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British science fiction writer Arthur C. Clarke’s third law states that “any sufficiently advanced technology is indistinguishable from magic”. More than 50 years after he pronounced this, technology has been transforming industries beyond imagination – attributing to both the demise and the rise of sectors globally. Advertising is no exception.
While traditional advertising may have taken a hit, the growth in adtech is promising to revitalise the industry in new ways. The Australian online advertising market reached $8.8 billion in 2018, up 11.6% from 2017, according to the IAB Australia Online Advertising Expenditure Report published by PwC. Australian consumers now spend close to 100 hours a month on a desktop, smartphone or tablet device and nearly five million people are accessing internet content on their TV screens daily.
This change in consumption habits has opened up the doors for programmatic to extend its reach across mediums, and for advertisers to connect with consumers like never before. As programmatic becomes the norm, agencies continue to lean on service providers to help them in this space.
Demand-side platform (DSP) The Trade Desk (TTD) has gone one step further and built a bespoke media buying and data management platform (DMP) for agencies to call their own. Developed here in the Australian office, TTD’s Enterprise API (application programming interface) enables agencies and marketers to go beyond being just a service provider.
Instead, General Manager AU and NZ Clay Gill says TTD allows agencies and marketers to own a tangible product which they can customise to their needs. Rather than white labelling it, he says agencies have full reign to make the DMP their own and sell on to their own customers.
“It will almost revitalise agencies or media agencies IP because agencies have so much experience in this area but it’s kind of a soft, intangible transaction; now it becomes something quite tangible and it has an outcome to it,” Gill says.
“If you can code what you would like to be placed or fed into our platform, then it’s really up to you what you would like to be pushing into it. What we’ve seen from our clients at the moment is they have very specific views on what sort of data to be modelled and the attributes they would like to see modelled.
“That’s their call, what they want to do. That ability in itself means that agencies can take their perspective and utilise it as a unique selling point to clients, and also drive revenue for themselves.”
In addition to launching Enterprise API, TTD has spearheaded an industry initiative it calls the Unified ID Solution in direct response to walled gardens such as Facebook and Google. In what may seem like an unlikely partnership, TTD has teamed up with other DSPs, supply-side platforms (SSP), DMPs and data providers to share their proprietary cookie ID and in turn create a universal ID.
“If you have a walled garden, it doesn’t pass back. So, if you’re a client with this first party data, you push it in but it doesn’t come back. That’s part one,” Gill says. “Under the unified ID initiative, the other issue is ‘I have spent all this money’ – it’s the scale issue. So, you can have all this first party data but if you can’t see that lookalike audience elsewhere, it’s pointless. You don’t really get much return.
“With this set-up, what it means is that we have mapped our cookie IDs with other partners. So, we opened it up and said you have a look at ours, I’ll have a look at yours and we’ll see what matches up and then we’ll improve that.”
Gill notes that in working with others on this project, not only does it provide scale but it also offers tremendous cost savings and a faster page load time leading to a more efficient and effective process for all involved.
Over the past year, TTD’s connected TV spend has grown just under 80% year-on-year, while audio has seen 157% year-on-year growth. The unified ID project is set to become integral in programmatic’s growth to maturity as it continues “moving up the funnel” with the rise of emerging platforms like connected TV, audio and digital out of home.
The future of advertising
Walled garden global giants Facebook and Google may continue to rake in the vast proportion of advertising dollars, despite the Australian Competition and Consumer Commission’s (ACCC) “deep dive” inquiry into the digital platforms. However, the growth in programmatic is helping to even out the playing field.
Andrew Frank, a Gartner Vice President and Analyst, says programmatic is the biggest player in the adtech space, and although it has grappled with many challenges surrounding privacy, fraud and viewability, he believes it is the future of advertising.
“Pretty soon almost all advertising will be bought in some programmatic way,” he says. “Maybe not in the real time auction but in some way that automates a lot of the stuff that was manual in the advertising world before the digital revolution came along.”
Unlike the walled gardens, Frank says programmatic is based on “open standards” created by the IAB. He also notes that blockchain could play a vital role in the future of the advertising market, relinquishing power from the bigger players.
“Blockchaining, as we know, is a decentralised ledger that can store a chain of transactions in a secure way that doesn’t require the oversight of some kind of centralised authority like a bank or a government or an internet platform,” he says.
“The connection with advertising comes from the observation that a lot of people feel that one of the big challenges in the advertising market today is the concentration of data and media power in the hands of a small number of companies – mostly Google, Facebook and Amazon.
“The upshot of this is, I hope, that perhaps some kind of decentralised structure like a blockchain could eliminate the concentration of data and media power as well as create a system that is more transparent.”
Blockchain may be the way to eliminate ad fraud and create a fairer market where more powerful players won’t be able to dominate.
“I don’t think it’s a cure all by any means but I think that some of the benefits of blockchain will find their way into adtech. I think one has to be selective about where these innovations can best be applied,” he says.
