Blog: Differentiation in an Era of Consolidation, by Ari Paparo, CEO Beeswax
As the last minute preparations for Interact are put in place we are delighted to bring you some perspectives on the key topics. Ari Paparo, CEO of Beeswax discusses the importance of differentiation in an era of consolidation. Continue reading…
One of the themes of this year’s IAB Interact conference is “Building a commercially viable digital ecosystem” which is apt considering the spate of negative headlines about the larger ad tech world.
It is an interesting time to be in ad tech. On the one hand, there clearly is some consolidation among vendors, and companies that have relied on an IO-based transactional sales model are seeing their businesses shrink or disappear. But at the same time, there’s an enormous amount of creativity and innovation taking place with new companies, ideas, and techniques popping up every day. A year ago no one even knew about this crazy idea of “header bidding” and now it is radically altering the landscape.
The key question we should ask is: “How do we encourage creativity and innovation in an industry that is consolidating and where the cost of doing business is increasing?” And this question is more pertinent in Europe than elsewhere because start-ups and their marketing clients often have smaller addressable markets in which to operate and create scale.
Some in the industry think there will ultimately be a very small number of platforms (maybe as few as two!) that everyone will use. This would be a disaster for innovation as new ideas, local requirements and business model innovation would be gated by the whims of large, conflicted entities.
But the opposite scenario, where there are hundreds of platforms, is not the answer either. If you talk to the smart people running scaled ad tech businesses they’ll tell you that there is a long tail of poorly-architected, sub-scale platforms out there that are in many cases causing more problems than they solve. Header bidding actually makes this worse, as the barrier to entry for a new platform has declined and more buyers and sellers are trying to get connected every day.
At Beeswax we believe that the scale problem can be overcome with smart technology. While the increasing demands of programmatic scale make it difficult economically to create a trading platform or an innovative ad network, by working smarter, an enormous amount of creativity can be unleashed.
One example is the rise of rewarded and playable ads in the mobile app world. These ad formats produce great results for the right types of advertisers and we’ve seen a number of our clients innovate ad formats or targeting technology to meet the specific needs of these formats. But accessing this very specific and somewhat rare inventory across exchanges is difficult since most exchanges haven’t invested in fine-grained filtering technologies. And since the format is relatively new, building a complete bidding stack from scratch would be cost prohibitive. The next generation of entrepreneurs and innovators need to be able to jump on opportunities like these, but at a reasonable and predictable level of cost and effort, and Beeswax has supported several companies buying media in this nascent space.
As long as platforms like Beeswax continue to invest in open architectures, with powerful APIs, we can support and encourage continued innovation in ad tech and let the entrepreneurs and creators execute their visions in this increasingly difficult marketplace.
Ari Paparo is the CEO of Beeswax, an ad tech start-up in New York that has created the industry’s first Bidder-as-a-Service platform. Previously, Ari has held a number of product leadership positions in the ad tech and marketing tech sectors, most recently as EVP of Product Management for Bazaarvoice, a publicly traded SaaS company that enables retailers and brands to better connect to their consumers through ratings, reviews, photos and other user generated content. Formerly, he was the Director of Product Management at Google’s DoubleClick business and the head of product management for AppNexus.