Turn, a demand-side platform (DSP), put its team of data scientists to work in an attempt to find which verticals in the programmatic marketplace were most competitive. Rather than looking at more “basic” metrics like supply and demand, Turn employed the Herfindahl-Hirschman Index (HHI), an economic model used to measure market concentration.
Per the U.S. Department of Justice site: “The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 (302 + 302 + 202 + 202 = 2,600).”
The HHI also “takes into account the relative size distribution of the firms in a market. It approaches zero when a market is occupied by a large number of firms of relatively equal size and reaches its maximum of 10,000 points when a market is controlled by a single firm.”
In other words, a “decrease in competition” as it relates to the HHI means a specific market is becoming more monopolized. On the flip side, if the market is seeing an increase in competition, it means it is moving away from monopolization.
According to Turn’s study, the Arts, Entertainment & Hobbies vertical was 60% more competitive in January 2014 compared to January 2013. Electronics & Computers were 56% more competitive, and Financial Services (52%) and Telecom (51%) were also markedly more competitive.
The Travel vertical -- which RTM Daily has previously reported as a vertical heavily invested in programmatic trading -- was 57% more competitive in January 2014 compared to the previous year.
Sports & Recreation was 121% less competitive in January 2014 compared to 2013, a dramatic drop. Jewelry (55%), Office Products (46%), Autos (41%), and Real Estate (29%) round out the top five categories in terms of decreased year-over-year competition.
Turn also looked at prices in the social, display, video and mobile channels. The eCPM -- effective cost per thousand impressions -- for social ads increased 24%, display 19% and video 4%.
However, mobile eCPM decreased 40% from January 2014 compared to January 2013. Turn wrote in the report: “Despite increasing competition throughout the year, increased supply appears to have prevented higher prices.”
In the U.S., prices increased the most in social. Turn wrote that mobile trended down in 2013 as a whole, but was only “slightly down” over the second half of 2013. Video saw the biggest increase in relation to volume.
No mention whatsoever of the most pivotal variable of all in commercial media - the message. Talk about being drunk on your own Kool Aid! To paraphrase the punchline of an old joke about a cheap suit: Don't you feel sorry for that poor bastard? Yeah, but he sure has a good looking Herfindahl-Hirschman Index!