Once upon a time there was a white space, one generated by the need to connect content created, planned and bought by agencies, with online media properties. This need led to the innovation of a technology that enabled the placement of online ads, and that was the beginning of the advertising operations industry. It was an attractive industry, one with high growth, high profitability, and one where a premium price could be charged.
But almost two decades later, the ad operations industry is facing the same realities as most growth industries. Despite its progression, it finds itself saturated with established players and facing a constant flow of new entrants, all in search of the same thing, advertising dollars.
Today, the barriers to creating ad operations technology are low, APIs exist and other players in the value chain can provide what was once a unique service. Finally, as economic theory dictates, the ability to command a premium price has diminished in accordance to the previous two realities.
Fork in the Road
At this point, an ad operations company has two choices. One choice is to face direct competition head on by becoming an even better operations provider. In this scenario, the focus is on, for example, improving the tuning and optimisation of ads, and on solving issues such as, device and network fragmentation, or the lack of standardised metrics.
Alternatively, an ad operations company could do what the original pioneers successfully did which is to identify a new white space, or innovate. In this scenario, the focus is on understanding what would fundamentally affect, or change, how things are done in a positive way.
To better understand this alternative opportunity I believe it would be opportune to observe how people behave. After all it’s these prospective customers and consumers that our ad operations galvanise into awareness, consideration, and purchase.
Syncing to Mobile
When looking at people’s behaviour we see it’s about finding, it’s about sharing, it’s about comparing, it’s about experiencing, it’s about solving, it’s about interacting, it’s about buying and it’s about paying. And, due to the increasingly mobilised world, this behaviour is now in real-time, on personalised devices, in non-linear and unpredictable ways.
As for where the money is, it’s where it’s always been, in retail. According to eMarketer, the global advertising industry is worth approximately $500 billion, of which online represents $80.2 billion. So let’s compare that to a key part of people’s value chain, purchasing, by looking at the size of the retail industry. The US retail industry alone is worth $4.7 trillion, and just the global book market is worth a whopping $98.3 billion.
I attest that by understanding how people behave, in context of the ultra-capable mobilised technology, and by looking at the size of the retail market, the white space can again be found by connecting the dots, but this time by connecting real-time consumptive behaviour with retail offerings.
In this scenario the service provided is the enablement of modern consumptive behaviour by matching commercial communication with the digitally mobilised world. In other words, by facilitating people’s understanding of what is available, in finding answers to questions, recommending, commenting, advising, personalising, buying and paying, wherever they are, whenever they want to; directly from the very same commercial content we serve.
In this scenario, the revenue is less sourced from typical ad operation streams, but even more from affiliate commission models where ad operations share a piece of what is relatively a much larger pie than advertising. This scenario also elevates an organisation into an even stronger position than today, by playing a key role in the macro value chain of retail, in the fast growth environment of mobile media.
The industry of advertising operations was built on connecting the dots therefore it is likely the future belongs to those that pro-actively identify and connect the new dots together.
Get the latest on all things premium at OPS London, which will bring EU digital advertising leaders and ops professionals together to discuss and develop best practices for operational excellence. Register today for OPS London, which will be held May 15, 2012.