Confused Seas -And, What Ad Tech Companies Will Win In The Future?

Data-Driven Thinking“Data-Driven Thinking” is a column written by members of the media community and containing fresh ideas on the digital revolution in media.

Today’s column is written by Scott Portugal, CRO at TRAFFIQ.

“Confused sea conditions are best avoided since there is no getting around them… Confused sea conditions occur as a result of major shifts in wind direction that occur quickly. This causes waves coming from differing directions, resulting in waves that are irregular and unpredictable. So called rogue waves are caused by two waves from differing directions coming together at oblique (very wide) angles. Like two boat wakes coming together, the net effect is to create a yet higher wave, up to two or more times the height of the originals. These can be downright dangerous due to their unpredictability.

When caught out in confused seas, one needs to be particularly alert for those big ones that suddenly pop up out of nowhere. With a bit of experience one can come to anticipate them soon enough in advance to take evasive action.”

– Dockside Reports, as printed by John Riley, Chief Strategist, Cornerstone Investment Services.

Confused seas & rogue waves. Read the above paragraph and tell me that it doesn’t appropriately capture the sentiments in the industry about how challenging it is to make sense of where this ad market is headed. The analogy works: rapid changes in technology create confused ad markets, and hot trends tend to come together to form a huge wave that is unpredictable. Sound familiar? The most recent rogue wave, real-time audience buying, was built by the waves of inventory scale and audience data crashing together. So in this type of environment, who is well positioned to win in the next few years? Based on the “confused seas” concept and it’s inverse, the television ad buying world (static and unchanging in any significant way for 50 years), I believe there are three critical factors to look for:

  1. Companies that remove confusion. And by “removing confusion”, I mean firms that help companies navigate the waters of audience buying & selling, but I also mean firms that remove confusion around what they do. Are you creating standardization? Are you making it easy to buy? Are you a network or DSP? Do you buy audience or sell it? Who is your audience, and what is the one thing you offer them that is going to change their lives for the better? What is the singular value proposition that makes it easier to navigate the complexity that exist in our confused seas? We revel in complexity, but at the end of the day, complexity breeds friction and friction is NOT our friend.
  2. Companies that provide easy-to-use tools for buyers and sellers. If the digital ad environment is confusing, providing a tool that is hard to use in order to remove confusion has limited value. That means companies who offer cloud-based systems that are easily interoperable with legacy platforms are well suited for success. It also means that companies who systems that can be added to existing media budgets without a long sales cycle are going to jump the line and start funneling real dollars back into their businesses. Funding a company with revenue keeps more equity with employees and management as the company grows, and that’s a recipe for success for everybody involved.
  3. Companies that can exist in both rough and calm waters. What if the current DSP trend never becomes the norm, but instead remains as an incremental part of media campaigns? If you’re building your model solely based on the current inertia that this “rogue wave” is exhibiting, when that wave disappears, so does your inertia. Companies that are building themselves to be flexible enough to participate in the RTB craze but aren’t necessarily beholden to it can win in any environment, even when the clouds part, the sun comes out, and the confused seas finally settle down.

After looking at the ecosystem through this lens, it becomes instantly clear who is best suited to become market leaders in the next 24 months. And while these concepts certainly aren’t ground-breaking, thinking of your product and your business model in the framework of “confused seas” can hopefully leave you ahead of potential competitors who aren’t able to see over the next wave. Through singular focus, a dedication to usability, and an ability to become uncoupled from the wave and still succeed, the formula for winning becomes instantly clear.

You can follow TRAFFIQ (@TRAFFIQ) and (@adexchanger) on Twitter.

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