Hi Mike! I'm glad you asked this question, and I'm glad you framed it this way. It's clear that *something* is happening, but I find that conversations about the disruption we're seeing tend to get stuck inside of one silo or another. Asking if ad tech is dying is a good way of pulling together a holistic view like you did here.
A few points.
I don't think ad tech has really processed what the move to first-party data truly means. That makes sense. For more than a decade nobody really wanted to talk about privacy, and now it's here, although I don't think anyone believes that legislation, clean rooms, and a move to first party has really delivered privacy to anyone. But in the most basic sense, the demand to do something (GDPR, CCPA, etc.) is about cracking down on third-party data and tracking, and logically that should be an existential threat to nearly all middlemen.
The AI story feels like the accelerant. I tend to think that ad tech was on its way out because of the shift to 1st party and the trend toward in-housing tech. And think that shift coincides with an audience shift away from the social media sites (facebook, twitter) that really drove traffic to the web. The response was to make the web experience worse by adding in more ads. But by the time AI came on the scene, consumers saw a terrible web experience AND shitty search experience because AI has this knack for scaling the worst of SEO. Without search and social, publishers don't have much left for distribution, and to your point, their ad tech partners have less traffic to monetize at a far lower quality. Yikes!
That brings me to email. The bloggers of yore have decamped to email. The open web is now the email newsletter, more or less. But if you look at Beehiiv they're building their own ad network. Substack has been piloting something, although their founders are so ideologically opposed to ads that I tend to think the only thing that really puts Substack in the ad biz is a serious cut to valuation and maybe a change in leadership. Of course, Substack could also build its own ad network, and my guess is it would work like TikTok where certain pre-qualified accounts could opt-in to monetize. Meantime, Substackers are selling their ads the old-fashioned way, one banner at a time, in direct deals.
Thanks Michael. Yeah, this whole interconnected system wasn't built for first party data, nor a finite web. It's a pretty massive transition with a lot of unknowns. I really like they way you framed it that the new open web is email. maybe there's hope for words!
Agree with Ana that ad tech is not dying: it is evolving to comport with the changing supply, tech, data and privacy dynamics. In 2004, there was $65B of linear TV in the US. In 2024, linear TV is still estimated at $60B (and decelerating), but then add $30B in CTV, Youtube and TikTok at $50-60B, OLV at ~$20B. So the definition of TV has changed, and the scale of it is 4x.
For the largest advertisers, the same fundamental questions remain (which ad tech helps to solve)
1. where did I spend my money? Simple question, but it's a very complex supply chain. Cue Mediaocean (my only self serving plug)
2. who did i spend my money engaging with and what did i say? data, data, data all through the process to define, find and present the right message to the right audiences. Before it was Nielsen, now way way more with research, planning, DCO and verification
3. what was the reach/frequency of exposure? ad servers, DSPs, SSPs, currency
4. what proof of performance do I have such that as a public company and steward of investments, I can credibly say I am managing investments effectively? Ad servers, DSPs, verification, currency, auditors, MRC, this and that. (Wait, why is a huge seller of media also the ad tech for display, mobile and DSP?!?!)
5. what is the impact of this spend? Huge innovation here with RMN, MTA, connecting brand and performance metrics.
6. Then, throw some good clouds and AI gasoline onto this fire.
We are on a long journey to reconsolidate the supply chain, and dealing with a staggering amount of complexity and innovation. We can and should talk about how buttress the unintended consequences of consolidation, compression and convergence, such as the impact on the open web. As I said about TV last week, Ad Tech is dead. Long live Ad Tech.
thanks for the thoughtful comments Ramsey. I thought this might fire you up! I wonder if another way to look at it is a prolonged contraction. For example, you mentioned your company. that is category that doesn't lend itself to 12 mediaocean competitors, right? I wonder if we'll see more of that, where the need for pipes doesn't go away but the market picks a few winners. As for the need for DSPs, SSPs, etc - the question is if you'll need those types of companies as much over time, if you're not spending as much on the web (big if)
Hi Mike! I'm glad you asked this question, and I'm glad you framed it this way. It's clear that *something* is happening, but I find that conversations about the disruption we're seeing tend to get stuck inside of one silo or another. Asking if ad tech is dying is a good way of pulling together a holistic view like you did here.
