publishers, monetization, and technology: state of the … · 2020-03-23 · 2 rocket fuel...

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PUBLISHERS, MONETIZATION, AND TECHNOLOGY: State of the Industry 2016

I N D U S T R Y R E P O R T

2 | Rocket Fuel Institute | State of the Industry 2016 | Publishers, Monetization, and Technology

A B O U T D I G I DAY

DIGIDAY is a media company and community for digital

media, marketing, and advertising professionals. We

focus on quality, not quantity, and honesty instead of spin.

We cover the industry with an expertise and tone you won’t

find anywhere else. The Digiday team strives to produce the

highest quality publications, conferences, and resources for

our industry.

A B O U T T H E R O C K E T F U E L I N ST I T U T E

The RFI is a research group dedicated to offering marketers, agencies,

and publishers new perspective and new insights that will impact how

they plan, execute, and measure their marketing efforts and monetization

strategy. We believe we should address some of the biggest known

unknowns in digital marketing, and perhaps discover some of the unknown

unknowns that affect marketers across the industry.

The RFI is housed and funded by Rocket Fuel, a leading programmatic marketing

company that combines the science of artificial intelligence with the scale of big data to

improve campaign effectiveness. Customers trust Rocket Fuel’s Marketing That Learns™

technology to achieve brand and direct-response objectives in diverse industries across

North America, Latin America, Europe, and APAC. The Rocket Fuel platform includes

data management, programmatic media-buying, site optimization, and predictive analytics

capabilities that extend across a marketer’s paid and owned channels, and personalize every

customer interaction. Rocket Fuel operates in more than 20 offices worldwide and trades on the

NASDAQ Global Select Market under the ticker symbol “FUEL.”


I N T R O D U C T I O NThe publication of this report marks the fourth year that

Rocket Fuel has partnered with Digiday to assess the state

of the publishing industry when it comes to monetization and

programmatic advertising. In those four years, we have seen

a movement that mirrors the rest of the digital marketing and

advertising industries – toward more programmatic solutions,

increasing use of new technological solutions to boost revenue,

and the turn toward native advertising.

We are four years into assessing these trends in the publishing

industry, and perhaps the most interesting finding is the

continued and substantive amount of uncertainty that remains

about how to effectively monetize publisher data and assets, and

how to implement any particular monetization strategy. What

the survey data reveals is that in so many areas, the publisher

industry still hasn’t coalesced around a particular approach

to solving their revenue challenges. At a time when only 1 in

5 publishers are exceeding their revenue goals, one might

expect the industry to begin lining up around a particular suite

of solutions, or developing a widespread consensus in favor of

particular technologies. While there are, and have been hints

that opinion is shifting, adoption continues to lag behind. Indeed,

while overall trends point to increased adoption over time, the

results of this survey suggest that at present industry opinion is

currently split down the middle on key technologies like DSPs,

DMPs, and PMPs—evidence that suggests a lack of industry

consensus about implementation and/or value, or, at the least,

temerity about executing and pushing some of these solutions.

There are positive signs, however. This 2016 survey offers a

broader look at the issues publishers are facing with data and

audience monetization, the solutions and technologies they’re

using, and the priorities that govern their monetization strategies,

and highlights the growing interest in solutions that extend reach

(like audience extension) and boost CPMs (like header bidding).

MethodologyThe State of the Industry Survey was fielded

by Digiday between July 25th and August

15th, 2016. A sample of 208 publishers

responded. Focused interviews were also

conducted on issues related to survey results.


Lack of consensus on key technologies and strategies

Publishers remain uncertain or split on key technology

decisions and strategies, despite the longstanding

existence of some of these solutions. Roughly half of

respondents currently work with a DSP (53%) while the

other half (47%) do not. While DSP adoption has grown

YOY, many publishers remain tentative or unsure. The

majority of respondents are unsure if they should look

into adopting a DSP as a potential technology solution

(52%), a number that doesn’t include the 26% who have

decided against doing so. Similarly, DMP adoption is

also split, with 42% who have implemented DMPs to

58% who have not. Of those who have chosen a DMP,

no single DMP provider enjoys a significant lead over

competitors, or captures more than 23% share.

Direct sales continue to dominate as a source of

advertising revenue

Respondents suggested that just under half (43%)

of their revenue is still attributable to direct sales

advertising, eclipsing other revenue sources. That

average was more than twice the revenue coming

from open exchanges, three times the amount coming

from ad networks, and four times as much as came

from private marketplaces. Not surprisingly, then,

display continues to be the clear leader for advertising

revenue by channel or media type, generating more

revenue than native advertising and video combined,

and more than tripling the amount of revenue currently

generated through mobile in-app channels.

