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Name Submitted by NAI on July 10, 2014

An interview with Michael Benedek, President & CEO, Datonics

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What does Datonics do?

Datonics (www.datonics.com), a member of the AlmondNet Group, is an Internet data marketplace. We offer media-buying and media-sales platforms access to proprietary consumer search, purchase-intent and life-stage data segments. These segments facilitate the delivery of highly relevant, privacy-sensitive ads to consumers on all of their devices. 

 

How long have you been a NAI member? What prompted you to join? Why did Datonics choose to invest tremendous resources in NAI by becoming a Board member?

Privacy has always been and will always be front and center in our business and in our company DNA since the founding of our parent company, AlmondNet (www.almondnet.com) in October 1998. AlmondNet invented and evangelized the concept of incorporating an opt-out in every banner as early as 2004, becoming today’s “Ad Choices Enhanced Notice” initiative. The solution was adopted by the NAI, first with the help of the head of the NAI at the time, Chuck Curran, and followed by the rest of the online advertising industry. In 2011, the AlmondNet Data Division was spun off into Datonics and I joined the NAI board of directors in May 2013. 

Datonics’ goal is to provide consumers with the opportunity to see relevant, privacy-sensitive advertising wherever they go. In working toward this goal, we serve the entire online advertising ecosystem. No organization is more aligned with this goal than the NAI, and it is our absolute pleasure to serve the industry through our active participation as a member of the NAI board.

How does Datonics work with DSPs, DMPs, and other members of the online advertising ecosystem? Do you see that role evolving?

Datonics data is integrated within and leveraged by media-buying and media-sales platforms, including agency trading desks, advertising networks and demand-side platforms (DSPs), for themselves or on behalf of their clients in order to achieve their specific goals for a digital marketing campaign. These goals may include customer acquisition, branding, engagement and ROI/CPM maximization, among others.  

We continually invest in and educate our clients as well as their clients about available data sets and use cases. I expect this process to continue and become even more necessary as we expand our data offering.

How have changes in the privacy landscape spurred changes in your business?

Providing consumers with a positive, relevant and privacy-sensitive experience is essential for ensuring the health and growth of the entire online advertising ecosystem. Maintaining consumer trust is essential for helping marketers reach a receptive audience that is in purchasing mode. Consumer confidence is also critical for data providers, who receive an incremental revenue stream, and for data buyers, who maximize ROI from their media buying and sales activities.

What’s the greatest value that NAI provides to Datonics?

The NAI ensures the health and sustainability of the online advertising ecosystem that is essential for the growth of our business in a rapidly evolving landscape. We’re proud to have a voice in how the NAI helps to set the bar for the way third parties manage consumer privacy. We also greatly appreciate that the NAI helps educate and provide a forum for those in the industry as well as for consumers. We look forward to remaining involved with the NAI for many years to come.

Name Submitted by NAI on April 8, 2014

An Interview with Erik Matlick, Chief Executive Officer, Madison Logic

Q: What does Madison Logic do?

A: Madison Logic provides intent data solutions for B2B marketers and publishers. Using our Content Consumption Monitoring technology, B2B brands are able to maximize the value of the leads they cultivate – from acquisition to loyal customers – and publishers can more efficiently monetize their businesses. With solutions driven by intent data, business buyers receive messages relevant to every stage of their journey to purchase.

 

 

Q: What prompted you to recently join NAI? 

A: Joining NAI reflects our core commitment to consumer privacy. We believe NAI’s mission to uphold the value of online advertising technology providers also aligned with our practices and we are thrilled to join their community. Respect for privacy and security are fundamental as to how we do business.

Q: Why is joining an organization like the NAI and complying with the NAI Code of Conduct particularly important for a B2B company?

A: The NAI is important for us as a B2B-focused company for several reasons. As we continue to grow, we needed a trusted partner whom we could turn to that provides an industry-accepted standard for privacy compliance and sage guidance. It’s especially important for us to stand in-line with our clients across standards. Our B2B clients represent many Fortune 500 companies, who all have the highest commitment to privacy, and the NAI affords a reference point for our clients. Finally, our commitment to privacy compliance requires us to keep up to date on changes and the NAI, through their webinars and educational support, acts as an excellent vehicle for distributing knowledge.

