6 June 2020
This August smartclip has been active in the Nordic markets for ten years. In many ways it marks a milestone in our history and with a long summer break after a very special first half year I found the time and peace to think back and reflect on how far we have come as a business and industry since 2010. So here are my reflections looking back but also making assumptions about what’s to come in our ever evolving industry moving forward.
UGC from pest to best?
UGC or User Generated Content was a much discussed topic back in 2010 when we first launched smartclip in the Nordics. Premium video content online was a very scarce asset that few players in the market could afford to produce, stream, host and monetize. As Google acquired the content platform YouTube back in 2006 many questioned both the use for and especially the content on the platform. UGC was a complete no-go for advertisers as video back then was dominated by broadcaster “play” services.. Fast forward ten years we have a completely different picture and market maturity. Video is a commodity, costs are a fraction of what they were and user generated content is ubiquitous. However with the recent brand safety discussions and advertisers boycotting Facebook it again puts the UGC-discussion front and center. Will the market pivot back to a more rigid view or have we accepted that the Internet can not be controlled like a broadcast like environment regardless of the technology layers we add on top and that this is something we as ad tech companies and marketers have to accept?
Technology and content enabling viewership
It’s always hard to look back and try to compare scenarios from ten years ago to where we are today in such a fast moving and tech savvy industry as online video. It quickly gets blurry. But most of us will remember trying to stream video on our desktops, with a somewhat shaky internet connection, waiting for videos to buffer. Streaming on the metro on our phones was unthinkable. Compared to where we are today where the user can truly choose what, when and how to consume, as content has increased tenfold, technology has really enabled video everywhere. Cloud based storage, adaptive streaming, unified standards, 4G and off course the enormous investment in content has really given the modern user a lot of options. With even more players entering the streaming market in Europe (Apple, Disney, Samsung TV+, Rakuten), even smarter devices and the technology now moving to 5G it will be very interesting to see where technology will take us the coming ten years – will there be a prime-time and a first screen attached to it?
Ad creativity and innovation
If technology and content has come a long way in ten years enabling video viewership we as an industry have also come a long way developing the linear TV-spot for online use cases. Back in 2010 a typical video ad was 30 seconds long and had the pay off or call to action in the very end. Today we have a whole range of different options adapting video advertising to the audience, the content, the platform and also the user. From shorter ads (6-10 seconds) to dynamic content seamlessly stitched in depending user data, geo-location, weather or part of a story telling strategy with sequential messages. Ads are square or vertical on mobile, has text as users mute by default, longer ads can be skipped and frequency caps work against irritation and ad fatigue. But we yet have much to learn and discover where we can not let the algorithms and machines do all the decisions for us. Creativity is key to telling a good story to the modern spoiled user and video is the most powerful media we can use. After 10 more years of trial and error, ad creatives will be exponentially better at hitting the mark with consumers.
Rise of programmatic buying
We made our first transactions via RTB on our own proprietary technology smartx Platform back in 2013. I still remember our programmatic wizard stepping into my office with a piece of paper showing a graph with the number of impressions sold the day before “It actually works!”. If I was to pick one thing that has revolutionized the online advertising market the most over the past decade it would without a doubt be the rise of programmatic buying. The promise – find the right user, at the right time, at the right price and get results and reporting in real time to further enhance the efficiency of your media spend. We have come a long way since the first impressions were bought and sold and we still have a long way to go. Like any complex new ecosystem it takes time for business models, actors, rules and regulations to set in. The modern stock market has been around since the sixteenth century and is still developing. Likewise, the story of the programmatic ecosystem hasn’t reached the final chapter yet.. Reduction in complexity, more transparency, more automation (AI/machine learning), better controls and consolidation. No doubt programmatic buying is here to stay but I think we have a number of challenges to solve in the industry to really make programmatic deliver on its full capacity in the coming ten years and beyond.
