Interoperability and consolidation in the digital display ecosystem

By: Erich Wasserman  Published: September 19, 2011

The digital display advertising market is taking off again. Much of this growth has been driven by new technology innovations, in particular demand side platforms (DSPs), which give advertisers the ability to manage digital media campaigns across multiple inventory sources – through a single interface and in real time. 

This gives much greater control over the metrics and pricing of campaigns, both in terms of the data used to target and for the media purchased to achieve specific business goals.  

At the same time, richer media formats – in particular video, mobile and social media – have contributed to the renaissance in display. 

Recent IAB Europe stats underline this industry trend, indicating that display has overtaken search as an advertising channel in Europe with a growth of 21.3% compared to the same period in 2010.

A polarised ecosystem?

With growth comes an inevitable shake-out of the display ecosystem which in some senses represents a polarising of the market: consolidation (acquisition) versus the interoperability of technology, data, media and analytics providers. 

Both approaches have advantages for advertisers and publishers.

The biggest mover of the consolidated approach is Google, which has made some high profile display related acquisitions including Teracent, Invite Media, and more recently AdMeld (an optimisation platform for publishers) for a reported $400m

These power moves send out a clear signal: Google is serious about display and its intention to deliver a 'consolidated' experience to marketers.

Google’s VP of display, Neal Mohan, has suggested that the channel will grow to become a $200bn industry by 2015. 

This is great for the display industry, not least because it has driven forward positive messages about the benefits of digital advertising over offline media, and of real-time bidding and campaign optimisation to marketers’ minds at the highest level. 

Will the market turn in to a handful of big players?

The consolidation horse is off and running but it's only one half of the picture. 

As opposed to search, in which marketshare is essentially controlled by a single player, display is a far more fragmented and complex ecosystem, characterised by a combination of disparate publishers, technology innovation and entrepreneurship. 

For this reason, and unlike search, it is highly unlikely that we will see a winner-takes-all market scenario. 

Rather, interoperability between the best and brightest in the display space has a huge part to play and it draws on the biggest strength of the digital industry, innovation.  

This space moves at break-neck speed, especially at its fringes where video, social, mobile, digital out of home and other emerging formats live, and it is this necessary speed and technological innovation which is driving the market forward and generating its own momentum. 

Consolidation seeks to figure out the one-size-fits-all solution and requires building or acquiring these technologies, both of which are processes that call upon considerable resources and time to roll out to the market.

Interoperability allows for flexibility and, more importantly, agility in creating an optimised service stack for each marketer.  

Interoperability is uniting the whole universe of available media in a way that works for both advertisers and publishers alike, and is a requirement for companies seeking to participate in this vast and growing economy.