Are programmatic media companies about to hit the wall? Ken Sena, managing director and Internet analyst at investment banking analyst firm Evercore Partners, is wary.
Despite the exuberant expectations around companies like Criteo and Rocket Fuel, Sena sees a possible multifront threat on the horizon. In an Evercore report called “Questioning Competitive Barriers In Programmatic,” Sena writes: “These programmatic media companies face competitive pressures not just from buyers and buying agencies but also from sellers who bring some unique publishing inventory or data into the mix.”
He references figures from Magna Global which note that even as Internet media spend grew around 16% in 2013, display advertising flatlined at around 6%. So what’s going on? Weren’t programmatic concepts supposed to help buyers optimize spend and sellers optimize yield?
Yes and yes – and for Sena, this is why growth in display advertising has stagnated.
“If [advertisers] can zero in and say this percentage of display is more valuable, [they] might also realize other display [they're] buying is less valuable, and adjust spend there negatively,” he told AdExchanger. “And if you’re a publisher, you can flip that around. You know what’s most valuable for advertisers, so you increase the prices there but lower the prices on everything else.”
Sena spoke with AdExchanger about why the fragmented display ad marketplace, and a lack of transparency among programmatic media companies, could create some unexpected chop in the water. (more…)