publishers, monetization, and technology: state of the industry 2016 · 2017-06-22 · 2 rocket...

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

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.


benefits 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.

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 S


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.

Advertisers Goals

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

62% 56% 50%

Reach Direct Response

ViewabilityLevel

17% 11% 5%

Brand survey lift

Inventory Quality Score

Other

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

48% 31% 23%

Higher CPMs

Increased Yield

Fewer Passbacks

11% 23%

LessLatency

Other


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.

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

41%

34%

28%

15%

47%

36%

29%

23%

13%

Reach

Internal/Sales Channel Conflicts

Buyer Transparency

Bot/Fraudulent traffic

Advertiser Education

Deal Delivery/Execution

Available Inventory Quality

Ad Blocking

Exchange/SSP Management


W H E R E I S T H E M O N E Y

C O M I N G F R O M ?

A D F O R M ATS

Format-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.

C H A N N E L S

44% of ad revenue for publisher respondents

comes from direct sales, with support from open

exchanges (19%) and ad networks (14%).

19% 16%

9% 11%

4% 8%

44% 35%

14% 15%

8% 10%

Open Exchanges

Native Advertising/Sponsored Content

Private Marketplaces

(PMPs)

Sponsorships/Site Takeovers

Data Sales

Other

Direct Sales Display

Ad Networks

Video

Programmatic Guaranteed

Mobile (in-app)

Rising Stars

4%


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.

How often do you include Audience Extension on Campaign Proposals?

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

Never

2015 2016

Rarely

Sometimes

Often

Always

5% 3%

25% 22%

47% 41%

19% 20%

3% 14%

16%

11%

8%

15%

10%

Overcoming overall scale/inventory

limitations

Increasing overall campaign

performance

Increasing campaign efficiency

Overcoming scale limitations due to

targeting

Adding reach on a channel you don’t

specialize in

Other

4%


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.

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

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

Ability to collect first-party data

Ability to build and sell custom audiences

Better audience insights/analytics

Better campaign optimizing technology

Ability to sell inventory programatically

Ability to extend reach through Audience Extension

Ability to personalize content for site visitors

Ability to monetize collected data

2015 2016 Change

n/a n/a

71%

56%

41%

n/a n/a

n/a n/a

24%

n/a n/a

67%

55%

55%

47%

28%

23%

19%

23%

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

-16%

-1%

+6%

-5%

(continued next page)


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.

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

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.


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%).

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

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 formats

(17%), with an emphasis on native or sponsored content

as a means to get around ad blockers. 9% of respondents

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?

1. 20% Ad Blocking

2. 13% Other

3. 12% Not Sure

4. 9% Viewability

5. 7% Mobile

6. 5% Programmatic

Native

7. 4% Video

Header Bidding

8. 3% Social

Revenue

Reach

Latency

Competition

9. 2% xDevice

Technology

Regulations

Personalization

Bot Traffic

9%20%

Viewability

Ad Blocking


1. 32% Not doing anything

2. 17% Different ad formats

3. 9% Using viewability/ inventory measurement to...

4. 6% Researching potential solutions It's not an issue Engage with the community Gating Content/ Blocking Blockers

5. 5% Not sure

6. 4% Investigating new tech

7. 3% Site/Content/UI Redesign

Improve Content

Advertiser Education

8. 2% Other

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?

9%17%

Using Viewability/ inventory

measurementDifferent ad

formats


C O N T R I B U TO R S

ROBERT JONES

Robert Jones is Director of Research & Insights for

Sailthru. Previously, he served as Director of Research

and Insights for Rocket Fuel, authoring custom research

such as the Definitive Guide to Creative Optimization

and Rocket Fuel's Political Insights series. Prior to his

work at Rocket Fuel, Robert did research and analytics

at NBC Universal, Lotame Solutions, and Discovery

Communications. He holds a B.S. in Mathematics from the

University of Maryland, Baltimore County.

KENNETH RUFO, PH.D.

Ken Rufo is the Principal in charge of Strategy and

Positioning at Emphatic Thinking, where, among other

things, he produces research, strategic insight, and

thought leadership for their clients. He holds a PhD in

Communication from the University of Georgia, and spent

years teaching about digital media before turning to

consulting full time.

DAVID AMRANI

David Amrani is CUSTOM’s senior creative strategist. A

writer by training, his background in sociology and media

and his obsession with the confluence of art and technology

lead him down some pretty weird paths and into plenty of

unconventional solutions.

DISCLAIMER:© Rocket Fuel Inc. All rights reserved. Rocket Fuel is a registered trademark of Rocket Fuel Inc. or its affiliates. This document may not be reproduced or distributed, in whole or in part and in any form, without Rocket Fuel's prior written permission. The information contained in this document is the proprietary and exclusive property of Rocket Fuel. Other product and company names mentioned herein may be trademarks of their respective companies.

publishers, monetization, and technology: state of the industry 2016 · 2017-06-22 · 2 rocket...

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