By Julie Réali, Global Partnerships Director, Dailymotion
Over the last year, and catapulted by the pandemic, mergers and acquisitions of ad tech companies have been dominating the ad tech industry. Left and right, companies were forced to reduce budgets and reevaluate ad spend, leaving many in the ad tech industry to struggle with simply remaining afloat. On top of everything else, the industry is navigating the impending death of third-party cookies – which recently announced would be delayed until 2023 – causing many companies to question what their next move is.
Some of these changes may look like insurmountable obstacles for smaller providers, but they do not necessarily have to be. There are key differentiators within these smaller companies that can give them the opportunity to thrive in a post-COVID-19 and third-party cookie world.
Industry Challenges
The COVID-19 pandemic accelerated the consolidation fear that loomed in ad tech. In one instance, the revenue timeline for demand-side platforms (DSPs) faced a dry spell as many cut back on ad spend. This left inventory unclaimed which caused the pricing to drop significantly making profit margins lean and sometimes nonexistent. With budgets tightening on ad spend very suddenly with no warning, DSPs simply did not have the revenue they needed to, thus, merging or getting acquired seemed like an optimal next step.
But consolidation really is nothing new in the ad tech space. A lack of trust, born from a history of bad practices and few regulations within the ad buying industry, has led marketers and publishers to drastically shorten their digital ad supply chains. Additionally, agencies have reduced the number of ad tech vendors they work with, mostly to increase efficiencies and decrease the cost of errors. However, the main driving force behind the consolidation rate in ad tech is that there is an overcrowding of independent ad tech providers and Big Tech wants to be the one-stop-shop for all advertisement needs. The mentality being why go to multiple different companies when you can just work with one that addresses all of your needs?
The Advantage of Small Ad Tech Companies
Despite these challenges, there are benefits to being a small ad tech company. Niche providers are able to offer clients more individualized services and overall transparency (of processes and measurable outcomes). Small ad tech companies also have the ability to adapt to a client’s needs more quickly through the creation of dedicated processes and technology, resulting in differentiation in product offerings and setting them apart from Big Tech. This level of attention to detail and nuance creates a more personalized experience for the client and allows for a more successful outcome.
Another benefit is the potential forced divestiture of Big Tech through government regulations over privacy concerns. We have seen governments stepping in with various policies such as GDPR and CCPA to regulate consumer data. These are the first laws geared towards more privacy on the web, but they certainly won’t be the last. The regulations to come will focus on preventing Big Tech from becoming monopolies, which may give smaller providers a chance.
In response to these regulations, Big Tech companies have fought back with talks of creating a more gated approach to their data: the end of third-party cookies. These cookieless policies are also causing a great divide within the market. By Big Tech cutting off access to third-party data, it forces ad tech companies to look for their coveted data elsewhere. While this may seem like the end of ad tech as we know it, it creates an opportunity for small ad tech companies to start fostering their own network of first-party data.
The Ticket to First-Party Data
But if everyone starts collecting their own first-party data, how will anyone offer something unique? Ad tech providers have an opportunity to focus on specializing in first-party data among different industries. Look at your customer base, are you able to recognize emerging trends within the types of clients that are leveraging your solutions? Lean into those focus areas and collect independent data valuable to your client base. This will make you an invaluable data gatekeeper in those industries.
The ad tech industry as a whole is facing some considerable consolidations and smaller providers are, of course, the most impacted. Despite some obstacles smaller providers will face in the market, there is still room for growth without being consolidated. Lean into differentiators and an agile approach, first-party data collection, and you’ll be primed to handle future government regulations more so than Big Tech.
About Julie Réali
As Global Partnerships Director at Dailymotion, Julie oversees the programmatic partnership team in charge of global strategy and the North American market. Under her leadership, the team is in charge of Dailymotion’s video programmatic monetization managing DSP and SSP relationships, developing strategic initiatives and expanding revenue streams. Before joining Dailymotion, Julie was Sales Manager at Warner Bros. where she was responsible for selling the Warner Bros. catalog, and maximizing their visibility and return on investment. Julie has worked for major companies around the world in Beijing, Seoul, Paris and New York City. She holds a Master’s degree in Marketing, Sales, and Business Development from NEOMA Business School as well as in Technological Innovation Management in South Korea at EWHA Womans University.
