This past weekend I traveled up to Skidmore College to deliver my once-per-semester guest lecture to a few business classes. In the past I’ve spoken about the structure of advertising agencies, the history of advertising, and things students can do to prepare for the working world. This time around, I focused exclusively on how AppNexus came into existence and what I do in my current role at the company.

The majority of my slide deck focused on the evolution of display advertising over the last 10 years.

Inspired by Ari Paparo’s recent post on Internet Advertising for Kindergartners and on recommendation by my girlfriend, Miranda, I had the students act out the evolution of the ecosystem as I tabbed through my slides. Miranda and I gave each student a different “Hello My Name Is” tag, labeling them a Publisher, Advertiser, Network, Exchange, SSP, DSP, ATD, or ITD. Additionally, we used poker chips to represent advertising impressions, which the Publishers traded for “Insertion Orders” with the Advertisers. It was a fun, interactive way for the students to better understand this ever-changing, multi-pronged ecosystem.

Throughout the presentation I focused on the themes of efficiency, intermediation, and “me too” companies that came onto the scene to compete with stand-alone intermediary companies (ultimately creating inefficiency). For example, I explained to the students that Ad Exchanges were originally meant to create efficiency by helping Networks deal with the inevitable imbalance between supply and demand. However, other Exchanges sprouted up to copy the idea of the first exchange, and a business model that was originally meant to create efficiencies did just the opposite. To solve for the inefficiency of multiple Exchanges, opportunists started DSPs and SSPs to serve as one point of contact for advertisers and publishers, respectively dealing with multiple exchanges. But then multiple DSPs jumped in as “me too” companies, then came ATDs and ITDs – and so on… The full slide deck is included below (note/disclaimer – the content of the slides do not necessarily represent the opinions or positions of AppNexus Inc).

 

The students responded to the presentation with insightful comments and questions about industry consolidation. A few highlights include:

Comments in favor of consolidation:

Why don’t Marketers and Advertisers band together and force a consolidation of all of the intermediaries in the landscape?

Why doesn’t the government step in and help organize this industry better?

Why don’t ATDs build their own bidders and bypass using DSPs?

Why don’t Agencies build their own bidders and bypass using ATDs, ITDs and DSPs?

Why haven’t DSPs, Exchanges and SSPs partnered together or merged to form a cohesive platform to compete with Google and AppNexus?

How can private consumer data be safe with so many intermediaries?

Comments in favor of more intermediation:

Why doesn’t someone start a Trade Desk Aggregator that serves as a single point of contact for Marketers/Advertisers and allocates funds to different ATDs/ITDs (one additional layer of intermediation)?

Why don’t large publisher consortiums start their own Trade Desks (Publisher Trade Desks?) – to serve the inverse role as ATDs?

 

Pretty good comments, right?

The Evolution of Online Advertising – Presentation at Skidmore College.
  • I like Act 7. Looks to be the One True Way ™ of advertising!

    Sounds like a cool presentation.

  • Dadio

    It may be time to post a picture of Miranda since she’s been instumental in the last two entries.

  • Andrew

    I think it will be interesting to see how all of the companies in Act 7 fair in the next few years. It seems somewhat illogical to me that 4 separate layers of intermediation can exist in any market for longer than a short while.

    Thanks for the comments!

    If you’re interested in seeing pictures of Miranda and I (as my father suggests above), you can find me on facebook.