By Richard Wheeler, Manager, Client Communications Planning, MediaCom
There has been a lot of speculation about the arrival of demand side platforms into the market and their likely effect on existing publishers. Unsurprisingly, their arrival wasn’t welcomed by the premium publishers who worried that a ‘race to the bottom’ would ensue. And with supply far outstripping demand for standard display inventory their concerns are justified. However, with DSPs gradually establishing themselves in the marketplace how are these premium publishers likely to fare?
Much has been promised by the DSPs; super-efficient automated buying using data to buy specific audiences and deliver outstanding results. As often happens with technology, the DSPs have not proved a panacea to digital advertisers. Looking at Gartner’s Hype Cycle we are still very much in the inflated expectations phase, but I believe that with the level of investment and resources being poured into the DSP space that within 12-18 months we will start moving into the productivity stage (not bad when you consider how many times you heard in the past that it’s ‘the year of mobile’).
Two key areas are holding back the growth of the DSPs in this market. Firstly, the lack of skilled talent in this area means that there is a lag whilst staff are trained and agency trading desks fully establish themselves. This is not a problem unique to Australia and the same skill shortage is currently being seen across all markets.
The second area preventing DSPs working to their true potential is 3rd party data; or rather, lack of it. Currently in Australia very little third party data is available to the DSPs and it is this third party data that premium publishers have a wealth of that is the key to ensuring that premium publisher’s continue to survive.
The Premium Publishers
With Australia’s major digital publishers (Yahoo, Fairfax, etc) having such a range of verticals within their digital portfolios, data is something that they have in abundance. But, data is a river not a stagnant pool; it only has value if it is regularly refreshed. For example, just because a consumer looked at buying a laptop 3 months ago doesn’t mean they are still actively looking to purchase a laptop now.
This places premium publishers in a strong position if they can learn to utilise their data to add value to media buys. Publishers have prioritised using their data and have worked with other 3rd party data sources to develop their own offering (i.e. Yahoo and Axciom, eBay GeoTribes, Fairfax and Adex), but in the mid-term I think we will increasingly see publishers starting to work with Agencies and Data Management Platforms to monetise their data beyond their owned sites.
The challenge these premium publishers will face however is how much is their data worth? Price is dictated by basic supply and demand and elasticity – in essence – what one party is willing to sell a product/service for and what the other party is willing to pay for it. Currently, we are in an unusual situation where neither the buyers (agencies or advertisers) or the sellers (the publishers) fully understand the value of this data.
Whilst data management platformswill help with setting the prices, publishers will still need to know the price floor for their data and increasingly I think access to 3rd party data will become part of trading agreements between publishers and agencies.
I believe that premium digital publishers that act and quickly learn to collect, use and monetise the information on their users will be able to minimise the impact of real time bidding on their margins. With this, in addition to healthy margins generated from their premium branding channels, they may still be able to weather the storm of real time bidding.