Rise of the walled gardens
What is a walled Garden and why do we refer to Google, Facebook and Amazon as walled gardens? I think the parable is somewhat accurate – behind the high walls everything is perfectly in order but you can only get in if you have an invite. The global tech giants have really made an impressive entry in the digital advertising space over the last decade. They have understood how valuable the user data is as an asset and on top of that built a whole ecosystem where advertising is made easy to buy, effective and self regulating controlling every step in an end-to-end self operated ecosystem. Global dominance has led to a scenario where reports indicate that 90% of all new advertising revenue spend lands with the Duopoly today. Standing on the outside of the walled garden this is off course problematic in many ways and what we have experienced in our Nordic markets the last years is a fierce consolidation where you simply need to go big or go home to compete for advertising dollars. Especially the consolidation within the struggling local media market during the current pandemic has led to a series of democratic questions and a number of different regulatory investigations against the dominant global players. All empires crumble sooner or later and it will be very interesting to see for the coming ten years how the Googles and Facebooks of this world will reinvent themselves to stay ahead of the pack that are all aspiring for their position at the throne of digital media.
Adtech and M&A
The rise of programmatic and the dominance of the Global tech giants has led to a fierce consolidation in the ad tech landscape. Traditional Ad Networks turned into SSP’s, Exchanges or even DSP’s. DMP’s (data management platforms) entered to fuel the ecosystem with data and a number of different platforms to optimize, verify and attribute. Back in 2010 very few of the companies that we saw as competitors are still around. As the ecosystem keeps developing and maturing alongside the privacy regulations,I predict the ad tech industry will be far more consolidated – smaller players will have been bought and swallowed up into the larger ones. Less players means more simplicity and that can only be good for advertisers. However I also think that there is room for invention and new players to enter finding USP’s and areas where true value can be added for the buy and sell side in our ever evolving industry.
As a consequence of programmatic, walled gardens and market consolidation on all levels a fairly new form of partnerships has been forming over the last years in Europe. Go big or go home has led to independent local media owners forming themselves in alliances where old enemies now partner to take on a rapidly growing threat to their business. Sharing resources, adtech, data and creating a joint offering to the market seems to be a trend that is here to stay. AdAllaince in Germany/Netherlands and Project Ozone in the UK are good examples of such alliances where independent media are joining forces to cater to the needs of local and global advertisers based on the same thesis that Google and Facebook are using so successfully but in a more transparent and locally adapted manner. As we head into the next decade I think alliances and coalitions between media owners will be more common not only locally but also regionally and internationally. As the consolidation and competition increases local media owners will have to find ways to reinvent themselves and find new allies in the competition for advertising dollars and digitization of legacy business models.
If I was to pick a second single event that changed the industry the most, it would be GDPR. We all remember the rumors and different legal interpretations leading up to the magical date May 25th 2018. I even heard stories of live events including refreshments and snacks looking at trending graphs in SSP’s and DSP’s – what is going to happen? The Cambridge Analytica scandal and frequent media reports of massive data leaks, data protection and privacy have become mainstays of ad tech discussions in the past years. Privacy is the entry point for regulation of the industry—we are seeing that with GDPR and CCPA—because privacy impacts people, whereas ad fraud has no tangible impact on the wider society. Moving forward privacy is a topic that is here to stay and the next steps are already happening with the death of the third party cookie, mobile identifiers (IDFA) being sunset by Apple, IAB TCF 2.0 and the upcoming E-privacy regulation from the EU likely to come into effect in 2022. It’s time for our industry to stop looking for shortcuts and rather put the users and their privacy front and center to create a sustainable ecosystem in the longer term. I think this involves everyone from the IAB to buyers, sellers, adtech and advertisers to really work together and come up with solutions.
I bought my first smartTV in 2010. Was it a TV or was it a computer with a TV-screen? If I watch content via the Internet on the TV am I watching TV then? This is where the lines between TV and Online started to blur. TV and premium video content have come a long way in the past ten years. Once the analogue powerhouse of classic one to many commercials, TV has become more and more digitized and consumption fragmented. With content being distributed via digital channels, the advertising approach has been digitalizing as well. But even within broadcast TV digital advertising has become a reality in Europe today. Linear ads are in fact being replaced with targeted online ads with a one-to-one delivery. Within the Nordics, we have seen very different developments though. While Sweden is leading the way in digitizing TV distribution, other markets develop at a different pace within advertising. But one thing is clear. Broadcast TV can not escape from the realities and dynamics of digital advertising. I predict that in ten years time a majority of advertising served to what we know as TV today will be done by an ad-server based one a one-to-one framework via the Internet…
Celebrating ten years as smartclip in the Nordics and being a part of the journey from the start really makes me excited and humble for what’s to come in the next ten years. See you all out there!