Commentary

Tale Of Two Ad Tech Cities (SF & NYC): Duality, Revolution & Resurrection

The themes echoed in Charles Dickens’ “A Tale of Two Cities” are alive and well in New York and San Francisco today. The major concepts of duality, revolution and resurrection are perfect to describe the rise of programmatic advertising.  We are seeing our own stories of the terror and overthrows, as big changes are happening or lie ahead for the advertising technology industry with the arrival of programmatic direct and premium programmatic.  

In Dickensian fashion, let’s look at what is done as much as what is said in programmatic. It is the best of times and the worst of times in ad technology in 2014 in San Francisco and New York (technologist vs. media executive).

Duality

Duality can easily be seen in the success of recent and current ad technology IPOs and most programmatic companies with high growth, higher margins and very bright futures in the programmatic revolution. It is also easy to see the destruction in valuations of traditional publishers, ad networks and small agencies, with some worth less than one times their revenue.

It is the best times for San Francisco companies, which do not need a huge sales force calling on Madison Avenue. In a programmatic and programmatic direct world, technology and self-service (SaaS) is king. Some of the companies most affected are the traditional site sellers, ad networks and agencies without strong trading desks. Some traditional publishers that pivoted away from ad networks and moved quickly to programmatic are surviving -- heck, really thriving. Private marketplaces are growing direct publisher relationships and scaling through new and better measurement to much greater heights with closer exclusive relationships, differentiation and upfront commitments that are tripling revenues and exploding run rates.

No one is fighting against the uprising programmatic revolution. Many talk a good game, but are not walking the talk or are merely programmatic talking heads. Programmatic direct is not black or white, but everyone in ad technology is 100% embracing new technology -- or revolution.

Revolution

While not overthrowing the established routines in the digital media process, programmatic direct is changing the social order. With this single programmatic turn, the industry is looking for the seizure of power and the new king. Will these new programmatic technology companies, which IPOed like RocketFuel and Criteo, trade at 10X+ forward revenue? Will traditional publishers with new leaders like Scott Havens, now at Time Inc., IPO soon and show us that “content is king” again? Will Forbes as a platform company sell for more than $500 million?

During this coup, who is going to overthrow the “big five” in digital -- Google, Facebook, AOL, Yahoo, and Microsoft -- and take more than 70% of digital dollars? Is  AppNexus, Rubicon, OpenX, Pubmatic or MediaMath the next big company, where innovation happens? Will MOAT change measurement forever? Is data the gunpowder that rules the times, or is the phablet? Big data is big business during the revolution, and the phablet is where are consumers are. It is a great time to sit back and watch what is done rather than just what is said, as Dickens’ narrator did in the 1700s.

Resurrection

Digital religion and battles of church and state are interesting to everyone trying to scale programmatic and programmatic direct in a native world. The Atlantic’s Scientology ad was the most-talked about native ad last year. Bringing back something that has died is the most interesting spiritualization of programmatic native thought. Many of the most interesting storylines today are those older companies that have pivoted to native, gone 100% mobile and only feature branded video content as an ad unit.

We Americans love a comeback. Can a Time Inc. IPO do better than Facebook? Will Comcast make NBC online a totally different animal combining TV, gaming and mobile? Can Mozilla kill the cookie and grow an older browser software company thought dead?

Digital duality, revolution and resurrection in the early days of programmatic will be fun to watch. We’ll see if it grows new companies, products and media routines like the television industry did with content companies like MTV, ESPN, Discovery, OWN and Netflix. Stay tuned, Dickens and programmatic fans.

1 comment about "Tale Of Two Ad Tech Cities (SF & NYC): Duality, Revolution & Resurrection ".
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  1. Chris Elwell from Third Door Media, April 3, 2014 at 11:17 a.m.

    You're putting a lot of faith in pre-money valuations and day traders, Skip. Some of these companies will make it, but we'll see who is standing after the VC runs out. Anyone remember Industry Standard?

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