A few points.
I don't think ad tech has really processed what the move to first-party data truly means. That makes sense. For more than a decade nobody really wanted to talk about privacy, and now it's here, although I don't think anyone believes that legislation, clean rooms, and a move to first party has really delivered privacy to anyone. But in the most basic sense, the demand to do something (GDPR, CCPA, etc.) is about cracking down on third-party data and tracking, and logically that should be an existential threat to nearly all middlemen.
The AI story feels like the accelerant. I tend to think that ad tech was on its way out because of the shift to 1st party and the trend toward in-housing tech. And think that shift coincides with an audience shift away from the social media sites (facebook, twitter) that really drove traffic to the web. The response was to make the web experience worse by adding in more ads. But by the time AI came on the scene, consumers saw a terrible web experience AND shitty search experience because AI has this knack for scaling the worst of SEO. Without search and social, publishers don't have much left for distribution, and to your point, their ad tech partners have less traffic to monetize at a far lower quality. Yikes!
That brings me to email. The bloggers of yore have decamped to email. The open web is now the email newsletter, more or less. But if you look at Beehiiv they're building their own ad network. Substack has been piloting something, although their founders are so ideologically opposed to ads that I tend to think the only thing that really puts Substack in the ad biz is a serious cut to valuation and maybe a change in leadership. Of course, Substack could also build its own ad network, and my guess is it would work like TikTok where certain pre-qualified accounts could opt-in to monetize. Meantime, Substackers are selling their ads the old-fashioned way, one banner at a time, in direct deals.
Thanks Michael. Yeah, this whole interconnected system wasn't built for first party data, nor a finite web. It's a pretty massive transition with a lot of unknowns. I really like they way you framed it that the new open web is email. maybe there's hope for words!
Agree with Ana that ad tech is not dying: it is evolving to comport with the changing supply, tech, data and privacy dynamics. In 2004, there was $65B of linear TV in the US. In 2024, linear TV is still estimated at $60B (and decelerating), but then add $30B in CTV, Youtube and TikTok at $50-60B, OLV at ~$20B. So the definition of TV has changed, and the scale of it is 4x.
For the largest advertisers, the same fundamental questions remain (which ad tech helps to solve)
1. where did I spend my money? Simple question, but it's a very complex supply chain. Cue Mediaocean (my only self serving plug)
2. who did i spend my money engaging with and what did i say? data, data, data all through the process to define, find and present the right message to the right audiences. Before it was Nielsen, now way way more with research, planning, DCO and verification
3. what was the reach/frequency of exposure? ad servers, DSPs, SSPs, currency
4. what proof of performance do I have such that as a public company and steward of investments, I can credibly say I am managing investments effectively? Ad servers, DSPs, verification, currency, auditors, MRC, this and that. (Wait, why is a huge seller of media also the ad tech for display, mobile and DSP?!?!)
5. what is the impact of this spend? Huge innovation here with RMN, MTA, connecting brand and performance metrics.
6. Then, throw some good clouds and AI gasoline onto this fire.
We are on a long journey to reconsolidate the supply chain, and dealing with a staggering amount of complexity and innovation. We can and should talk about how buttress the unintended consequences of consolidation, compression and convergence, such as the impact on the open web. As I said about TV last week, Ad Tech is dead. Long live Ad Tech.
thanks for the thoughtful comments Ramsey. I thought this might fire you up! I wonder if another way to look at it is a prolonged contraction. For example, you mentioned your company. that is category that doesn't lend itself to 12 mediaocean competitors, right? I wonder if we'll see more of that, where the need for pipes doesn't go away but the market picks a few winners. As for the need for DSPs, SSPs, etc - the question is if you'll need those types of companies as much over time, if you're not spending as much on the web (big if)