The Moving Middle

In the late ‘60s and early ‘70s we had a healthy and vibrant middle class. Now, after many changes to our economy, including the exporting of jobs, those left in the middle are fighting every day, paycheck to paycheck. The bell curve has shifted left and the upper class is collecting more wealth. This is similar to what I see happening to digital media.

The late 2000s were frothy for many companies:start-ups were a dime a dozen, new media companies were sprouting like weeds and individual bloggers were loading their pages with ads and cashing in. Publishers large and small were forced to work with intermediaries in order to move the inventory that was overflowing from their properties. This excess gave rise to many technology companies, also in the middle, to help manage and alleviate the operational pain created by all these new middle men (networks and exchanges).

Fast forward to 2015. Today we still have a massive number of web properties and apps with only a few remaining networks that are able to weather the storm of consolidation and constriction. However, the technology companies are still holding strong thanks largely to programmatic expansion, and there is renewed interest by large publishers and advertisers to work a little harder and remove the middle man. This is not to say that advertisers want to run media in house, but there is a desire to take more control back from the middle men, remove fees associated with spend and limit the number of vendors required to execute a campaign. Advertisers like P&G, Ford and Kellogg’s, as well as a few agencies, are leaning into direct relations with pubs to enhance programmatic media relationships and drive spend on fewer, higher quality properties.

Makes total sense right? However, with more control comes greater responsibility. Eliminating technology and intermediaries means more work for the publisher. Now, instead of the middleman operating the campaigns, applying smart optimizations, leveraging media scale and driving price efficiency, the publisher will need to shoulder this burden. The challenge from moving out of an exchange, where the buyer has access to massive scale to a direct relationship with a publisher, is that now the publisher needs to directly expose the perfect matching audiences and placements to satisfy needs of the buyer.

There is complexity in the demand advertisers have today, and the targeted attributes are endless: viewability, audience, time, geo, creative, frequency, device, etc, which makes inventory and yield management quite tricky. Publishers must be prepared to do the heavy lifting. Only large media companies with a broad portfolio and significant scale will be able to rise to the occasion to satisfy the demands of the advertiser. Of course we are seeing new technology vendors working to solve this problem with header tagging, ad server integrations and even data management platform (DMP) integrations to flag high-value inventory in the ad server.

The benefits are clear: reduced fees, decreased friction, transparency, enhanced communications, improved results, new opportunities to collaborate and leverage the unique capabilities offered by publisher (native, social, creative, data, etc). But are publishers prepared to take on this added responsibility? Do they have the capabilities in-house to support sophisticated buying? We’ve seen companies like Google, Facebook, Verizon and Amazon invest heavily in adtech to power their media offerings to offer in-house capabilities to buyers that are unique, scaled and efficient. Will traditional media companies rise to the occasion and do what is necessary to service their clients or will they be just like the middle class and slowly shift to the left, struggling day to day, media buy to media buy?

Or, are we in for a new technology evolution focused on the publisher’s internal ad stack?

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