Q: In your opinion, why is privacy primarily perceived as a B2C discussion when it is obviously important to B2B buyers as well?

A: Privacy is incredibly important. Whether it’s a consumer in the B2C space or a user in the B2B space, it’s the cornerstone of a respectful communication discipline. In B2B, you’re not looking at a user’s personal information, but you still want to ensure that you’re respecting their privacy. The difference in perceptions is primarily the reference point – the e-mail address. Your personal e-mail address can point to you as an individual and can be your address for a lifetime. Your work e-mail lives only as long as you work for a firm and generally is controlled from an access point by your company. You use it for work issues and it generally does not point to any personal information. Additionally, since e-mails are a primary form of communication in the business world, you have business protocol and even international considerations to which you have to adhere. 

Q: What key values have you already seen from your membership and expect to see over the coming year?

A: The knowledge sharing through the NAI was immediately beneficial. The NAI has supported Madison Logic in evaluating various business models and products to determine which would be best from a privacy standpoint. Their compliance verification provides us with the acknowledgement of the standards we adhere to, bolstering client confidence when looking to use our services. Lastly, we look to the NAI for expert knowledge – their training programs assist us in keeping up to date and informed on industry privacy trends.

 

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of the Network Advertising Initiative and/or any other contributor to this site.

Name Submitted by NAI on March 31, 2014

An Interview with Mark Zagorski, Chief Executive Officer, eXelate

Q: What does eXelate do?

A: eXelate powers smarter digital marketing decisions by offering access to accurate, actionable, and agile data as well as insights into online household demographics, purchase intent, and browsing habits.

 

 

Q: How long have you been an NAI member? What prompted you to join? 

A: eXelate has been an NAI member since 2009, and we have always felt that it’s critically important for us to not only meet but exceed industry standards for consumer privacy and compliance.

Q: What role do you see responsible third-party data companies playing in the year ahead in the overall evolution of the online advertising ecosystem?

A: The third-party data business is fueling the evolution of marketing. It’s how data has been made actionable in real-time, helping marketers achieve better business outcomes in the digital realm. 

In the year ahead, I believe we’ll see a small handful of major players in the data industry attempt to own the “digital identities” of consumers who interact with their platforms. On the one hand, this could be beneficial, but it also means that these entities could keep this information to themselves. Without the independent access to consumer insights provided by responsible third parties, we could be heading toward a disjointed, walled-garden effect – one that is very different than the promise of a free and open internet. We strongly believe that a world in which independent cookie+ technology is provided by trusted third-party data partners creates an environment that is more conducive to innovation.

Q: What do you think are the biggest misconceptions people have of third-party data providers?

A: I think the name itself – third-party data – is misleading. Third-party data is not mysterious information that evolves from the nether regions. For the most part, true purveyors of third-party data capture it directly from first-party sites, directly measurable panels, or even compile direct transactional data from retailers themselves. There is also a misconception that it’s not needed, but in reality, it is an essential component of building reach because it enables marketers to attract new customers. The third big myth is that third-party data is less reliable or less accurate than first-party data. However, the best third-party data is subjected to rigorous validation standards established by objective, blue-ribbon rating companies such as Nielsen and comScore. 

Q: How has the privacy landscape changed since you have been part of the NAI, and how have you adapted?

A: Privacy has always been important, even if it has only recently become part of the mainstream dialogue. Consumers are embracing the internet and mobility, and for the most part, they understand there are trade offs for the free-content, ad-supported internet that they enjoy today. But discussions around the NSA and the “What They Know” series, among others, have created fear and confusion. Now more than ever, privacy can no longer be an afterthought. With savvier consumers so tuned into the conversation, privacy must be at the forefront of everything we do. eXelate has adapted by making sure that we go above and beyond industry standards. We strive to be two years ahead, and our NAI membership is part of this goal. We see membership as not only a smart business practice, but as a competitive advantage.