Local innovators
In the past, Australia’s smaller population seemed to drive the belief that the nation was lagging behind others, particularly on the tech front. These days, companies such as TTD and others see it in a brighter light, and an ideal testing ground for many innovations.
Singapore-headquartered business Nugit is a data storytelling platform founded by Australian entrepreneur David Sanderson in 2013. Launching officially in Australia last year, the platform works with artificial intelligence (AI) and natural language generation software to give enterprises, tech companies, publishers and agencies access to data, and drive productivity with the automation of the analytic process.
Nugit Australia Country Manager David Nemes says the business is working to give agencies and marketers that “single source of truth” with the data they use and in turn creating a more valuable experience for consumers.
“I think a lot of products have been created with the idea of extracting as much revenue as possible rather than adding the most value to the user,” he says. “There are many examples proving that if you put the user or member at the core of everything you do, the more valuable your product becomes.
“I think that as everything becomes digital, ad tech will become more crucial than ever. There will be a lot of consolidation but the products that are adding value to both the user and the marketers should thrive. The adtech that just clips the tickets on the transaction but adds little to no value will struggle to survive.”
Innovation in the local market is on the rise, but Nemes is calling on more help for start ups to get their feet off the ground.
“In the past, a lot of the innovation was coming out of the US and Europe but I think that gap has closed significantly,” he says.
“Today we can find amazing tech originating from all over the world and Australia is no exception. Unfortunately, we need to do a lot more to help start ups in Australia, especially when it comes to R&D. We are falling behind a lot of other markets in that regard and are losing a lot of early-stage companies to countries that are more supportive.”
One person advocating this is Chantal Abouchar, founder of creative and media tech incubator The Studio which is based out of Sydney’s start up hub. In just over a year, The Studio now finds itself home to around 136 local creative and media start ups and has raised around $28 million in investment collectively.
She says that the beauty of many of the start ups, despite being focused on creative and media tech, are industry agnostic. One of the start-ups OOVVUU, which allows publishers to monetise video news telling, has scaled exponentially through the incubator, Abouchar explains.
“One of the first start ups through the door was Ricky Sutton Greg Moore and Ross McCreath, the founders of OOVVUU, and there were four people in that team,” she says. “They were ready to start scaling but they’d been on this incredible journey where they’ve just been on this incredible exponential growth and have raised, I think, close to $12 million a year. They’re scaling really fast and they’re now heading towards a team of 20.”
Another adtech start up based out of The Studio is OIS which provides third-party physical verification to the global out-of-home media industry. It aims to reassure advertisers that consumers have the opportunity to see their paid ads displaying correctly.
OIS head of platforms and partnerships Rebecca Pirrie says there has been a need for the verification platforms as brands demand greater transparency.
“In out-of-home specifically too many players are self-reporting however, brands want clarity on how their out-of-home campaigns are delivered without relying on publisher data,” she explains.
“This has been the case with online media for some time, which now sees accredited industry standards. We have developed proprietary technology that enables us to physically visit and verify out-of-home media assets for greater accuracy.
“As the industry evolves and changes ad verification platforms such as OIS will become more critical in removing any ambiguity in this space. Advertisers and agencies should have access to independent, meaningful data and analytics that inform and facilitate better decision making.”
Founded in Perth last year and owned by ASX-listed company Adveritas, TrafficGuard is another adtech innovator designed to combat barriers the industry is facing. Founder and Chief Operating Officer Luke Taylor says digital advertising fraud is the second most lucrative criminal enterprise, costing businesses in excess of $19 billion in 2018.
“TrafficGuard was built from the ground up leveraging the power of machine learning to detect and remove fraud as it evolves,” Taylor says.
“TrafficGuard analyses traffic at the impression, click, attribution, and post-attribution levels in order to invalidate fraud as early as it can be reliably detected. TrafficGuard detects both general invalid traffic (GIVT) and sophisticated invalid traffic (SIVT) to ensure that digital advertising results in legitimate engagement.”
In a recent forecast by Juniper Networks, ad fraud is expected to cost the industry up to US$42 million in 2019. APAC alone lost US$18 million last year.
“New fraud tactics are on the rise, and as the tricks and schemes of the past 20 years become less successful for fraudsters, we are seeing perpetrators adapt and evolve,” Taylor says.
“Additionally, as more users consume media through mobile apps and OTT channels, fraudsters are finding new vulnerabilities to exploit in emerging digital channels.”
All roads in the quest for ad tech draw back to the same conclusion – the future lies in true connection and value. As it continues to mature, ad tech will continue to be the driving force in the new wave of advertising but as Taylor notes – it must armed and ready to fight fraudsters.
“There is little doubt that digital advertising will, across the world, supplant traditional advertising over the next few years. However, the sustained growth of the digital advertising ecosystem will, as an unintended consequence, continue to fuel the rise of ad fraud.”