Publishers still struggle to drive value from

their DMPs

Although nearly half of publishers surveyed had a DMP

(42%), publishers employing a DMP were just as likely

to be falling short of revenue goals as those without

one and only slightly more likely to be exceeding their

goals. Fewer than half of respondents are realizing

K E Y F I N D I N G Sbenefits beyond collecting first-party data and using it

to build custom audiences, suggesting that publishers

either aren’t leveraging the technology to full effect, or

their current solutions aren’t sophisticated enough to

accomplish their goals.

Publishers are in the driver’s seat, if they want to be

Three of the top five hurdles to revenue growth that

publishers identified are largely within their own

control – educating advertisers, providing consistent

deal delivery or execution, and managing internal

sales channel conflicts.

Publishers offering audience extension see fewer

challenges from reach and finding quality inventory

The remaining two hurdles, reach and quality inventory,

are significantly less burdensome for the more than one

third of publishers that offer audience extension, The

sense that reach was a significant hurdle to revenue

growth declines 21% among those who offered

audience extension relative to those who did not, and

likewise quality inventory was 28% less likely to be

seen as a hurdle . Not surprisingly, the percentage of

publishers who “always” include audience extension

has risen by over 450% since our 2015 survey.


A N U N C E RTA I N I N D U ST RYThe data suggests that there is little consensus over

which DSP & DMP providers represent the leaders

in the industry. Only 52% of respondents currently

work with a DSP. Of those 52%, the majority work with

Doubleclick bidmanager, which isn’t surprising given

Google’s size and presence, but even these numbers

are smaller than one might expect given Google’s

overall market share. Each of the remaining options

(AppNexus, Mediamath, Rocket Fuel, The Trade Desk,

and TubeMogul) received at least 16% of the response.

The results reflect the uncertainty over DSP providers

as only half of the respondentsproviders are electing to

use a DSP and within that half there is a high degree of

variation about which provider to use. The uncertainty

is even more pronounced when the respondents were

asked whether or not they planned on investigating a

DSP in the next 12 months. The most significant answer

by far was “unsure” which received 52% of responses

with the remaining respondents split between 21% for

“yes” and 26% for “no”. The fact that over half of the

respondents were unsure whether they would simply

investigate a DSP highlights the uncertainty of the

current market.

The results surrounding DMPs represents an even

greater degree of uncertainty. Only 42% of the

respondents currently have a DMP. Within that 42%,

there was little to no consensus over which DMPs

represent an industry leader. The respondents were

offered 11 DMP options to choose from and asked

to select all of the options that they currently work

with. Not one of the options secured more than 22%

of the responses. Lotame, Abobe, Oracle/Bluekai,

Krux, and Nielsen/Exelate all fell between 11-22% of

the responses. The remaining options: Rocket Fuel,

Experian, Acxiom, Neustar, Quantcast, and Turn all

ranged between 2-9% of the responses. The data

suggests that publishers have many options to choose

from in the market, but that none of the DMPs have

emerged as the industry leader which suggests that

the publishers have a difficult time distinguishing

between their DMP options.

One reason why publishers may struggle to differentiate

between DMP options stems from the perceived

benefits from adopting a DMP. The respondents were

asked to identify the potential organizational benefits

of adopting a DMP. The overwhelming answer with

66% of the responses was that DMPs provide the

“ability to collect first-party data.” Although collecting

first party data is extremely important, it is not a

service that differentiates DMPs in the market place.

The respondents were much less likely to select the

options that required a greater degree of customization.

For instance, the “ability to personalize content for site

visitors” was ranked last with just 19% of the response.

While there are obvious and powerful benefits to

collecting first party data for monetization, the lack of

customization and application of that data, relatively

speaking, offers interesting insight into how DMPs are

currently understood and utilized by publishers.

“Since our industry is so real time it takes a lot of backtrack after you try something that's failed. I think that's kind of it. There's chicken or egg, who's going to do it first, there's no precedent for it, things can go wrong, and I think people sometimes are a little afraid to fail.”


E VO LV E D P R I O R I T I E S , N E W C O N C E R N SPublishers were asked about the most common goals for advertiser campaigns

run on their site over the last 12 months. Reach continued to be the number 1

priority, with direct response metrics like CTR and conversions being a close

second. This year, viewability also came in a close third, trailing behind reach

by only 12% and behind DR metrics by just 6%.

