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The Barbell Strategy: Equally Weighted, or Time to Take Sides?
Image Credit  Eric McGregor Creative Commons license

The Barbell Strategy: Equally Weighted, or Time to Take Sides?

Digital advertising is at an important oil and water moment, where two different strands of the industry are starting to emerge. On one hand you have the online ad companies that are media based (ie, ad networks, or companies that started off as publishers and have bought into ad serving technology), and on the other, the online ad companies that are really technology companies.

For evidence of this you need to look no further than the stock market. A handful of media companies have gone public, with relatively modest results over the past few months. The most recent addition to this family is Rocket Fuel, which saw almost 100% valuation increase in its first day of trading – something that’s reminiscent of the dotcom days of the late 90s.

For BrightRoll specifically, this separation excites us. From our perspective, it not only offers us the unique opportunity to be recognised for the value that we’re adding to the market, but also for the technological differentiation we’re bringing to the marketplace.

But not everybody shares this ‘oil and water’ view of the industry. This is most evident in what is known as the barbell strategy. Many believe that with online advertising developing in the way that it is, there are two segments that are set to be very large and grow rapidly: one is the premium side of the business and the other is programmatic, which uses technology to automate the process of buying and selling advertising.

There are those that see their future operating in both areas, or in other words, making sure they cover both sides of the barbell. From a publisher’s perspective, this might mean keeping their online magazines and other owned and operated media content, continuing to sell advertising the way they always have – by creating a premium and limited supply – while at the same time deciding to invest in programmatic technology, either through cobbling something together internally or by making an acquisition.

But my question here is: Can a business succeed at being best-of-breed on both sides of the barbell? My belief is that there is a place for premium, but the largest opportunity in the future of digital is around programmatic because it offers real-time performance, while offering transparency, control and efficiency.

Offering a best-of-breed service is about having your finger on the pulse of what is needed to drive your sector forward efficiently and effectively, to the benefit of all involved. At BrightRoll, the barbell is heavily weighted towards one side – we are 100% focused on programmatic and every ad on our platform is bought in real-time. Our focus is on delivering a technology platform that brings together buyers and sellers to automate and improve video advertising, and we see three key areas of opportunity for technological development over the next 12 months:

1. User interface

The advertising platforms that exist today are relatively difficult to navigate, and typically not designed to drive optimal performance for those using the platforms every day. The first thing the programmatic industry needs to do is work on its user interface.

We recently rolled out a new programmatic buying console for the BrightRoll platform to our global clients, and early results show as much as 40% increase in spend from select clients that moved over to this newly designed programmatic console. Importantly, the development of the console is the result of strategic partnerships with some of our largest customers to ensure that the interface addresses their biggest challenges and delivers the performance they needed to help them plan and reach audiences with digital video efficiently across screens. Obviously, it’s working.

2. Tools and infrastructure

The industry is crying out for significant investment and development in programmatic tools and infrastructure. It’s just as important as the front end. There is a lot of skepticism around the exchange of data server-to-server, but it is working and real-time bidding (RTB), a method of buying and selling advertising in real-time on an impression by impression basis, is growing exponentially.

3. Global and mobile

The opportunity for mobile is not only huge, it’s extremely important. Video is watched all over the world and the increasing volume of server-to-server inventory and data on mobile in the US and Europe means that there could be in excess of five trillion transactions taking place on our platform next year. However, there are some fundamental challenges to address in video when it comes to mobile. The first thing we have to do is make sure we are taking mobile seriously as a marketing channel for video, effectively making it a first-class citizen. Only then can we think of online advertising from a mobile-first perspective.

In addition, there are important standards that must be defined for mobile in terms of targeting and measurement, and BrightRoll is working with the industry to put common measurement tools in place to enable broader adoption for the mobile ecosystem over the next six to 12 months.

As the RTB revolution continues to gather pace over the next 12 months, more challenges will undoubtedly come to fore. For now, tackling these issues over the next 12 months is crucial to stand the industry in good stead to sustain its rapid growth.

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Tod Sacerdoti

Tod Sacerdoti

Tod Sacerdoti is the CEO and founder of BrightRoll, a company that he has steered from conception to becoming world’s largest video advertising network, which regularly surpasses Google at the at the top of the online video ad serving rankings.

Tod’s vision in building BrightRoll has been to create the world’s premier ad network wholly focused on matching quality brand advertisers with quality publishers. He has long championed the benefits of video advertising versus other mediums. He is an outspoken critic of current industry practices that act as barriers to advertisers seeking to successfully embrace online video as a marketing vehicle.
Prior to founding BrightRoll, Sacerdoti served as the director of revenue at Plaxo, one of the fastest growing Internet companies in history. He also led business development at Spoke Software, an Internet pioneer in sales and marketing efficiency solutions and also held positions at Interscope, Geffen and A&M Records, a division of the Universal Music Group. Prior to this, Sacerdoti worked as an investment banker in the Internet marketing group at Robertson Stephens.

Sacerdoti holds a BA in Economics from Yale University and an MBA from the Stanford Graduate School of Business.

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