisers will see the need to coordinate campaigns across all digital channels—display, movie, video, audio, TV, native and social—and across all devices. The ability to optimize from a single platform will empower agencies and their clients to gauge effectiveness by the strength of their connection with the audience across the open web, not just by crude metrics like the number of people reached. This will benefit advertisers, publishers and also consumers, because advertising will become more relevant and meaningful.

Advertisers will step up their vigilance on brand safety.

The question all advertisers must ask is not how to avoid fake news, but rather how to make sure that 100 percent of their advertising dollars align with content that reflects the broader value of media integrity? To that end, advertisers and vendors must exercise editorial judgment, and in doing so, they must look for nuances that would not likely trigger a hate speech filter. Already, we’ve blocked a growing list of sites and are seeing the arrival of pre-bid vendor solutions targeted at curbing the spread of fake news. Ultimately, this is a question of a white list, not a black list. Advertisers depend on quality media, free of hate, to carry their messages. As an industry, if we fail to invest in a healthy media ecosystem, the parasites will diminish the entire enterprise.

Demand-side platforms (DSPs) will partner to lower cost and increase efficiency.

The exponential increase in queries-per-second (QPS) across the programmatic landscape has made it very expensive to run bidders. Instead of expanding and maintaining their own bidder service, specialty DSPs will build on top of larger-scale DSP platforms through API integrations. They’ll cut costs, increase their scale, and grow their businesses by investing in meaningful differentiation. Partnering will also ensure that clients of these DSPs get a crack at every opportunity, because the sheer volume of requests make it difficult for every supply-side platform (SSP) to include every bidder.

Connected TV will pull away from linear TV.

Linear TV is a huge business, but it relies on outdated targeting strategies to support its ad-funded model. Because of this lack of targeting, advertisers will only pay lower prices. This forces operators to run even more ads to drive revenue. Consumers end up deluged with irrelevant ads. Watch for connected TV apps to steal an increasing chunk of this business. These apps will employ various ad-funded models while offering a far more targeted audience. Viewers will see fewer, more relevant ads, and advertisers will gladly pay higher prices to reach a select audience.

Digital audio will come of age.

Research suggests that audio listeners have a higher brand recall rate than other consumers. Why? Because the ads are part of their everyday lives—they hear them while making dinner, cleaning the house or taking a shower. Look for advertisers to spend some cash here, which in turn will benefit artists with higher revenue streams from streaming providers.

RIP, insertion orders for premium inventory.

For the first time, agencies will spend hundreds of millions of dollars in forward contracts using programmatic pipes. Orders will be placed with publisher partners directly, or through a Private Market. The capability to negotiate and finalize those deals with ease will give rise to libraries of high fill contracts across publishers, channels and formats with the convenience of one bill instead of invoices from multiple vendors. It also will come with consolidated reporting that covers entire multi-channel campaigns.

In short, it’s clear that market forces will drive media to be transacted programmatically—very, very soon. Relevance will drive results, and appropriate pricing will follow. We are already seeing this. I am convinced programmatic is the key to enable ad-funded publishing models to flourish with advertisers and consumers alike once again.