The growing emphasis on viewability adds additional burdens for

publishers, but represents a distinct and substantive trend at present,

and something publishers and advertisers will need to coordinate

moving forward.

Header bidding was also a new and trending topic in this year’s

survey. Roughly 3 in 10 publisher respondents had adopted

Header Bidding technology, indicating that it might be the

single biggest area of opportunity identified by our study. The

most common challenge to adopting header bidding in an

organization was a potential increase in page latency (31%),

followed by concerns over higher bounce rates. Although

valid concerns (tags slow load times), just under half of

publishers who had adopted Header Bidding (48%)

indicated that they had seen higher CPMs as a result,

and nearly one third (31%) reported increased yield.

One in nine (11%) of publishers employing Header

Bidding said they actually saw less page latency

post-adoption.

Among those publishers who hadn’t yet

adopted Header Bidding, nearly half (44%)

said they’d either “definitely” or “probably”

look to prioritize programmatic on

the same level as their direct-sold

inventory within the next year,

which suggests that in this case,

at least, perception regarding the

promise of header bidding as a

programmatic revenue boost

will drive significant adoption

between this year and the

next.

Reach

62%

DirectResponse

56%

ViewabilityLevel

50%

Inventory Quality Score

11%

Other

5%

Brand SurveyLift

17%

Viewability has become a goal on 50% of campaigns run with publishers over the last 12 months

Increased Yield

31%

HigherCPMs

48%

FewerPassbacks

23%

Less Latency

11%

Other

23%

What, if any, are the benefits your organization has seen as a result of adopting

header bidding technology?


A DV E RT I S E R E D U CAT I O N I S

T H E B I G G E ST H U R D L E TO

G R OW I N G R E V E N U E

47% of publishers believe that advertiser

education is their biggest hurdle to

revenue growth, with advertisers finding

it diff icult to know what solutions are

available and what’s best for them. Reach

(41%) also remains a significant problem

of a scaling industry, with publishers still

limited by the scale of their own platforms.

Internally, the basic blocking and tackling is

also a challenge, particularly as the number

of technology platforms publishers are

using increases. Deal delivery/execution

(36%) and internal/sales channel conflicts

(34%) are the biggest internal hurdles

faced by publishers. With a limited pool of

inventory/eyeballs, and the challenges of

increasing reach, internal sales channels

will continue to compete over a finite

resource.

Understandably, reach was a much bigger

problem for smaller publishers in the study,

with 40% of publishers averaging fewer than

50 million monthly uniques listing it as a

major hurdle to revenue growth, compared

to only 18% of publishers with more than 50

million monthly uniques. Availability of quality

inventory was of equal concern to publishers

of all sizes (26%) however, suggesting that

while larger publishers may not struggle as

much with overall reach, they have similar

issues finding quality opportunities to reach

key audiences.

Internal/Sales Channel Conflicts

34%

Reach

41%

Deal Delivery/ Execution

36%

Available Inventory Quality

29%

What are your three biggest hurdles when it comes to growing revenue?

Bots/Fraudulent Traffic

15%

Buyer Transparency

28%

Ad Blocking

23%

Exchange/SSP Management

13%

Advertiser Education

47%


W H ER E IS TH E M O N E Y CO M I N G FRO M ?

Channels44% of ad revenue for publisher respondents comes from direct sales, with support from open exchanges (19%) and ad networks (14%).

Private Marketplaces

(PMPs)

9%

Programmatic Guaranteed

8%

Direct Sales

44%

Ad Networks

14%

Data Sales

4%

Open Exchanges

19%

Increased Yield

31%

HigherCPMs

48%

Display

23%

Less Latency

11%

Other

23%

Less Latency

11%

Ad FormatsFormat-wise, Display still leads the pack at 35% of publisher ad revenue due to its ubiquity, followed by engagement plays like native advertising/sponsored content (16%) and video (15%). The higher price points on these formats means they’ll have a larger dent on overall revenue with less volume.

FewerPassbacks

23%


AU D I E N C E S E X T E N D E DPublishers are leveraging multiple programmatic channels

and technologies to expand reach, improve campaign

performance, increase CPMs, and meet revenue goals.

Just over one third (34%) of publisher respondents include

Audience Extension to their advertiser partners, and of those

one third include in their campaign proposals “Always” or

“Often.” Another 41% offer extension on about 50% of their

proposals, depending on the campaign and the client. This

represents a marked increase from our 2015 study, when

only 22% of publishers were including Audience Extension

on campaigns either “Always” or “Often.”

