The Quest For Scale Is Ruining The Digital Ad Industry – via AdExchanger (source: Yael Avidan, vice president of product at Adelphic)
The first question marketers or agencies ask ad tech vendors or media companies is probably this: “That audience is perfect, but can it scale?”
Audience targeting is great, but ultimately, advertising’s main draw is reaching large-scale audiences. Although it reflects the return on investment, that marker can miss the point and may end up stifling the digital ad world’s growth.
This results in three core issues I see threatening the growth and sustainability of the digital ad world. First, the quest for scale reduces the value of smaller yet engaged audiences. As a result, many smaller publishers are having a hard time competing and struggle to maintain their revenue bases.
Second, advertisers’ willingness to pay for scale has unsurprisingly driven the emergence of bots and traffic drivers that step in and “supply” this demand. This, in turn, created a massive distrust of advertisers in the ecosystem and is one of the key problems that holds back the shift of more TV dollars to online.
Last but definitely not least, in a market that values scale above all, a handful of large publishers are capturing the majority of advertisers’ attention and spend at the expense of the rest of the market.