Why Should a SSP or DSP buy a DMP ?

Why Should a SSP or DSP buy a DMP ?

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  © 2016 KarthikEthirajan, all rights reserved Should SSP buy a DMP ? Karthik Ethirajan April 2016
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  © 2016 KarthikEthirajan, all rights reserved 2 Agenda 3. Digital Ad Value Chain 4. DMP TAM 5. Data Use Cases 6. DMP One Platform 7. Platform Components 8. DMP Market 9. Competitive Landscape 10.Business Case 11.Summary Analysis Industry Product Market Strategy
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  © 2016 KarthikEthirajan, all rights reserved 3 In this constantly evolving digital ad value chain, data providers (DMP) cater to all players Advertiser Agency/ Trading Desk DSP / Ad Network SSP/ Exchange Publisher • Principal buyer • Creative arm • Brand relationship • Technology arm / RTB • Campaign operations • Creates a marketplace • Inventory aggregator • Ad server • Programmatic • Yield optimization • Inventory owner • Audience $ $ $ $ $5 $0.5 $1 $1 $0.5 $2.25 100% 10% 20% 20% 10% 45% Function CPM Value Industry Players DMP • Provides buy and sell sides with data & insights • $0.50-$2 CPM • 15% CPM Source: GCA Savvian Demand/Buy Side Supply/Sell Side
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  © 2016 KarthikEthirajan, all rights reserved Mobile DMP market will nearly double in size from 2015-17 4 $531B $582B 2015 2017 Global Ad Spend U.S. Ad Spend DMP TAM Mobile Ad Spend 34% 34% $30B $50B $58B $75B $183B $197B $1.3B* $2B* CAGR 4.7% 3.8% 14% 29% 32% 38% 52% 67% Global Ad Spend by Medium Search 45% Programmatic 59% RTB 37% U.S. Digital Ad Market 15% 15% 24% Future Trend ($67B in 2016) Source: Zenith Optimedia, eMarketer, BI, Karthik analysis Digital Ad Spend * DMP TAM assume 50% of all display & video ads use data for targeting Search 44% Display 20% Desktop $25B Mobile $42B Video 24% Display 43% Video 10%
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  © 2016 KarthikEthirajan, all rights reserved 5 Application of Big Data in advertising & adjacent markets Market Facing Use Case Analytics / Refined Data Raw Data Value Volume Examples • Reg Data • Lat/long • Browse History Providers • Ad-tech • Publishers • Carrier Providers • Data Analytics Examples • Behavioral Profile • Look-alike Model Providers • Ad-tech • Market Research Firms Examples • Targeting • Attribution • Ad Optimization • Insights Targeting Location based user profiles User Lat/Long POI Map + Attribution Conversion & lift analysis Offline / POS + Ad Optimization Yield Optimizer User Clicks + Market Insights* Location tech & heat maps Demographics + Campaign Data Site Categorization Network Lat/Long * Market Insights reports are used by many industry verticals such as financial services, healthcare, hospitality and others for purposes unrelated to advertising
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  © 2016 KarthikEthirajan, all rights reserved End-to-end platform that links data source with ad serving 6 Data file Ad Request Data file 1st Party Data SSP Data 3rd Party Data Pubs Data Coop Data LogicalCombinations Premium Pubs Data file Ad Request Custom • Songs played • TV shows • Contract up • Others Standard • Age • Gender • IAB category • Others Data Dictionary • Link to campaigns • Generate reports Campaign Execution Collection Methods Data Sources DMP Analytics Audience Segments Publishers decide which data fields to share (Coop data) and which ones to keep (Pubs data) for their own campaigns Audience Pixel Branded Data Standard • Branded audience segments SSP/ Exchange
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  © 2016 KarthikEthirajan, all rights reserved 7 Portal An easy to use self- service Audience Builder • Layer different data types to form custom segments • Show avails • Link to live campaign • Pull reports SDK/APIs Client SDK & server-side APIs • Capture user & device data • Enrich ad request client-side • Implement real-time ad decisioning such as geo-fences Data Onboarding Support variety of data collection methods • Offline ingestion • Ad request parameters • On-demand data upload • Audience pixel Enable data matching using PII, device ID, cookies & other match keys Data Taxonomy Define and organize all targetable data in a data dictionary • Demographics • Behavioral • Location • Devices • Apps • Clicks & conversions Data Science Data analytics capabilities • Supplement reported/reg data with derived data to help boost scale • Look-alike modeling • Data normalization • Device fingerprinting • Attribution report • Lift analysis Integrated Platform Seamless end-to-end platform with an integrated DMP & ad server • No data leakage • Yield optimization Key components of an ad-tech DMP
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  © 2016 KarthikEthirajan, all rights reserved DMP players can be classified by many dimensions. Successful players are able to offer differentiated services across multiple dimensions. 8 DMP + VAS VAS such as ad serving, reporting Pure Play DMP Standalone DMP Many Pubs Premium & diversified Single Pub Large but walled garden Mobile Cookieless tracking Online Desktop legacy Mainstream Analytics Combination such as location, user agent, sub-ID, app verify, etc. Niche Analytics e.g., Location, Census, Credit agency Success Factors Ad-Tech DMP
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  © 2016 KarthikEthirajan, all rights reserved Relative strengths of DMPs in enabling ad-tech compared to industry behemoths 9 Feature Walled Garden Location DMPs Online / Legacy Integrated platform No data leakage O&O inventory Premium & diversified Mobile expertise Cookieless, deterministic Toolkits Data layering, avails calculator, etc. Data analytics POI graph, modeling, inferred data Cross screen Mobile, tablet, online Attribution Offline / online Data onboarding Device ID, PII, cookie matching SDK / APIs Client-side, server-side enrichment
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  © 2016 KarthikEthirajan, all rights reserved Buying is better if DMP platform can be integrated fast and its data usage ramped up rapidly in campaigns Impressions Data CPM $1 $2 Demographics Behavioral / Location Custom 0% 5% 10% 15% 20% 25% 30% 35% 0 20 40 60 80 100 120 Months before breakeven DataUsage ~1 year BE period if data usage >5% Partner Data Cost Buy Breakeven Analysis 10 Breakeven Analysis Buy DMP for $150M Average market value of 3rd party data is $1.50 CPM M&A cost in impressions: $150M / $1.50 CPM Equivalent of 100B impressions SSP traffic is about 100B per month BE point (in months) is SSP traffic / portion of SSP traffic that utilizes DMP data BusinessCaseGrowthStrategy Buy DMP sales $50-100M DMP valued at 2-3x sales multiple M&A cost will be between $100-200M Build DMP team of 10 at $200K for a year Build cost will be $2M Partner DMP data cost is $0.50 - $2 CPM Equivalent of 20-30% top line revenue
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  © 2016 KarthikEthirajan, all rights reserved Strategic considerations of buying a DMP 11 Pros Cons Synergy Strong tech play including toolkits, location, analytics, etc. Strength in mobile DMP tech not related to ad-tech Integration Data collection from offline and real- time data sources DMP still needs to be integrated with SSP platform components Scale Many DMPs do not “own” data Tech may be available but user data may need to be built from scratch Business Model DMP data available for consumption on the SSP platform May need to deprecate “selling” data for consumption outside platform Business Case Better targeting commands higher CPM. SSP gets to keep all of incremental revenue. Data centers incur Opex Brand Source new campaigns by marketing DMP brand Advertiser may ask for data from a different DMP requiring us to still partner with other data providers StrategicConsiderations Recommendation Buying a DMP will speed time to market by providing the needed tech. However, SSP will still need to partner with other data providers to satisfy customer interest