why should a ssp or dsp buy a dmp ?
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© 2016 Karthik Ethirajan, all rights reserved
Should SSP buy a DMP ? Karthik Ethirajan April 2016
© 2016 Karthik Ethirajan, all rights reserved 2
Agenda
3. Digital Ad Value Chain
4. DMP TAM
5. Data Use Cases
6. DMP One Platform
7. Platform Components
8. DMP Market
9. Competitive Landscape
10.Business Case
11.Summary Analysis
Industry
Product
Market
Strategy
© 2016 Karthik Ethirajan, all rights reserved 3
In this constantly evolving digital ad value chain, data
providers (DMP) cater to all players
Advertiser Agency/
Trading Desk DSP / Ad Network
SSP/ Exchange
Publisher
• Principal buyer
• Creative arm
• Brand relationship
• Technology arm / RTB
• Campaign operations
• Creates a marketplace
• Inventory aggregator
• Ad server • Programmatic • Yield
optimization
• Inventory owner
• Audience
$ $ $ $
$5 $0.5 $1 $1 $0.5 $2.25
100% 10% 20% 20% 10% 45%
Fu
ncti
on
C
PM
V
alu
e
In
du
str
y
Pla
yers
DMP
• Provides buy and sell sides with data & insights
• $0.50-$2 CPM • 15% CPM
Source: GCA Savvian
Demand/Buy Side Supply/Sell Side
© 2016 Karthik Ethirajan, all rights reserved
Mobile DMP market will nearly double in size from 2015-17
4
$531B $582B
2015 2017
Global Ad Spend
U.S. Ad Spend
DMP TAM
Mobile Ad Spend
34% 34%
$30B $50B
$58B $75B
$183B $197B
$1.3B* $2B*
CAGR
4.7%
3.8%
14%
29%
32% 38%
52% 67%
Global Ad Spend by Medium
Search 45%
Programmatic 59%
RTB 37%
U.S. Digital Ad Market
15% 15% 24%
Future Trend
($67B in 2016)
Source: Zenith Optimedia, eMarketer, BI, Karthik analysis
Digital Ad Spend
* DMP TAM assume 50% of all display & video ads use
data for targeting
Search 44%
Display 20%
Desktop $25B
Mobile $42B
Video 24%
Display 43%
Video 10%
© 2016 Karthik Ethirajan, all rights reserved 5
Application of Big Data in advertising & adjacent markets
Market
Facing
Use Case
Analytics / Refined Data
Raw Data
Va
lue
Vo
lum
e
Examples
• Reg Data
• Lat/long
• Browse History
Providers
• Ad-tech
• Publishers
• Carrier
Providers
• Data Analytics
Examples
• Behavioral Profile
• Look-alike Model
Providers
• Ad-tech
• Market
Research
Firms
Examples
• Targeting
• Attribution
• Ad Optimization
• Insights
Targeting
Location based
user profiles
User Lat/Long
POI Map
+
Attribution
Conversion &
lift analysis
Offline / POS
+
Ad Optimization
Yield Optimizer
User Clicks
+
Market Insights*
Location tech &
heat maps
Demographics
+
Campaign Data Site Categorization Network Lat/Long
* Market Insights reports are used by many industry verticals such as financial
services, healthcare, hospitality and others for purposes unrelated to advertising
© 2016 Karthik Ethirajan, all rights reserved
End-to-end platform that links data source with ad
serving
6
Data file
Ad Request
Data file
1st Party Data
SSP Data
3rd Party Data
Pubs Data
Coop Data
Logic
al Com
bin
ations
Premium Pubs
Data file
Ad Request
Custom • Songs played
• TV shows • Contract up
• Others
Standard • Age • Gender • IAB category
• Others
Data Dictionary
• Link to campaigns
• Generate reports
Campaign Execution
Collection Methods
Data Sources
DMP Analytics Audience Segments
Publishers decide which data fields to share (Coop data) and which
ones to keep (Pubs data) for their own campaigns
Audience Pixel
Branded Data
Standard • Branded audience segments
SSP/ Exchange
© 2016 Karthik Ethirajan, all rights reserved 7
Portal An easy to use self-service Audience Builder • Layer different data
types to form custom segments
• Show avails • Link to live campaign • Pull reports
SDK/APIs Client SDK & server-side APIs • Capture user & device
data • Enrich ad request
client-side • Implement real-time
ad decisioning such as geo-fences
Data Onboarding Support variety of data collection methods • Offline ingestion • Ad request parameters • On-demand data
upload • Audience pixel
Enable data matching using PII, device ID, cookies & other match keys
Data Taxonomy Define and organize all targetable data in a data dictionary • Demographics • Behavioral • Location • Devices • Apps • Clicks & conversions
Data Science Data analytics capabilities • Supplement
reported/reg data with derived data to help boost scale
• Look-alike modeling • Data normalization • Device fingerprinting • Attribution report • Lift analysis
Integrated Platform Seamless end-to-end platform with an integrated DMP & ad server • No data leakage • Yield optimization
Key components of an ad-tech DMP
© 2016 Karthik Ethirajan, all rights reserved
DMP players can be classified by many dimensions.
