How To Steal Some Of Microsoft’s 76% Ad Tech Market Share

ohara-ddt-nextmark-usethis“Data Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Chris O’Hara, Chief Revenue Officer at NextMark.

When you think of advertising technology in the display space, the first names to come up are probably Google, PubMatic, Adobe and AppNexus. But Microsoft? Not really top of mind, unless you are thinking of its disastrous aQuantive acquisition in 2007. Sure, every now and then MSFT will pick up the odd Rapt or Yammer, but is it really having a huge impact in the ad tech space? Even if you’re a regular AdExchanger reader, you’d be justified in thinking it’s not.

But you’d be 100% wrong.

Microsoft has been quietly running the inner ad tech workings of digital display since the first banner ad was purchased in 1995. According to some recent research, the company’s ad-planning software boasts an amazing 76% market share among agency media planners. MediaVisor ranks a distant second with a measly 9.7%. Almost nine in 10 planners who use this software spend more than an hour a day on it, while almost 35% use it for more than four hours per day.

This software is called Microsoft Excel.

Released in 1985 (originally for Macintosh), Excel is nearly three decades old and has been powering digital media planning since its inception. Combined with Outlook, Word and PowerPoint in the Office suite of products, Microsoft tools have been central to the digital media planning process for a long time. Planners plan in Excel, publishers pitch in Excel and PowerPoint, contracts are made in Word, and everything is communicated via Outlook. And then we have billing and reconciliation tasks that occur within spreadsheets. Nobody ever seems to wonder why more than $6 billion in digital display media transactions (representing nearly 70% of all ads sold) use Microsoft tools and the occasional fax machine.

While innovative companies have challenged the dominance of these systems in the past, early efforts fizzled. The complexities of modern digital media planning, combined with the reluctance of agency planners to change their behavior, have hindered innovation. Looking at past and current “systems of record” for media buying, it’s no wonder planners are scared of change. If you have ever seen legacy agency operating systems, you wonder if a single dollar was ever spent on user experience or user interface design.

Why Programmatic-Direct Planners Use Excel

As an ad technology “evangelist” of sorts, my job is to show agencies the future of digital-media planning. This is being called programmatic buying, a term encompassing both “programmatic direct” buying, which targets the transactional RFP business that accounts for 70% of digital display ads, and “programmatic RTB,” which accounts for the impression-by-impression purchases that represent $2.4 billion, or 25% of the pie. (The remaining 5% is custom, which is impossible to automate.)

Companies like MediaMath and AppNexus have made the latter category wildly efficient. Buyers don’t use Excel to create an audience-buying campaign across exchange inventory. Instead, they log into a web-based RTB platform.

For automating guaranteed display buys, though, Excel has become the default for media planners, even though it doesn’t have the features of many web-based systems. For example, Excel doesn’t track your changes. When planners change something, multiple files are created, and it’s easy for two people to work on a plan simultaneously, duplicating and botching their work. Excel isn’t Sarbanes-Oxley compliant, either. Agencies end up with thousands of Excel sheets on hard drives and servers, and a complicated file versioning and access system that makes replicating and tracking plans really difficult. Excel doesn’t integrate easily with other systems. At the file level, Excel is great. You can import and export Excel files into almost anything. But Excel can’t send out an RFP, or accept an order. Excel can’t automatically set an ad placement inside an ad server like DFA or MediaMind, or get comScore updates. Excel is amazingly flexible, but it wasn’t built for media planning.

Today, the average digital media plan costs nearly $40,000 to produce and takes as many as 42 steps to complete. That’s why, according to a recent Digiday survey, more than two-thirds of agency employees will leave their jobs within the next two years. Digital media planning should be fun and innovative, and young, smart people should want to spend their time influencing how major brands leverage new technologies and media outlets to sell their products.

The reality is that young media planners fill their days with reconciling monthly invoices and ad delivery numbers. Have you noticed media planners’ eyes glazing during your latest “lunch and learn?” That is today’s young agency employees’ way of calling bullshit on ad tech. Our technology has been making their lives harder and their hours longer, rather than ushering in a new era of efficiency and performance.

How We Can Finally Beat Excel

I believe that dynamic is rapidly changing now. Buy-side technologies from innovative software companies, combined with offerings from sell-side players that are plugging into publisher ad servers, are creating a programmatic future by building web-based, easy-to-use and extensible platforms.Here are a few reasons these types of systems will be adopted:

  • Pushback on agency pricing models: Big agencies have been getting paid by the hour for years, but their clients are starting to push back on cost-plus pricing schemes. After exposure to self-service platforms and programmatic buying, they are getting used to seeing a larger percentage of their money applied to the media, and that trend is only likely to continue. Brand advertisers are demanding more efficiency in direct-to-publisher buys, meaning agencies must embrace programmatic direct technologies.
  • User interfaces and user experiences are improving: Young people plan media. They are used to really cool web-based technologies such as Snapchat and Twitter. Today’s platforms not only centralize workflow and data but increasingly come with something even more critical to gaining user adoption – a nice interface. When we start building tools that people want to use and a user experience that maps to the tasks being performed online, adoption will quickly increase.
  • Prevalence of APIs: Today’s platforms are being built in an open, extensible way that enables linkage with other systems. Since there are so many phases in modern digital media planning (research, planning, buying, ad serving, reporting, billing) it makes sense for platforms to talk to one another. While some legacy APIs are not the best, they are getting better. Server-to-server integrations make a lot more sense than 23-year-old planners updating spreadsheets. As David Kenny, CEO of The Weather Company, once remarked, “If you are using people to do the work of machines, you are already irrelevant.”

Because of these factors, I expect 2013 will be the year that programmatic direct buying changes from a fun “lunch and learn” concept to a reality. It’s time for us to finally get steal some of Microsoft’s ad technology market share.

Follow Chris O’Hara (@chrisohara) and AdExchanger (@adexchanger) on Twitter. 

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  1. Kirby Winfield

    Great stuff Chris. Only once we solve the fundamental labor efficiency issue can we move up the heirarchy of needs to solve for ad effectiveness. Adtech salespeople spend so much time complaining that agencies are hard to sell to without understanding they’re putting the cart before the horse.

  2. So true, Chris. This is the year to get the industry behind the tech tools needed to make everyones’ life easier. We can drive down the buy & sell side costs. The net effect is media purchased faster, more ad spend to actual media which equals better “performance” and more profit for publishers so they can continue to fund great content for consumers.

  3. Yes. The unsexy part of digital media!

    Excel is used in everything, not just planning — but reporting too. Sales pipelines, analytics, delivery, 3rd party stats, data usage, internal product performance. We’re working on the reporting side here at Staq.

  4. Alejandro Correa

    I really liked the article, and agree with much of what is said here. Excel remains the most accessible way for someone without SQL or other highly specialized knowledge to look for insight buried in large sets of data. We could (and should!) build better data-entry interfaces for people in media, because no one should be entering data manually into a spreadsheet. I’m not sure we need to “beat excel” or banish it altogether; this would eliminate one of the ways that assistant media planners and planners can contribute big ideas to their clients.