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AdExchanger.com Predictions for 2011: The Investment Community

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AdExchanger.com 2011 Predictions: InvestmentAdExchanger.com reached out to the angel and venture capital investment community for their predictions about the digital advertising ecosystem in 2011.

Click a name below to begin, or scroll:

Gil Beyda, Managing Partner, Genacast Ventures

  • First, we will see the rise of Data 2.0. Data 1.0 is the raw or lightly processed data points we see today. This data is very inconsistent and thus very difficult for algorithms to extract signal for targeting purposes. Data platforms will begin refining and scoring this data to produce highly enriched data that is consistent, predictable, scalable and of very high quality. Data 2.0 will be the foundation of next generation “smart” segments that will provide significant signal and thus lift to targeting engines.
  • We will begin to see consumer privacy policies implemented in technology platforms. Now that self-regulation is firmly in place and direction has been provided to industry, technology platform providers will begin implementing reporting and enforcement tools into their solutions.
  • Finally, we will begin to see consolidation in the online advertising ecosystem. Too many players have point products or features while the buyers and sellers need full solutions. Look for roll-ups or mergers to simplify the landscape as larger players fill out their product lines.

Jeff Crowe, General Partner, Norwest Venture Partners

  • Demand side platforms and supply side platforms exploded onto the scene in digital advertising in 2009-10. DSPs and SSPs were all about efficiency, optimization and scale. Now it is the turn of data management platforms. Platforms which enable superior audience management and targeting through the sophisticated use of data will give strategic advantage to both advertisers and publishers alike. DMPs will be the next high stakes battleground in 2011.

Chris Dixon, angel investor, co-Founder Hunch

  • Online-offline attribution will be increasingly important area.
  • Facebook will launch off facebook.com display network.
  • Display will grow dramatically as more brand advertisers move to web.

Roger Ehrenberg, founder and Managing Partner, IA Ventures

  • The balance of power will begin to shift from the demand side to the supply side, setting the stage for 2012: The Year the Publisher Takes Control of Online Ad Monetization.

Chris Fralic, Partner, First Round Capital

  • Consolidation will continue as ad networks continue to look to incorporate data, targeting and non-display formats into their offerings. Related to that, the innovation and trends we’ve seen around targeting, data, and platforms will move into search, mobile, video and email. Also related – CPM’s will continue to rise in 2011.
  • 2011 will likely be the year we see legislation take shape in the area of privacy, largely driven by the WSJ.com/WhatTheyKnow and similar series of articles.
  • We’ll also likely see Facebook continue to be a critical and growing component of the display landscape, and the share of dollars spent there (currently around 9%) will grow towards their share of impressions (currently around 22-23%).

Jonah Goodhart and Noah Goodhart, WGI Group and entrepreneurs

  • Creative, creative, creative – while 2010 was the year of the science of advertising (data, retargeting, RTB, etc), in 2011, we’ll start to see a renewed focus on the art of advertising. Why? Because advertisers are starting to realize that creative has a multiplying effect on the success of their campaigns – combining the art and science in a thoughtful way can lead to 4x-10x lifts in performance.

Seth Levine, Managing Director, Foundry Group

  • Where to even start… I think we’ll see acceleration of the consolidation that we’ve been talking about for years on the ad network side, but the overall number of companies in the online advertising ecosystem will continue to rise.
  • 2011 will see a billion dollar M&A event in ad tech, at least 2 ad tech companies going public and one (or two) deals that we all scratch our heads about and wonder how the acquirer could have possibly justified paying up that amount (possibly the billion dollar outcome? not sure).
  • I also suspect we’ll see some kind of public hearing on data and privacy in Washington, followed by very little in the way of incremental regulation (plenty of grandstanding, however).

Jerry Neumann, angel investor

  • The trend towards building companies that solve problems closer to the marketer and publisher will continue; innovation will keep moving away from the core towards the edges.
  • Marketers and publishers will finally start to digest the massive wave of innovation that washed over them in the past few years. The emergence of ad tech solutions that actually provide real and large improvement to marketing ROI will speed this along. Services and solutions that help marketers and publishers figure out how to navigate the landscape and implement best practices will flourish.
  • Towards the end of the year, the smartest entrepreneurs will start thinking about how to reinvent the core platforms to better support the needs of the best emerging applications. A dynamic similar to the software/hardware co-evolution of the ’70s and ’80s will begin, creating similar strategic opportunities.

Matt Nichols, Highland Capital Partners

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  • 2011 will be the year of social for ad tech with implications rippling across the industry.
  • Massive shift in display inventory (Facebook nears 50% of total display ad inventory).
  • Breakout success for targeting using social data (33Across, Media6, xGraph, etc.).
  • Notable privacy breaches as companies try to utilize social data effectively before the rules for its use are clearly defined.

Satya Patel, Partner, Battery Ventures

  • There will be less consolidation in the ad tech market than people anticipate, largely because there is still too much venture money flowing into startups and established companies. Most consolidation that does happen will be modest private-to-private transactions and small tuck-in acquisitions rather than big dollar M&A by the large online players.
  • Data will continue to increase in importance, with both the buy-side and sell-side looking for solutions to help access, manage and measure both first party and third party data so that they can stop pushing dollars, audience and inventory through middlemen.
  • Networks and exchanges will look to expand from just display into multiple online ad types/channels, particularly video and mobile.
  • An entire ecosystem of companies will develop around Facebook ads, similar to what happened with Google AdWords.

Bipul Sinha, Principal, Lightspeed Venture Partners

  • iPad and its clones will open up large inventory for brand advertising – lean back media consumption pattern will attract brand advertisers.
  • Audience buying will be the main driver for brand ad spend on online media.
  • Advertisers will demand cross channel attribution intelligence on media spend.
  • 2011 will be the inflection point for social media advertisement – social media advertisement will move from experimental budget to real spend.
  • Continued consolidation of Ad Networks and commoditization of DSPs.
  • Android will increase mobile ad inventory by an order of magnitude – agencies/advertisers would be able to buy scaled audience on mobile.

Andy Weissman, COO, Betaworks

  • Publishers will realize that concurrent users is a better measure of a site’s value than monthly unique visitor.

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