Sizmek bankruptcy and its implications on adtech
We don’t want to drag it. Sizmek filed for chapter 11 bankruptcy (docx) at the end of last month. Now, publishers are going through clawback emails from SSPs to see whether they’re going to get paid for the ad impressions served by Sizmek demand.
Typically, SSPs have a contract in place, which allow them to pay publishers only when demand partners do so.
On a higher level, ad dollars flow from clients to agencies to trade desks to DSPs to Ad Exchanges to SSPs to publishers.
Within a week, both DataXu (offers omnichannel DSP) and Verve (offers programmatic products for advertisers and publishers) laid off 30 staffers each. As you have guessed, bankruptcy and successive layoffs affected the whole ecosystem. Though the adtech have struggled in Q1, it’s not as bad as we all think.
Let’s start with Sizmek. The net revenue of Sizmek and Rocketfuel dropped from $399 million to $289 million, after the acquisition. Sizmek couldn’t hold the high working capitals of Rocketfuel’s managed service business and with the advertisers shifting to self-serve platforms from managed services, the company failed to rebuild its platform for the self-serving environment and migrate the advertisers.
“The deal to combine with Rocket Fuel was the death knell for that business, and I don’t think a lot of people were surprised.”
– Terry Kawaja, CEO and founder of investment bank LUMA Partners.
Verve, as briefed by AdExchanger, is experiencing layoffs because of its pivot to programmatic video. Last year, it winded down the European business (of course, because of GDPR) and acquired Receptiv to capitalize on in-app video, which is still a work in progress.
DataXu reported impressive growth across its TotalTV business, an OTT product for advertisers and agencies and Ed Montes, president, and general manager of its TotalTV unit confirmed that the recent layoffs aim to cut the people who aren’t fit for the TV-forward vision of the company.
Even Criteo Q1 slump has its own reasons.
With the connected ecosystem, some fear that the domino effect might be on the horizon.
“A dozen other supply-side companies must have exposure to other DSPs that themselves have significant exposure. It’s that kind of domino effect.”
– Dan Wilson, CEO of London Media Exchange.
While it’s quite clear that the industry isn’t doing great, it doesn’t make sense to peg the layoffs and a company’s failure to something bigger. That being said, we cannot take the pressure on third-party cookies and adtech consolidation lightly. It’s not the one that causes the failure, but many. Keep your eyes wide open.
Publishers discover better use cases for their videos
We’re bullish about videos, not just because of tens of billions of ad dollars quaffed by the format every year, but also because of its other use cases.
According to Digiday, AccuWeather garnered over 650 million views. The weather publisher placed trending videos right below the local weather forecasts, which increased the view count by 300 percent YOY.
With videos, the publisher also built loyalty and revenue. For instance, people who watch the video tend to get back to the site more than the others and they go through four videos per session with a completion rate of 80 percent. The publisher woos the advertisers with the numbers as it runs pre-roll ads and mid-roll ads on the videos.
Insider TV, a part of Insider Inc., is ramping up its video production too. Unlike AccuWeather, Insider TV distributes and monetizes its videos on other platforms, on top of Insider web properties. From Facebook Watch to programming, it functions as a brand studio, rather than a lifestyle publisher.
Relying on other platforms won’t work well, in most cases. But it makes sense for a publisher to utilize the social networks for distribution. As social media algorithms boost videos better than posts/links, it’ll be a traffic driver.
Advertisers began to get their hands dirty
With the increasing ad fraud rates and brand-safety concerns, advertisers are getting into the field, to curate a trust-worthy marketplace. The marketplace would be the place where media sellers – with the advertisable environment and quality content trade their impressions to the known buyers at scale. Unilever, Diageo, and Nestlé are among the buyers who opted to try the so-called marketplace.
If this sounds familiar, it actually is. Remember, TrustX?
The private marketplace gained immediate traction, raised millions in funding with the same promise. It has a huge number of premium publishers and advertisers on its network, trading billions of ad impressions.
It recently announced its tax reduction plans for buyers so that it can decrease its churn rate, which, in turn, helps publishers in the long run.
Why there’s a new marketplace then?
Plurality is better for the industry. There are several invite-only marketplaces powered by adtech vendors exists today. We believe advertisers handpicked the suitable sellers and framed a new contract/policy to improve transparency and cut down the middlemen. For instance, Lexus inked a deal with Vogue, GQ, and Condé Nast Traveler directly to run a content series.
“We can’t afford for our marketing department to get left behind.”
– Spiros Fotinos, global head of brand management and marketing at Lexus.
Media owners with billions of impressions and an in-house team/tech stack are willing to connect with advertisers. Apparently, it solves many issues. But many publishers tend to overlook the value of data. Advertisers use it to target, measure, and find a better way/environment to reach their audience. In fact, the investments for hiring data specialists are pumped up lately on the buy-side. If you’ve decided to run direct deals, you need to keep with the market always – in terms of both quality and quantity.
Moments That Matter
Expert Networks, Publishers’ next strategy to attract social media users – Digiday.
Meet Sellers.json: It’s Like Ads.txt, But For The Buy Side – AdExchanger.
The state of GDPR, an interview with Giovanni Buttarelli, European data protection supervisor – Digiday.
The New York Times sells premium ads based on how an article makes you feel – Poynter.