Technology may still capture the most advertising value, but what if publishers own it?
A few years ago, ad technology banker Terence Kawaja gave a groundbreaking IAB presentation entitled, "Parsing the Mayhem: Developments in the Advertising Technology Landscape." Ever since then, his famed logo vomit slide featuring (then) 290 different tech companies has been passed around more than a Derek Jeter rookie card.
While the eye chart continues to change, the really important slide in that deck essentially remains the same. The "Carving up the stack" slide (see above), which depicts how little revenue publishers see at the end of the ad technology chain, has changed little since May 2010. In fact, you could argue that it has gotten worse. The original slide described the path of an advertiser's $5 as it made its way past the agency, through ad networks and exchanges, and finally into the publisher's pocket.
The agency took about $0.50 (10 percent); the ad networks grabbed the biggest portion at $2 (40 percent); the data provider took two bits (5 percent); the ad exchange sucked out $0.35 (7 percent); and the ad server grabbed a small sliver worth $0.10 (2 percent), for a grand total of 64 percent. The publisher was left with a measly $1.80. The story hasn't changed, and neither have the players, but the amounts have altered slightly.
While Kawaja correctly argued that DSPs provided some value back to both advertisers and publishers through efficiency, let's look ahead through the lens of the original slide. Here's what has happened to the players over the last two years:
The slide we are going to be seeing in 2012, 2013, and beyond will show publishers with a much larger share, as they take control of their own data. Data management technology is not just the sole province of the "Big Five" publishers anymore. Now, even mid-sized publishers can leverage data management technology to discover their audiences, segment them, and create reach extension through lookalike modeling. Instead of going to a network and getting $0.65 for "in-market auto intenders" they are creating their own - and getting $15.
Now, that's a much bigger slice of the advertising pie.
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Chris O'Hara is an ad technology executive, and the author of "Best Practices in Digital Display Media," a contributor to ClickZ, and the author of the new whitepaper "Best Practices in Data Management." He can be reached through his blog at www.chrisohara.com
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