Q: What do you see as the next big challenge for the data industry?

A: The next big data challenge will be managing consumer privacy and trust in a world where more people are using multiple devices more often. There are different rules of engagement across platforms, and yet consumers expect seamless experiences while companies maintain their data privacy preferences across the board. We are currently tackling these questions, and we imagine many NAI members are as well as we shape the evolution of our businesses and policies.

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of the Network Advertising Initiative and/or any other contributor to this site.

Name Submitted by David Wainberg on December 18, 2013

The following is a guest blog post from David Wainberg, Privacy & Policy Counsel for AppNexus and NAI Board member.

At AppNexus we believe that third-party advertising makes the Internet better. We also believe that it is in our long-term interest to ensure a positive user experience of advertising on the Internet. In order to do so, our industry must continue striving for the highest standards in privacy and overall quality.

 

The NAI has long been a leader in the development of privacy policies and best practices that shape the way we do business. That's why AppNexus is not only a member of the NAI, but also sits on the NAI Board of Directors. Being an NAI board member turns out to be a lot of work, especially these days. This is a time of exceptional change in our industry, and going forward, if we want to maintain the NAI’s relevance and effectiveness, we cannot take for granted that what has worked in the past will work in the future.

I personally have a long history with the NAI. Prior to working at AppNexus, I was employed at the NAI, and during that time, I led the creation of the NAI’s compliance review process, which, I think it is safe to say, now stands as the most robust self-regulatory compliance program of its kind. Former critics of the organization now laud the NAI's compliance review regime. I was also there through the creation of the DAA, the Ad Choices Icon program, and the DAA opt out page that now expands to the entire ecosystem the framework of notice and choice that the NAI successfully pioneered for third parties over a decade ago. 

Today, as the AppNexus board representative, I cannot understate how honored I am to serve on the NAI board with a group of extremely smart, thoughtful professionals who care deeply about the industry, the Internet, and user privacy. The NAI is a key voice in not only advocating for the interests of third parties, but also in setting a high bar for the standards under which we operate. Because the NAI is constantly evolving to keep pace with innovation and meet the challenges of the day, it is poised to lead our industry forward.

As I mentioned, our industry is in a time of especially rapid change, and there are those who continue to challenge and criticize self-regulation. It doesn't help that we have seen in our country, in more than one industry, clear examples of the failure of industry self-regulation. These are pointed to as evidence that self-regulation cannot work. 

As I sit on the NAI board and interact with my peers across member events and meetings, I am energized by the fact that we are nearly 100 third-party organizations that are like-minded and dedicated to making self-regulation work. So how do we make sure of it, and avoid becoming another example of failed self-regulation?

The answers lie in leveraging our existing strengths to shape self-regulation for the decade ahead. We, as an industry, are fast and nimble, bold, and have a talent for creative innovation.

Be fast and nimble

The argument has always been that self-regulation can better keep pace with rapidly evolving technology and business models than can government regulation. One key risk of government regulation is that it will cement things as they are in a moment of time, and the regulation will become quickly obsolete, or it will inhibit positive evolution of the marketplace, and thus lead to stagnation. But self-regulation, the argument goes, can continually adapt to the changing market, can create incentives for innovation rather than obstacles, and can even anticipate issues with proactive rather than reactive policy-making.

We need to prove this argument correct, and we need to keep proving it over and over again. In the past we’ve shown how effective self-regulation can be. Just this year, the NAI released an updated Self-Regulatory Code of Conduct and a Code of Conduct for Mobile. However, as the marketplace has become orders of magnitude more complex, we risk falling behind the pace of change. Immediately in front of us today we have issues such as statistical identification and cross-device correlation that require our attention. 

In 2013, we were forced to expend a tremendous amount of time and resources on Do Not Track. In 2014, I expect we’ll have the opportunity to refocus our efforts, and get back to responding quickly to the real issues in front of us.

