There was a time when ad networks were considered manna from heaven by digital publishers and advertisers alike. Sadly, that scenario has changed drastically in recent years. The reasons behind it are many, say some ad tech executives we spoke with.
From stymied evolution, to lack of investment in technology, to a failure to match to the scale provided by platforms like Facebook and Google; the reasons are myriad.
In India, there have been some major changes in recent months/years.
Consider — Ozone Media has rebranded itself as Adadyn and retired its ad network business last year. Komli Media sold of its media businesses in India (to SVG Group) and Southeast Asia (Singapore, Thailand, Vietnam, Philippines, Indonesia, Malaysia and Hong Kong) to Malaysia’s Axiata Group earlier this year. An independent entity, spun off from the company, RevX, continues to operate as a standalone company with a focus on mobile app re-engagement.
Just recently, Vizury announced that it will be laying off around 50 employees in its retargeting business as it also seeks to transition its focus areas. And industry sources have indicated that AdMagnet, at one point of time India’s biggest ad networks, has shut shop, though no official statement has yet been received by the company.
There are enough examples to show that this is just not a one-off issue.
Dhruva Shetty, Head of Marketing at Vizury, said about the restructuring: “Earlier this year, we announced Vizury Engage, a data and marketing platform, and already have customers on board. As our collective efforts are directed towards Engage to realize our vision of becoming the world’s first performance marketing hub, some aspects of our retargeting business had to be transitioned.”
On similar lines, a spokesperson for Adadyn agreed that the traditional ad network business model is on the decline as media planners and advertisers want greater control and transparency. “Ad networks need to align themselves more closely with the client needs, as transparency concerns continue to plague the ecosystem,” he said.
When asked about the likely evolution of the ad network ecosystem, he said, “There's plenty of opportunity in the marketplace as well. Unfortunately, technologies have evolved at a pace that it's difficult for the common company to keep up. This has rendered many technologies simply inaccessible. Being on the forefront of making these technologies accessible will be key to success in the marketplace.”
But this is not just an Indian phenomenon, though, as we saw earlier, we have witnessing some major shifts among Indian networks. Ad networks around the world are facing the brunt of changing consumer behaviour, client expectations and a the very basic problem of having failed to keep in touch with times.
“It is a global phenomenon. We saw a bunch of Western ad networks go public and see their stock fall too. All these companies (including Indian companies) have stuck with the traditional ad network model but in the long term just doing media arbitrage is not going to add any value unless you bring in human intelligence and a tech core,” said a senior executive at an ad tech firm, who did not wish to be named.
Here is the main problem; the traditional ad network was a way to connect the publisher to the advertiser to allow placement of ads. There was no other (or hardly any) value addition from the side of the ad network. Now, with platforms like Google and Facebook providing spot on targeting capabilities, advertisers are understandably gravitating towards them (and other ad tech companies which provide these capabilities).
“The media inventory model that all ad networks used to follow used to work till advertisers and media planners were carrying out destination planning, viz. just advertising on pre-determined websites. The way of discovery of content has now changed, which has further caused planning to become more audience-centric and you need a strong tech and data background,” opined Madan Sanglikar, Co-founder and Co-founder and MD (Indonesia) & Executive Director (SE Asia) of Affle.
Giving the example of a recent ad network that has shut down, he further pointed out that the increase of traffic from mobile (which used Mobile ID as means of profiling) as compared to desktop (which uses the obsolete cookies) was a major technological shift and one that a lot of ad networks were not prepared for.
“Media aggregation as done by ad networks is being disrupted by RTB Ad exchanges and data-based decision-making done by real time engines. Data driven marketing delivers much higher conversions and ROI as compared to other formats. Consumers are being bombarded by an excessive number of ads today. With data driven insights, advertisers are able to identify which ad will work best for which customer in a contextual fashion,” said Shiju Mathew, Head of Product Management (Mobile) at Vizury.
Siddharth Puri, CEO at Tyroo, also agreed that the fact that traditional ad networks could not evolve and keep up with the emergence of mobile contributed to their current state. “Companies that were only playing on the media aggregation card are shutting down even though the total number of ad networks is increasing,” he added. He also pointed out that the shift in media planning is also because of the rise of social content, something others alluded to too. “In the past, no brand would want to advertise on user generated content but look at how things today. Most content is only on Twitter and Facebook,” he said.
On the publisher side, the rise of programmatic is also making things easier for them to plan out their digital ad spends in an automated and transparent manner. The rise of automation has also made media agencies and the true ad tech companies more effective at planning spends for clients. “Programmatic has taken away the need for media aggregation because publishers are getting wooed by programmatic tech companies. If you see, it is not the ad networks that bring change but the publisher and the media agencies and so they (ad networks) who need to evolve with these guys,” says Karan Gupta, Founder of andbeyond.media.
So what is the solution? Said one ad:tech executive, “Creativity, intelligent media planning and technology are the three pillars for any company that survives in the future.”
And another key ingredient would of course be data. Gupta opines that the ad networks who will be able to prosper will be the ones who can leverage the data the best.
“The companies that never invested in data have lost out. Even the pure play, inventory-led companies have now realized how important data is,” Sanglikar further added.
The change in outlook is also bringing about a consolidation in the market. To take one example, over recent years, the SVG Group has been picking up networks and digital agencies like Komli Media, Seventynine, NetworkPlay, etc. Tyroo, too, is a part of the group. This amalgamation of differently specialized ad:tech companies might also be a possible solution, said heads of ad:tech agencies we spoke with. In SVG Media’s case, Seventynine is a mobile ad network, Tyroo has a strong focus on e-commerce tech products, while NetworkPlay is into performance advertising.
“What we realized a couple of years ago is that we could either try to be large or become a specialist in a niche. Thankfully, the former has worked for us. For ad networks, the one with the largest scale will survive. Or, like in e-commerce, everyone is looking to get into vertical niches. The guys in the middle of the daisy chain will face the problem,” said Puri, when we asked him about his thoughts on consolidation.
Add to this, a systematic and aggressive drive by media agencies to enter the programmatic ad buying/selling space and one can understand why the era of the ad network is all but over.