AdExchanger.com: In your April 6 LSVP blog post, you say there will be more ad networks not less. Why?
JL: There are four elements that you need to be able to run a successful ad network:
- Access to inventory - which has become commoditized by the ad exchanges.
- Good data for targeting - which is becoming commoditized through companies such as Lookery and Blue Kai
- Good targeting algorithms - which is often over-rated - more data usually beats a better algorithm.
- Access to advertisers/sales execution - which has become the gating issue, and there are lots of good sales people who have a spike with advertisers in a geography, demographic or vertical area who can now set up shop on their own.
Through your entrepreneurial lens, who and/or what models in the advertising tech world is taking advantage of this valley in the economy right now? Any predictions on ad tech models that get funding in the next year or two?
Early strength with ad exchanges has been in performance display advertising / direct response. Do you see brand advertisers participating in the exchange in the future?
Yes. Brand advertising hasn't been as measurable as performance advertising, so it has largely required a leap of faith. But as the metrics improve, we'll likely see brand advertisers also making the jump.
Large, "premium" publishers are trying to steady their falling CPMs by cutting out their former network partners. Are large publishers getting it right with this walled garden strategy? Any better ideas?
One of the ways that publishers can maintain their premium has been to do more integrated campaigns and this intrinsically works better when you're vertically integrated versus when sales is disaggregated from the rest of the publisher. I think that this will continue to be a viable strategy.
How must the media buying agency model evolve in the increasingly, digitally optimized world of online advertising?
Some agencies are already trying to create their own exchanges (WPP etc). They control the advertisers dollars, so they really are in the drivers seat.
Will Google own the display ad exchange model eventually? And, assuming privacy can be overcome, do you see search retargeting as a driver in this ownership?
It isn't clear that Google will win the exchange model. It isn't clear who will. We're still in the early stages. Search retargeting is one driver of value, but as data gets commodized (see Q1 above) it won't be the only way to drive value. Direct sales execution will be of key importance and that hasn't been an area that Google has historically excelled in.