Be bold

One thing I want in 2014 is for us, as an industry, to get better about boldly and proudly telling things like they are. Let’s be freer to speak our collective mind. 

The assault on third parties has reached a peak, with irrational and inaccurate FUD driving the debate. Too often we’re defensive and apologetic. I’ve even heard people in our own industry compare us to the oil or tobacco industries. It infuriates me to hear these comparisons because they are absolutely, 100% off-base. The third party online advertising industry adds tremendous value to the online ecosystem, without harm.  Advertising powers the Internet. And thanks to the self-regulatory approach pioneered by the NAI, we do it in a responsible manner.

It’s time we take a more active role in shaping the story that’s told about us, and ensuring that story is true and reflects the positive contributions that we make.

Be creative

Just because things have been done a particular way for a decade doesn’t mean we must or should do the same for the next decade. We’re not afraid of change when it comes to our technology and our businesses. Why shouldn’t we also be willing to pivot and part with the past when it comes to policy? In 2014 we need to be willing to re-evaluate our current frameworks for privacy self-regulation.   

I want to ask this question, and I mean it as a serious question, not rhetoric. For many years, notice and choice has been the predominant framework for privacy, and not only in our industry. But is notice and choice the complete answer for the digital world ahead? Will it be adequate as the core of our framework in the future to protect consumers’ privacy, or should we do more in terms of data minimization or other controls?

I’d like us to think about that in 2014, and to start putting resources into exploring supplements and alternatives to the notice and choice framework. Can we as an industry embrace privacy by design, and build privacy into our business models and products such that we do not overburden the notice and choice approach? I hope so.

That’s my view of what we need to do to keep self-regulation healthy. Our industry is growing and maturing. We have incredible diversity and innovation in our market. Advertising continues to fuel new content and services online. We’ve had an amazing run up to this point, but there’s even more greatness ahead of us. It’s not a time to rest on our past accomplishments, but rather to step up and go further. The NAI is poised to help us do that, and I am looking forward to working with NAI Staff and all NAI member companies to make it happen. 

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of the Network Advertising Initiative and/or any other contributor to this site.

Name Submitted by NAI on September 30, 2013

An Interview with Julia Casale, Chief Marketing Officer, Casale Media

Q: What does Casale Media do?

A: We are an advertising technology company. We design and build the robust, evolutionary computing systems that power both our programmatic exchange platform, Index, and our premium advertising network, MediaNet.

 

 

Q: What prompted you to join the NAI, and how long have you been a member? 

A: We believe in and fully endorse the initiatives being undertaken by the NAI and its code of ethics. Membership was an obvious way to lend support to these critical efforts as well as demonstrate our philosophical alignment. We have been members since 2010.

Q: Casale Media has been a longtime supporter of the NAI's mission to further consumer understanding of online advertising and industry self-regulation.  Can you explain how your company got involved in the NAI's Consumer Education Campaign, and why?

A: We got involved in the NAI’s Consumer Education Campaign to help them spread awareness about online consumer privacy. This took the form of a commitment to contribute media from our premium advertising network, MediaNet, to the campaign over the second half of 2013.

Q: In your opinion, why is consumer education important for online advertising companies?

A: Adverting online is a highly complex and technical process; we can’t expect consumers to trust in something that they don’t understand. Communicating proactively and transparently is the best way for us to promote a healthy and universally valued digital ecosystem. 

Q: Besides getting involved in programs like the NAI's Consumer Education Campaign, what other steps can companies take to ensure consumers are kept informed of their choices around online advertising?

A: It all starts with being transparent about your company’s privacy practices – paving a clear path along which consumers can learn about what you do, why it matters, and what their choices are. If you’re serious about consumer privacy, membership is a great way to demonstrate your commitment. Industry bodies like the NAI not only facilitate the pooling of resources to promote consumer education and ethical privacy practices, but they also make it possible to deliver a consistent message from a collective industry voice, which helps foster consumer trust.

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of the Network Advertising Initiative and/or any other contributor to this site.