Successful players are able to offer differentiated
services across multiple dimensions.
8
DMP + VAS VAS such as ad serving, reporting
Pure Play DMP Standalone DMP
Many Pubs Premium & diversified
Single Pub Large but walled garden
Mobile Cookieless tracking
Online Desktop legacy
Mainstream Analytics Combination such as location, user agent, sub-ID, app verify, etc.
Niche Analytics e.g., Location, Census, Credit agency
Success Factors
Ad-Tech DMP
© 2016 Karthik Ethirajan, all rights reserved
Relative strengths of DMPs in enabling ad-tech compared
to industry behemoths
9
Feature Walled Garden Location DMPs Online / Legacy
Integrated platform No data leakage
O&O inventory Premium & diversified
Mobile expertise Cookieless, deterministic
Toolkits Data layering, avails calculator, etc.
Data analytics POI graph, modeling, inferred data
Cross screen Mobile, tablet, online
Attribution Offline / online
Data onboarding Device ID, PII, cookie matching
SDK / APIs Client-side, server-side enrichment
© 2016 Karthik Ethirajan, all rights reserved
Buying is better if DMP platform can be integrated fast
and its data usage ramped up rapidly in campaigns
Impre
ssio
ns
Data CPM $1 $2
Demographics Behavioral /
Location Custom
0%
5%
10%
15%
20%
25%
30%
35%
0 20 40 60 80 100 120
Months before breakeven
Data
Usage
~1 year BE
period if data
usage >5%
Partner Data Cost
Buy Breakeven Analysis
10
Breakeven Analysis
Buy DMP for $150M
Average market value of 3rd party data is $1.50
CPM
M&A cost in impressions: $150M / $1.50 CPM
Equivalent of 100B impressions
SSP traffic is about 100B per month
BE point (in months) is SSP traffic / portion of
SSP traffic that utilizes DMP data
Bu
sin
ess C
ase
Gro
wth
Str
ate
gy
Buy DMP sales $50-100M
DMP valued at 2-3x sales multiple
M&A cost will be between $100-200M
Build DMP team of 10 at $200K for a year
Build cost will be $2M
Partner DMP data cost is $0.50 - $2 CPM
Equivalent of 20-30% top line revenue
© 2016 Karthik Ethirajan, all rights reserved
Strategic considerations of buying a DMP
11
Pros Cons
Synergy Strong tech play including toolkits, location, analytics, etc. Strength in mobile
DMP tech not related to ad-tech
Integration Data collection from offline and real-time data sources
DMP still needs to be integrated with SSP platform components
Scale Many DMPs do not “own” data Tech may be available but user data may need to be built from scratch
Business Model DMP data available for consumption on the SSP platform
May need to deprecate “selling” data for consumption outside platform
Business Case Better targeting commands higher CPM. SSP gets to keep all of incremental revenue.
Data centers incur Opex
Brand Source new campaigns by marketing DMP brand
Advertiser may ask for data from a different DMP requiring us to still partner with other data providers
Str
ate
gic
Co
ns
ide
rati
on
s
Recommendation
Buying a DMP will speed time to market by providing the
needed tech. However, SSP will still need to partner with
other data providers to satisfy customer interest
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