Last year, Pubmatic commissioned a market study by Forrester, which predicted that digital display ad spent would soar from $20 billion in 2015 to $38 billion by 2019.
Hurrah! Boom times ahead. But the big question is who will pocket the money?
Will it be the publishers? The ones who create the stories that drive much of the consumption of the ads? Or will it be the platforms – Facebook, Google, Apple, LinkedIn, Twitter – who host it?
This is a huge question, fundamental to the future of what used to be called ‘the press’. For Kirk McDonald, president of adtech giant PubMatic, there is little room for nuance: publishers must stop Facebook and the rest from stealing their lunch.
He says: “The platforms are saying to publishers ‘hey, you can have all the sugar you want – we’ll pay for it’. Well, you may like the fact that you’re not paying for your meal any more – but it’s killing you.”
As the former president of digital at Time Inc, McDonald is watching the evolution of the publisher class with great interest. And he’s obviously very worried.
The shift of power away from ‘traditional’ publishers to digital platforms has happened because social media has exploded in popularity. Consumers are spending all their time on these sites (and in these apps), and as a result these platforms have decided to make news part of their content offerings: Facebook’s Instant Articles, LinkedIn Pulse, Twitter Moments and so on.
These services tweak articles to make them easy to read. They load quickly and format correctly. In so doing, they more or less guarantee huge audiences for popular content.
Now, many publishers appear happy to make their work available on them. In September 2015, The Washington Post confirmed it would send 100 per cent of its stories to Facebook to be formatted as Instant Articles.
There is so much great independent tech out there. It’s really not hard to find. Some of the adtech companies are getting to be 10 years old. They know what they’re doing. I would urge publishers to seek them out. Take back some control and then go and get a better deal from Facebook and Google. Make them honest”
But, it’s a gamble. Instant Articles content is hosted and monetised by Facebook. In effect, Facebook ‘owns’ the customer relationship and merely passes along a revenue share to its content partners. Meanwhile the publisher has to trust Facebook to nurture the relationship, and watch as readers stop visiting the publisher’s own websites and apps.
McDonald is pretty horrified by the acquiescence of ‘old media’ here. He says: “As a publisher for most of my career, I think publishers should be terrified about over-dependence on Facebook, Google and Twitter. What if the platforms decide to change their tariffs, what happens then?
“If Facebook is in control of your CMS and your ad decisioning and your consumer relationship, what do you have left? This is the kind of thing that would wake me up at 3.30 every morning.”
McDonald accepts that many publishers – in common with other ‘analogue’ businesses like music – have lacked the foresight to avoid their plight. “It happens in history,” he says. “Organisations are founded on ideas and innovation, but they end up hiring people to protect their success. They don’t want to change, and they build walls around the behaviour that created their business decades ago.
“And so Facebook comes along and lets the consumer do the things they want to while publishers refuse to move,” he says.
Happily, McDonald believes it’s not too late for publishers to wrest back some control. They just have to be open to new technology, and to be prepared to invest in their own systems. They can still work with Facebook et al, but will have more of a bargaining chip.
He says: “There is so much great independent tech out there. It’s really not hard to find. Some of the adtech companies are getting to be 10 years old. They know what they’re doing. I would urge publishers to seek them out. Take back some control and then go and get a better deal from Facebook and Google. Make them honest!”
Naturally, PubMatic can help. McDonald says the company has run numerous request for information (RFI) surveys for publishers on ad decisioning – and he can’t recall ever losing against Google.
He’s also excited that publishers such as News Corp, Haymarket and NBC are demonstrably taking back control of their customer relationships. In February, NBC unveiled a new division called Audience Studio, which gives brands tools to match their own data with data from all of NBC’s various channels. That way, they can improve the targeting of their ads.
And this, of course, is what all the debate is about.
PubMatic’s business is programmatic advertising – a process that uses algorithms to decide which ads to show which viewers in fractions of a second. These decisions are based on who the consumer is (age, gender etc), previous behaviours (sites they’ve visited) and context (where they are, type of device being used, weather etc).
PubMatic says these decisions are made during ‘mobile moments’, the occasions when consumers are fully engaged with their smartphone screens.
The company’s platform basically helps publishers sell their own inventory during these moments. Its platform gives them a single view of their advertiser relationships across every screen, channel and format.
The programmatic revolution is what has prompted the disruption in publishing. None of this could have happened when ads were sold by people picking up the phone to other people.
Programmatic advertising was an inevitable consequence of (near) infinite inventory and improved consumer insights. But it’s not perfect. Ads can slow down page-loads. And they can be interruptive, especially when the creative is uninspired.
This is what has led to another pressing issue for the industry: ad blockers. Again, McDonald believes the industry can do better.
“I don’t think it’s right for consumers to use ad blockers. I don’t think it’s OK to consume content and then take away that content provider’s chance to make money.
“That said, you can also see ad blockers as a cry for help from frustrated readers. As an industry we need to be more thoughtful about the interruption.
If I’m looking at my banking records, is it really a good time to tell me to play Candy Crush?”
“We can do better. And I’m confident that most consumers will accept commercial messages when they are done well.”