Name Submitted by NAI on September 17, 2013

An Interview with Angelique Okeke, Senior Counsel, Lotame

Q: What does Lotame do?

A: Lotame is a marketing technology company and our proprietary unifying data management platform allows publishers, marketers and other agencies to collect or learn more about the data on their online properties and then activate that data through delivery of relevant advertising and content customized to match the interests of the user.

Q: How long have you been a member of the NAI? 

A: Lotame has been a member of the NAI since April 2009. We originally joined when Lotame was an ad network and approximately two years ago, when we changed our business model, we worked closely with the NAI to ensure compliance with the Code during every step of our evolution. Despite the change in our business model, NAI remains extremely relevant to Lotame and to the ecosystem as a crucial voice of third parties.

Q: You recently joined the NAI on a panel at the 2013 Computers, Freedom and Privacy event in DC to discuss the experience of being an NAI member and how it impacts your business. Can you share that here?

A: We have found that continuing our participation and becoming more involved with the NAI have been very helpful to our business, particularly for me in my role as senior counsel for Lotame. I review every contract the company enters and lead all negotiations, from third-party data provider partners to commercial contracts with our clients. Our membership and the compliance process that we go through on a quarterly basis really inform the way that I negotiate, particularly around some of the provisions in our contracts. Our membership with the NAI mandates a certain level of transparency.

What I have found is that even if some of the smaller companies with whom we are negotiating may not be members of NAI themselves, they have heard of the NAI and understand that our membership means that Lotame adheres to a rigorous and respected self-regulation model. This minimizes the back and forth negotiation during these contract reviews. We simply say affirmatively, ‘This is what we adhere to as part of our membership with the NAI, so here is what you, as our client, must adhere to as well.’ Lotame’s stance on respecting consumer privacy is strong and it is bolstered by our close alignment with the NAI.

We perform periodic privacy audits on our customers to make sure contractual obligations are, in fact, operational. We look for the presence of a prominent privacy policy with operable choice tools. Because our clients’ practices reflect on us during our annual NAI review, we do not want to take any chances when it comes to our compliance with the Code or Lotame’s reputation as a leader in protecting consumer online privacy.

Q: On the panel, Marc Groman, executive director, and Anthony Prestia, associate counsel for policy & technology for the NAI, discussed the NAI’s rigorous pre-certification and annual review.  Aside from these ongoing processes, how else does Lotame leverage its NAI membership?

A: We have used the NAI as a very close resource outside of the annual review process. For instance, we recently began working with a branded provider of medical data. Before the data aggregator provided us with any segments for our DMP clients to activate, we needed to see a comprehensive list of the segments that could be used for targeting. From there, I discussed with the NAI some of the interest segments that would mandate certain disclosure as required by the NAI’s Health Transparency Policy. We were able to review the list of segments with the NAI and received critical guidance that was a large part of the decisioning process when informing the provider which segments that we would ingest into our system for our platform clients’ access and use. 

Q: In your opinion, what is the primary value of NAI membership and the annual compliance review?

A: The annual compliance review process starts with me, but it really touches every department in our organization, from sales, technology, engineering, and client success teams – these are the folks who are helping our customers aggregate and understand the data and act on it. I conduct internal training sessions on the NAI Code, distilling it down for the various departments, so that everyone at Lotame is on the same page in terms of what we need to think about as we are activating new customers or as new use cases arise for existing clients. The review process keeps the entire Lotame team focused and ensures we are running a business that not only meets the needs of our clients but, is one we can confidently describe as privacy strong.

The NAI informs our business and impacts the way we do business. As a data company, and I’m sure I speak for all NAI members when I say that ultimately, we are all looking to do the right thing. We want to make sure we are providing consumers with privacy choices and the ability to control their data. We think of the NAI as our primary partner in achieving this goal.

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of the Network Advertising Initiative and/or any other contributor to this site.

Name Submitted by NAI on August 29, 2013

An Interview with Andrew Pancer, COO, m6d

Q: What does Media6Degrees do?