The next step
Much like Ron Weasley learning to master his spells in Harry Potter and the Chamber of Secrets – and instead making himself vomit slugs – adtech is still learning how to master challenges surrounding data, transparency, ad fraud and brand safety.
CEO Adrian Farouk of digital marketing company Digitas says that adland needs to come together to better combat these issues. He believes each facet of the industry, including ad tech, is too disconnected and believes a holistic approach is the way forward.
“A large part of data security issues really comes from when you’re moving from one platform to another which is why we see adtech platforms becoming more high led BMP’s or programmatic platforms, so they can control the flow of data better,” Farouk says.
“We’ve got to think about this end to end. It’s just still too siloed.”
Rather than having too many cooks in the kitchen, Farouk advocates brands having a “single source of truth” to better manage data.
“It can be done in different ways, it doesn’t have to be done in one way,” he says. “But if they can build a single source of truth and actually take control of their own data and therefore the intelligence they can drive from it, they’ll also be taking a major step to managing data privacy governance, when ultimately delivering brilliant customer experiences.”
Similarly, tech company Quantcast’s Managing Director for APAC Andrew Double is calling on the industry to be more “diligent” in its quest for and use of data. He says not enough questions are being raised about the source of data that informs the insights many brands are being presented.
“Not enough in this industry right now do people question where the source of that data comes from,” Double says. “We could all come up with nice fluffy things but it’s not meaningful. I think the diligence, the questioning, the rigour is crucial to how we move forward.”
Despite Quantcast being in the game since 2006 – a substantial timeframe for a tech-based company – Double admits there is still plenty of room for improvement. While targeting and conversion are hot topics in the industry, Double says these areas are still not fully understood.
“I would say from a targeting perspective, it hasn’t gotten vastly better – the targeting piece – because I still think we’re led on assumptions rather than actually understanding audiences,” he explains. “How has it got better? I think people know more about their audiences than we ever did before. I think it has gotten better in terms of people starting a journey of understanding what an incremental conversion is.”
He calls out meaningless measurements such as click-through rates still being used by advertisers to attribute conversion, explaining that 96% of the online population don’t click on ads and more often than not those who do have done so by mistake.
Moving away from assumptions and focusing on real user interactions is where adtech can drive the most impact. Double points out that through the use of “machines” marketers and advertisers are able to get back to focusing on strategy.
“Humans are very, very good at running strategy. Humans can do tonnes of things that machines can’t do but in terms of making really up-to-date minute decisions on who an audience is, etcetera, a machine would always be able to do that much more efficiently and effectively than a human would.”
Samuel Tan, Senior Director Market Development JAPAC at AppNexus, A Xandr Company, agrees with Double on the transparency front.
He says it is one of the key challenges the ecosystem faces.
“Although programmatic advertising has brought improvements in efficiency, effectiveness and scale, it also introduced a complicated supply chain that lacks transparency,” Tan says.
“As a result, marketers still struggle to answer basic questions about where their working media dollars are going and what portion of their spend actually ends up with publishers.”
But how to overcome this? Tan believes companies need to support policies and practices that improve visibility within the supply chain – which is exactly what AppNexus has been executing.
“We have signed agreements with many direct publishers in the AppNexus marketplace to give us permission to confidentially share our sell-side technology fees on each impression with the buyer,” he says. “This visibility enables buyers to make more informed and justified decisions about their spend.”
Alongside transparency surrounding ad spend and data, the line between traditional and digital media is one that continues to be blurred. Global media company Verizon Media’s Liz Adeniji, who heads up Verizon Ad Platforms in Australia, has probed questions surrounding ownership as the two worlds continue to collide.
“We know that traditional media is being disrupted,” she says. “We’re seeing the emergence of connected TV, digital out of home and audio which are all growing both in interest and in spend. Who owns it? Is it the digital teams that own the planning and buying of it or is it the offline teams that own that? How do you connect the dots to show value in incremental reach? How do you simplify terminologies so they both match?”
She also points out the importance of connecting the dots to alleviate the questions surrounding measurement, viewability and attribution. Transparency is an issue that remains top of mind for most in the industry.
These questions probe barriers within what Adeniji calls the “educational piece”. Through efforts from bodies like the IAB though, she says standards and frameworks have begun to be set that are helping to overcome these issues.
Despite these issues, Adeniji remains positive about where the future of adtech lies. Moving beyond the mobile and desktop, she says the opportunities are endless with a range of emerging channels now expanding programmatic advertising's reach.
“Today, programmatic advertising has endless possibilities from programmatic native, video, audio, digital out of home and for us, which is really unique, it also includes virtual reality (VR),” she says.
“[VR is] still an emerging channel but we're seeing appetite from some large FMCG brands. Essentially, it allows our clients to digitally insert a piece of advertising within a user's VR experience.
“So, we’ve really seen advancements in those areas and maybe in three years’ time, we’ll come back and we’ll talk about programmatic IoT [Internet of Things] which will also encompass smart homes, smart cars and pretty much anything you can put a sensor on.”
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