Most of the hard problems in mobile are being solved by 1st-party platforms
Back when desktop advertising ruled, 3rd-party ad tech played an important intermediary role in the advertising / publishing ecosystem:
- Helping publishers sell their inventory — ad networks
- Ad serving, targeting, attribution — ad servers
- Innovating around creative — rich media tools and vendors
- Providing better audience targeting and reach — retargeting & prospecting networks
Among other things. But now, because of mobile, all the major advertising challenges are being solved by 1st-party platforms (with repercussions for all digital media):
- Bad banner ads: Native, in-stream ads are the clear winner (Facebook, Twitter). After all, native advertising really just means ads that people actually like. Beyond native, mobile search and video are also winning (Google). And new publishers with a non-IAB approach to advertising are finding audiences and funding (Buzzfeed, Vox).
- Cross-device audience attribution: Deterministic attribution (via login authentication) is vastly preferable to 3rd-party probabilistic methods. Winners: Facebook, Twitter, LinkedIn, Google, Apple, Aol. In terms of multi-touch attribution, VisualIQ is the only major 3rd-party platform still standing, since Convertro is now owned by Aol and Adometry by Google.
- Reach & distribution: “Build it and they will come” is less true than ever. No matter how great your web site or mobile app might be, if you want an audience you will partner with a major distribution platform. And so smart brands go where their audience is — Facebook, Twitter, Google, Instagram, SnapChat, Buzzfeed— with creative that is authentic to that medium. Smart news publishers (NYTimes, Quartz) understand that news is no longer just something a reader consumes, it’s part of their social experience of the Web. And so Twitter has become the place for breaking news, while ‘traditional’ news pubs (NYTimes, Quartz) now create genuinely compelling branded content.
The ad tech industry as we knew it is going away. The startups that will prosper during the next 5 years will be the ones that can accelerate the macro shifts already underway or create new markets:
- Native advertising ‘enablers’ (platforms)
- Marketing automation & personalization services, including virtual assistants and AI
- Full-stack influencer platforms built on social APIs
- Technologies connecting TV to digital, to social, and to in-store retail
- Content creators with a data & social-centric approach to distribution and audience.
As a corporate VC, there are some areas my firm is no longer investing in:
- 3rd-party mobile rich media platforms
- 3rd-party cross-device attribution (whether probabilistic or hybrid)
- 3rd-party Targeting / Re-targeting networks
- Demand-side platforms
- Mobile networks
- Ad servers
A recent Goldman Sachs report summarized the shifting ad tech landscape well: “the infrastructure underpinning the digital ecosystem [will] likely go from the fragmented oversupply of largely recycled or undifferentiated content sites supported by a massive ad tech ecosystem toward consolidation around platforms and content owners.”
And a recent Andreessen Horowitz podcast puts it even more bluntly: “Ad Tech right now is like Search before Google.”