A: Media6Degrees’ (m6d) audience-based buying platform, ProspectRank™, delivers relevant audiences to marketers by capturing a unique brand signal from existing customers, and scoring prospects based on their digital journeys through millions of websites in real-time. Additionally, with our recent acquisition of EveryScreen Media (ESM),  we will now be able to directly connect mobile devices, including their location, to web browsers, which will give marketers a bigger picture of what their customers are doing as they move between the web, smartphones and tablets and help them reach their best new prospects on whatever channel they’re currently engaging on.

Q: How long have you been an NAI member, and what key value do you see from your membership? 

A: m6d joined the NAI in 2008, and I am proud to currently serve on the NAI Board of Directors. As a third-party data-collection company, m6d receives great value from our NAI membership because the NAI fuels the maintenance and growth of the online advertising ecosystem while actively supporting consumer privacy and data rights. The NAI’s Mobile Code of Conduct has also served as an excellent guide to the industry best practices for advertising in the mobile space, and is especially important for m6d based on our recent acquisition of ESM.

Q: Our members got an up close look at ValueClick's Amber Alert program at the NAI Member Summit in May.  Can you tell us how m6d is getting involved?

A: I attended the inaugural NAI Member Summit in the spring and was impressed with what fellow board member company, ValueClick, was doing with their Amber Alert initiative. m6d immediately reached out to ValueClick to see how we could help with the initiative by implementing our technology into the alerts program to help broaden the reach. Amber Alerts have consistently decreased year over year, and this is largely because of the involvement of targeting companies like ValueClick, 24/7 Media and m6d.

Q: What motivated you to get involved?

A: The program has the potential to help people and save lives. The fact that consumers are always connected now, whether it be via desktop or mobile devices, means that NAI members, through their broad audience reach have the potential to get geo-targeted emergency messages delivered to consumers faster than through any other medium. 

Q: Can you share your thoughts on the potential impact of the Amber Alerts as more companies like m6d join the program?

A: The ability to reach every connected device in the U.S., whether it be mobile or desktop, can help save children’s lives. NAI member companies not only have the technology to make this possible, but they also have executives, who understand how to utilize the technologies for these greater good efforts. The goal of the program is to eventually never have to use it again because it is so powerful, would-be abductors will no longer abduct children.

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of the Network Advertising Initiative and/or any other contributor to this site.

Name Submitted by NAI on May 22, 2013

An Interview with Khurrum Malik, CMO, eXelate

Q: What does eXelate do?

A: eXelate is dedicated to making digital media more relevant for consumers and effective for marketers through our smart data and analytics platform. Our smart data platform provides accurate, actionable, and agile data and analytics on online household demographics, purchase intent, and behavioral propensities.

Q: How long have you been a member of the NAI, and what key value do you see from your membership? 

A: We joined the NAI in 2009 and continue to be active members. We share a common goal with the NAI to champion consumer data rights and transparency on a consistent and ongoing basis. As the digital world gets increasingly complicated, we believe that keeping our industry grounded and focused on consumer data rights becomes even more important.

Q: You recently completed a study of third-party data use by online advertisers. Could you please provide an overview of the study and key findings?

A: We conducted a comprehensive study in conjunction with Digiday in early 2013 where we captured feedback from over 650 digital advertising professionals representing advertisers, agencies, and platforms (ad networks, ad exchanges, demand side platforms). The research was driven by the ongoing need to reduce the complexity of the ad tech ecosystem by providing clarity to the real demands of advertisers and agencies.

Key highlights from the eXelate State of the Industry survey include:

  • Audience targeting continues to grow with more than 80% of advertisers and 90% of agencies, ad networks, ad exchanges and DSPs utilizing the capability
  • Over 60% of advertisers prefer 3rd party online data for audience targeting, followed by 1st-party CRM data
  • Over 80% of the ecosystem reports that audience targeting is an effective marketing strategy
  • 3rd party online data is the highest ranked data set for both direct response and branding campaigns for both advertisers and agencies, outperforming 1st-party social, custom and CRM data 
  • More than 69% of respondents report they plan to increase their audience-targeting budgets, with an average budget increase of 38%

Folks can review the full version of the survey at eXelate.com or tweet us @eXelate and we’ll send you a link.

