The Digital Advertising Ecosystem Needs More People Says Angel Investor Neumann

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On The EcosystemAd tech angel investor (33Across, Flurry, Magnetic, Metamarkets, PerformLine, The Trade Desk, XA.net, and Yieldbot among others) Jerry Neumann recently spoke to AdExchanger.com about his views of the digital advertising ecosystem today.

Click below or keep scrolling to read his answers...

AdExchanger.com:  What is missing in the digital ad ecosystem today?

JN: The thing that's missing right now is people. There's been so much innovation over the past few years that we have all this advanced technology, we have all this data, we have all these algorithms, but we have very few people who know how to use them. Some technology companies are becoming managed services companies because the only people who really know how to use the technology are inside of the companies who are building it.

There are not enough talented people in the ecosystem for all the agencies, for all the marketers. And I think that leads to sub-standard results.

We need a few hundred more ad tech experts, dispersed around the industry. If some big company in the space got acquired and a bunch of those people spread out to the far reaches of the marketing world bringing all their knowledge with them, the technologies and the processes would all of a sudden get more traction because they would be in the hands of the people who really know how to make them hum.

If you're a CPG company today, say, you can't just hire some young person out of college and say, "All right. Do this." They can, right? They will learn how to do it. It's not like it's that complicated, but it'll take them several years to become an expert. But right now the good people are locked up inside the adtech companies. It’s surprising to me that you don't see more competition for some of these people from the traditional agencies and marketers.

Why aren’t they hiring people who actually understand this industry? I think they're still underestimating it. I think they think it's something they're testing, something they're trying out. They don't seem quite convinced yet that this is here to stay, and it's going to be a major piece of how they do business from now on. That will come. I just wish it would come sooner, it’s holding us back as an industry.

Is there room for more exchanges?

Right now we have an end‑to‑end connection process taking place.  Companies like Admeld are enabling the publishers to sell their inventory in real time, RTB technology implemented at the publisher, and that inventory doesn't have to go through an exchange at all. The buyers can direct‑connect into that publisher side system.

But if you RTB-enable enough publishers it becomes difficult for all the buyers to direct‑connect into all of them. Each buyer has to implement some sort of automation to sift through all the offers from all those sellers. They’ll all need DSPs to be placing bids into all the private exchanges.

So you need the DSPs on the buy side, and there are going to be many of them. But then you have scores of programs on the sell side, scores of programs on the buy side, all trying to direct-connect to each other.  That’s a lot of connections. Having some sort of smart router in the middle that says, "This one's going over here. This one's going over there," or even just starting with a common set of APIs, makes a ton of sense. And that's the beginning of a new exchange. I think that is still going to happen. I don’t think some company is going to start up a thin exchange like that, It's going to have to be the industry saying, "All right. This has gotten way too complicated. Let's implement a standard set of interconnect protocols and perhaps even a place where that interconnect takes place." And that then becomes the exchange. And it's not going to be a company. It's going to be a collaborative or cooperative between the companies using it. And it will be something that nobody ever hears about if you're not involved in the industry’s plumbing, any more than your average internet user ever hears about internet exchange points. And that’s good, there are layers of abstraction shielding us from the gory details of how it works. It just works, and that’s one less thing to think about.

Are publishers getting smarter in this data driven ad world?

The question itself kind of bothers me. I think in the industry we look at the problem of media buying and we have a better way of doing things. There's this sort of an engineering viewpoint of, "We've created the perfect way of doing this, the perfect system, so line up and start using it.”  When people don’t like it, we think they just don’t get it.

But like everything, the perfect system implemented wrong is going to be sub‑optimal. These tools should help buyers allocate their money better, and on the publisher side generally allocate value better, but systemically they aren’t used well.

So the stories you hear about how marketers and publishers implement some of this stuff and it doesn’t goes back to the fact that they just don't have the people internally who know how to implement it well yet. And then with a suboptimal result they're kind of like, "Well, all right. This sucks."  And the answer we give back too often is, well, you're doing it wrong. But that answer, "You're doing it wrong," is not a good answer.

You don’t get to blame the customer. You've got to figure out how to make it so it works for the customer, and we haven't done that yet, not in a straightforward way.  Everybody's struggling with that.  And partly it's because what we’re doing is too complicated to just slap on a simple user interface and expect it to do much. So you really need people in every business that's touching this who are more sophisticated, not just in one or two… everywhere. It can't only be the middlemen who have all this sophistication.

Follow Jerry Neumann (@ganeumann) and AdExchanger.com (@adexchanger) on Twitter.

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