Publishers offering extension expect it to account for 16% of

their ad revenue in 2015, and expect that proportion to rise

to 21% on average in 2016.

Generally, publishers include Audience Extension on campaign

proposals to push past platform limitations around inventory

scale (50%) or targeting (48%), though many turn to extension

as a way to improve performance and expand reach onto

platforms that they don’t specialize in.

While reach was listed as a significant hurdle to revenue growth

for publishers in 2016, publishers offering audience extension

planned to struggle with it much less--only 27% of publishers

offering extension said reach was a major hurdle to revenue

growth over the next 12 months, compared to 41% of publishers

not offering it. Similarly, while 29% of publishers not offering

extension felt that availability of quality inventory would be a

hurdle to revenue growth, only 21% of publishers offering it felt

that way.

Roughly a third of those who use audience extension attribute at least 20% or more of their advertising revenue to it. Nearly 1 in 6 believe that half of their revenue will be attributed to audience extension by 2019.

20

15

How often do you include Audience Extension on Campaign Proposals?

Never6% 3%

20

16

Rarely25% 22%

Sometimes47% 41%

Often19% 20%

Always3% 14%

Overcoming overall scale/inventory

limitations

50%

Overcoming scale limitations due to

targeting

48%

Increasing overall campaign

performance

44%

Adding reach on a channel you don't

specialize in

28%

Increasing campaign efficiency

25%

Other

5%

What are the most common reasons you'd include audience extension on campaign proposals?


53% of publisher respondents currently work with a DSP, suggesting that overall, more than half are at least

dipping into programmatic solutions. Among those who aren’t currently partnering with a DSP, 21% plan to

investigate one over the next twelve months, while only 26% have no plans to do so (53% are on the fence).

Publishers weren’t necessarily confined to working with a single DSP: On average, publishers reported

working with 1.7 DSPs, and one third (35%) of respondents worked with 2 or more DSPs.

20

16

What, if any, are the benefits your organization has seen as a result of adopting a DMP?

20

15

Although programmatic is becoming a necessity, data and its application may still be more of a luxury--only

42% of publisher respondents currently have a Data Management Platform (DMP). This was in-line with last

year’s result (46% of publishers in 2015), suggesting that although the industry saw a significant increase in

adoption over last year’s survey results, that process has slowed over the past twelve months, particularly

for smaller publishers. While more than three out of f ive (60%) publisher respondents with 10 million or more

monthly uniques reported having a DMP, only 23% of publishers with fewer than 10 million monthly uniques

reported having one.

When it comes to realizing the benefits of a DMP, many publishers may still be in the early stages of usage.

Publishers in the study were most likely to see the primary benefit of a DMP as being the ability to collect

f irst-party data, followed by the ability to build and sell custom audiences. Compared to our study last year,

publishers are less enthusiastic about selling custom audiences and slightly more likely to realize better

performance and optimization results from having a DMP. That fewer than half of respondents are realizing

benefits beyond collecting first-party data and using it to build custom audiences suggests there is still

plenty of “meat on the bone” for publishers with regard to leveraging a DMP to achieve revenue goals.

Ch

an

ge

67%

n/a

n/a

Ability to collect first-party data

25%

71%

-16%

Ability to build and

sell custom audiences

55%

56%

-1%

Better audience insights/analytics

47%

41%

+6%

Better campaign optimizing technology

n/a

28%

n/a

Ability to sell inventory

programatically

n/a

23%

n/a

Ability to extend reach

through Audience Extension

24%

19%

-5%

Ability to personalize content for site visitors

23%

n/a

n/a

Ability to monetize collected

data

D EM A N D S I D E P L ATF O R M S

DATA M A N AG EM ENT P L ATF O R M S


More than half of publisher respondents (53%) currently offer inventory through one or more private

marketplaces. The campaigns run through these marketplaces are biased toward branding, with 51% of

publishers saying that either all or most of the campaigns run with them through a PMP are branding

campaigns. These are more custom campaigns with higher-priced or higher-tier inventory.

Over the next year, what do you think will be the biggest developments, challenges, or changes in the industry that

publishers will have to adapt to?

