As CEO Rajeev Goel tells it, publishers' use of programmatic is expanding in a variety of ways and many want to take more control with a "do-it-yourself" sensibility.
"Our industry is at a tipping point, as people are moving from a 'do it for me' technology-driven model to a 'do it with me' solution and services approach," Goel said. "Publishers and advertisers are looking for partners to help them drive their business strategy and thinking. They don't just want tools and technology alone."
The new advisory business will be run by Richard Sobel, a former Time Inc. business development and revenue management executive who joined PubMatic in January 2012 after previously working as an independent consultant.
Aside from looking to separate itself from companies like the Rubicon Project, which has been pursuing a more general marketplace strategy in catering to both the sell and buy side, the move reflects what Goel said is a trend by publishers taking more technology functions in-house. "Seven of the top 10 marketers are building their own bidding systems," he said. "When companies take these kinds of processes in house, that suggests an even greater expansion of the marketplace, as programmatic becomes the way the transact business and becomes embedded in their DNA."
As the value migrates out of technology and into the business strategies driving those tools, companies like PubMatic need to find new ways of proving their value and relevance as the online ad industry at large experiences a wider shift and evolution.
"The ad server is dead and [the industry] needs to reflect that," Goel said. "Over the next two to three years the industry will transition from a legacy ad-serving platform -- business rules-driven, contextually but not audience-aware, since these companies -- DFP, OAS, Ad Tech, etc. -- were built before the advent of real-time advertising. The industry's future involves having the ad server manage both context and audience, with guaranteed direct sales on one end and indirect, non-guaranteed on the other, all operating in real time."
While the decision to add an advisory layer alongside its technology may seem novel, a number of tech companies have attempted to do the same over the years. In 2012, for example, exchange operator AppNexus attempted to create a "global services unit" along the lines of a Deloitte and Accenture. The idea was to have an implementations consultant advise marketers on how to integrate their digital ad systems with AppNexus. (Clarification: We initially reported that AppNexus had abandoned this part of the business, a but a rep for the exchange operator describes it as very much alive with 100-plus consultants whose primary job is help clients use the AppNexus platform and customize it for their needs.)
Perhaps a better analogy to what PubMatic is doing is what AdMeld did before it was acquired by Google two years ago. As an independent SSP facing off against PubMatic and Rubicon, AdMeld created its Strategic Advisory Services group to give it extra appeal to publishers. Unlike AppNexus, AdMeld positioned its consultancy as something that would help clients beyond the use of its platform.
The language Goel used in describing PubMatic's new venture is similar to what was said at the time by Pooja Kapoor, who was director of AdMeld's SAS group and is now Google Display Sales Lead. In a blog post announcing the launch of SAS, Kapoor wrote, "Though we’ve used the term sell-side platform as much as anyone else, the truth is that it only tells half the story. Premium publishers don’t need another platform, and they don’t need another vendor. They need a partner."
That service was essentially included at no additional charge to AdMeld's larger clients, while smaller ones who didn't want or need the company's full suite of products and services could take advantage of SAS for what was described as a nominal fee. In general, SAS was not considered a major revenue driver for AdMeld, but it did factor into Google's decision to buy the company, showing that the company had marketing talent as well as technology.
Goel wouldn't say how much of a revenue generator he expected its consulting to be. Rather, he emphasized that it would enhance the whole of what PubMatic does and how it is perceived in the marketplace.
"When I started the company in 2006, we started with the premise that we could create a multibillion-dollar technology and services company," Goel said, noting that the company is close to that level and will soon have nearly 400 staffers across five continents. "I think we underestimated the opportunity. With everything we're putting in place, we can build a $10 billion or $20 billion business over the next 10 years."
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