Q: In your opinion, what does this study say about the value of third-party data in the digital advertising ecosystem?

A: A surprising survey insight included the fact that both advertisers and agencies preferred 3rd party online data as the #1 source of audience targeting data over 1st party social media and 1st party custom data for both direct response and branding campaigns. This result confirms that the audience targeting ecosystem continues to rely on accurate and actionable 3rd party data pools to power effective audience targeting campaigns. Despite the ongoing debate on 3rd party cookies and data, it is clear that all parts of the digital advertising ecosystem – advertisers, agencies, and platforms - increasingly rely upon and trust the reach and effectiveness of 3rd party data. 

Q: What do you see as the biggest opportunities and the biggest challenges facing third-parties based on this research?

A: Some of the biggest opportunities are also the biggest challenges.

Mobile. The research highlighted increasing momentum for platform-centric audience targeting. Smartphone and tablet platforms were utilized for audience targeting by greater than 50% of respondents – fast approaching the 75%+ for PCs. This trend represents a great opportunity for our industry to provide multi-platform solutions; however, the challenge will lie within execution. Mobile represents a very fragmented environment when compared to the PC and will require innovative ways to cut through the noise.

3rd Party + 1st Party. Another key finding was that 3rd party data scored the highest rank for both direct response and branding campaigns; however, 1st party CRM data wasn’t far behind. The opportunity here is for our industry to be able to take 1st party CRM data and seed 3rd party online data to amplify audience targeting impact. The challenge lies in the ability to have an accurate and actionable data set that can drive a measurable difference.

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of the Network Advertising Initiative and/or any other contributor to this site.

Name Submitted by NAI on December 21, 2012

PubMatic and IDC recently released an RTB forecast relevant to many of our members. In this Five Questions interview, Richard Sobel, director of product marketing and platform strategy, discusses the company’s membership, the study and more.

Q: When did PubMatic join NAI and what was the impetus?

A:  PubMatic joined the NAI at the beginning of the year.  It was an overdue membership, since PubMatic is committed to clear and effective rules governing online advertising.  As a tool for publishers, it was important for us to support the good work and clear rule setting the NAI has been leading, and we’re thrilled to be a member.

Q:  Could you please provide an overview of the study and key findings? 

A: PubMatic commissioned this research from IDC to evaluate the global growth of RTB, including how it impacts specific markets around the world, how it’s impacting direct sales efforts, where mobile is coming into play, and how RTB ultimately provides a long-term opportunity for the advertising ecosystem.  We presented the findings at PubMatic’s fifth annual Ad Revenue conference in New York on October 23.

This report is an update on 2011’s version of this research, and presents their estimates of past and current spending on RTB-based display advertising and forecasts until 2016.  The findings are based on interviews with publishers, agencies, ad networks, DSPs, SSP, and ad exchanges in the United States, the United Kingdom, France, Germany, Japan, and China, along with existing IDC information and other publicly available research.

What we found was that RTB is the fastest growing digital ad segment, predicted to increase to $13.9 billion in spending worldwide in 2016, with a compound annual growth rate from 2011-2016 of 59.2%.  This projection points to RTB outperforming all other digital ad segments including mobile, video or social advertising.  Overall, the use of RTB for direct sales will grow on average 148% through 2016, amounting to over $1.2 billion.  This growth in RTB, coupled with the adoption of Private Marketplace by publishers, offers the opportunity of a strategic combination of direct and programmatic sales in unison. 

While mobile markets generally lag behind traditional PC spending behaviors by about three years, this research indicates that it will rise to nearly $500 million by 2016.  The challenges for the mobile space still remain: A growing ecosystem to support cohesive cross-channel strategies, and the lack of cookie-based targeting inhibiting buyers from granularly targeting as they can in the PC world.