LO O K I N G A H E A DAs publishers move forward, they’ll continue to face many of the same challenges with regard to generating

revenue, including advertiser education and growing reach. Looking ahead to the next year, we can see

that ad blocking remains a serious concern for publishers, with one in five respondents (20%) saying that it

will be one of the biggest challenges that the industry will have to adapt to over the next year. Viewability,

both measurement and meeting goals are also a major concerns (9%), as are scaling and monetizing mobile

inventory (7%).

20%

Ad Blocking

13%

Other

12%

Not Sure

9%

Viewability

7%

Mobile

5%

Programmatic

5%

Native

4%

Video

PR I VATE M A R K E T P L AC ES

3%

Social

3%

Revenue

3%

Reach

3%

Latency

3%

Competition

2%

xDevice

2%

Technology

2%

Regulation

4%

Header Bidding

2%

Personalization

2%

Bot Traffic

In addition to the one in five publishers that see ad blocking as one of the biggest concerns of the next 12

months, just under one in four (23%) of publishers see ad blocking as one of their three biggest hurdles to

revenue growth, and nearly one third (29%) list inventory quality as a top hurdle. One third of publishers we

surveyed aren’t doing anything to combat ad blockers or problems with inventory quality (32%), while 6%

felt it wasn’t an issue and 5% weren’t sure what they were doing about it.

The most common solution among publisher respondents for both problems was moving to different ad

A D B LOC K I N G A N D I N V ENTO RY Q UA L IT Y CO N C ER N S


formats (17%), with an emphasis on native or sponsored content as a means to get around ad blockers. 9% of

respondents said they were working with viewability or inventory quality measurement tools to track quality

to address quality concerns.

Beyond changing ad formats, publishers were divided on potential solutions for ad blocking. Publisher

respondents are just as likely to plan to engage with their community on the importance of ads on-site and

inviting them to turn off their ad blockers (6%) as to gate their content or employ tech to block visitors using

ad blockers (6%).

What, if anything, is your organization currently doing or planning to do to combat concerns around inventory quality and ad

blocking?

n/a

Not doing anything

71%

Different ad formats

41%

Using viewability/ inventory

measurement to...

n/a

Researching potential solutions

n/a

It's not an issue

71%

Gating Content/ Blocking Blockers

56%

Not Sure

41%

Investigating new tech

n/a

Site/content/ UI redesign

24%

Improved Content

n/a

Advertiser Education

n/a

Engage with the community

n/a

Other

Publishers largely expect their revenue to come from the same sources in similar proportions next year,

with a slight increase for revenue from Private Marketplaces (PMPs). Though with 45% of publishers who

don’t already implement header bidding planning to prioritize programmatic on the same level with direct

next year, it’s likely that the share of revenue from programmatic sources will increase more than expected.


DISCLAIMER:

RFI’S RESEARCH STUDIES (THE “MATERIALS”) ARE INTENDED SOLELY FOR GENERAL INFORMATION

PURPOSES. THE MATERIALS DO NOT NECESSARILY REPRESENT THE POSITION OF ROCKET FUEL

OR ANY OF ITS DIRECTORS, OFFICERS, OR EMPLOYEES, OR ANY OF THE AUTHORS OR OTHER

CONTRIBUTORS WITH REGARD TO ANY OF THE MATTERS ADDRESS THEREIN. ROCKET FUEL

DISCLAIMS ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THOSE OF

MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR OTHERWISE ARISING OUT OF THE

ACCURACY, COMPLETENESS OR ADEQUACY OF THE INFORMATION CONTAINED IN THE MATERIALS.

RFI DOES NOT REPRESENT, WARRANT, UNDERTAKE OR GUARANTEE THAT THE USE OF THE MATERIALS

WILL LEAD TO ANY PARTICULAR OUTCOME OR RESULT. IN NO EVENT WILL ROCKET FUEL BE LIABLE FOR

DAMAGES OF ANY KIND, INCLUDING WITHOUT LIMITATION, DIRECT, INCIDENTAL OR CONSEQUENTIAL

DAMAGES (INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR LOST PROFITS, BUSINESS INTERRUPTION

AND LOSS OF PROGRAMS OR INFORMATION) ARISING OUT OF THE MATERIALS, INCLUDING WITHOUT

LIMITATION, ANY CLAIM ATTRIBUTABLE TO ERRORS, OMISSIONS OR OTHER INACCURACIES IN THE

MATERIALS.

CONTRIBUTORS:

KENNETH RUFO, PH.D.

ROBERT JONES

DAVID AMRANI

publishers, monetization, and technology: state of the … · 2020-03-23 · 2 rocket fuel...

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