The U.S. will remain the most advanced market, with RTB spend growing from $1.1 billion in 2011 to $8.9 billion in 2016 at a compound annual growth rate of 53%. The market share of RTB-based spending of all display ad spending will grow from 10% in 2011 to 27% in 2016, and its share of all indirect spending will grow from 28% to 78% over the same time period.

In Europe, among the three major markets (UK, Germany and France), the UK is farthest along in adopting RTB. IDC projects spending in the UK to grow at a compound annual growth rate of 54% through 2016, with RTB-based display ads accounting for 12% of all spend in 2012 already – up 108% year over year.

German RTB spending will account for 8% of total display ad sales in 2012, an increase of 171% from the 2011 spend. RTB’s market share in indirect ad sales will be 23% in 2012, up from 9% in 2011.

In France, 8% of all display ad sales will be generated using RTB in 2012, a growth of 120% compared to the 2011 spend of €23 million or 4% of total display ad sales. Its market share within indirect ad sales will be 24%in 2012, up from 11% in 2011. 

Q: In your opinion, what does this study say about the value of RTB and third-party data driven companies' role and value in the digital advertising ecosystem? 

A:  RTB is a growing key force in advertising.  The research indicates and projects that more than 33% of all digital advertising spend will be transacted through RTB, based on the efficiencies and online targeting capabilities the protocol provides for advertiser Return on Investment (ROI) and Return on Advertising Spend (ROAS).  The question now is less about it as a concept, and more about how it gets leveraged across the ecosystem.  Advertisers and agencies are seeing great advantage by applying dynamic algorithms to targeted audience buying, and publishers are seeing greater returns by opening up their inventory.

The value ad technology companies like PubMatic provide for targeting, bid management, and analytics is akin to what agencies have been providing to advertisers for years: Service.  While we are all technology solutions, we provide a service to the ecosystem, all serving one side of the transaction – either buyer or seller. PubMatic continues to work for our publishers by enabling buyers to reach our publishers’ inventory.  The value we create in the transaction is tangible, and other companies in the transaction create compelling value as well.  That will not change, so long as we all can prove that there is value in third-party advertising technology.  In a world based on driving efficient and optimized results, it’s up to each company to own our value proposition in the RTB process.

Q: Based on the research and everything you know about digital advertising and publishing, what do you see as the greatest opportunities and threats to digital advertising and publishing over the next 12-24 months? 

A: The greatest opportunity and the largest threat are one and the same: Strategy.  Advertisers, agencies, and publishers have done tremendous business with direct, relationship driven sales.  On the other end of the spectrum, great efficiencies and productivity results are being proven out through RTB.  Those two elements come together in a strategy, and that’s the most critical focus right now on both sides of the transaction.

On the sell side, publishers have been vocal about their success in a direct sales environment based on relationship-driven solution selling for large impact.  According to the research, publishers are also seeing increases of 100% in eCPM on average by leveraging RTB.  The opportunity is to blend the vision of direct sales with the execution of RTB through a strategy of direct programmatic sales.  As I mentioned above, the expected growth for the use of RTB in direct sales is tremendous, and a clear area of direct revenue opportunity for publishers to gain market share.  However, lacking a clear, understood strategy across the sales team can create a corresponding threat to the business growth.

On the buy side, it’s certainly clear that RTB is a part of the media mix.  The opportunity is to find the right partners and the best balance of inventory sources, and to execute with a range of message that targets the best value for the consumer seeing the ad.  It again comes down to strategy.  Negotiating and maintaining direct relationships with your best media partners is still a fundamental key to marketing success, and leveraging RTB is a key part of executing plans for those relationships.  Layering in powerful messaging through the capabilities of Big Data is the next step in making those relationships turn into fruitful results.

Q: Is this study one that you will update on a regular basis and are other resources like this available through a library on your site or elsewhere?

A:  This research and our recently released Forrester Total Economic Impact case study are available with all of our previous white papers and commissioned research on our website, http://www.pubmatic.com/reports-and-whitepapers.php

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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of the Network Advertising Initiative and/or any other contributor to this site.