How can new age media companies create a Blue Ocean

How can

Media CompaniesNew Agecreate a ‘Blue Ocean’?

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EXECUTIVE SUMMARYThis whitepaper will be focusing on Video advertising as a media choice and how the enabling technology players can attain and sustain their competitive edge in the marketplace.

Online video ad revenues are said to reach $5 billion in 2016 up from $2.8 billion in 2013. But why is the marketing industry harping on about a media that is more often than not considered annoying and intrusive by laymen. Video ads disrupt users from their main goal of watching videos and are largely ignored or in some cases even blocked. That being said however, a 2014 IAB study showed that 76% of consumers turned to video as their chief source of brand information. 24% concurred that video was their ‘trusted’ brand content source and 20% of the surveyed consumers attributed a renewed sense of emotional connection with brands using video.

Ergo as a media choice, Video advertising is certainly not on its last legs. However as traditional video viewing habits undergo a change, advertisers are faced with their own set of challenges and complexities. Video distribution and viewership has become highly fragmented and is no longer restricted to a single screen (TV).

A 2014 IAB STUDY SHOWED THAT 76% OF CONSUMERS TURNED TO VIDEO AS THEIR CHIEF SOURCE OF BRAND INFORMATION

It now spans across multiple screens (Laptops, Tablets and Smartphones etc.) and formats. The proliferation of internet video has also provided advertisers the chance to target consumers with a greater level of granularity (individual, screen, household) and also give content publishers (sites, apps, blogs) a way to monetize their content.

Video ad serving technology companies are thus a key enabler of the above space. The video ad serving space itself is the scene of encouraging growth with ad serving providers being locked up with major deals with industry behemoths. Yahoo, AOL, Google and Facebook are just some of the internet giants that have snapped up ad serving companies for their potential.

The competition however remains fierce. Video Ad Technology companies are increasingly finding it difficult to fend off each other and fight for market-share in a slow, but steadily increasing market. The innovative space is fraught with unyielding competition, highly specialized product offerings and a scramble for market share. But what can video ad tech companies do to stay ahead of the competition? How to they differentiate themselves in the New Age Media spectrum and continue to excite their customers and attain sustainability?

That being said however, digital video advertising is currently a minnow in the world of digital advertising taking current market numbers into consideration. In terms of online ad revenue percentages, video ads account for 9.7% of the total, but that number is rapidly rising and tipped to hit 15% by 2017. Display, Search and other online media make up remaining bulk of online advertising. Hence the video ad market at present remains niche.

Global video Internet advertising revenues are set to rise sharply

-2.8% TV

-40% -20% 0% 20% 40% 60% 80% 100% 120%

-13.9% Newspaper

-16.8% Radio

6.7%Other non-digital

8.6%Search

110.2%Mobile

19.5%Online video ads

2.9%Display ads

6.0%Other digital

This whitepaper will be focusing on Video advertising as a media choice and how the enabling technology players can attain and sustain their competitive edge in the marketplace.







2013 2017

15%9.7%

Video ads now span multiple display devices and come in several different formats

Video ads’ share of the online ad pie is expected to rise rapidly

WMV

AVI

MOVMP4

3GP

This whitepaper will be focusing on Video advertising as a media choice and how the enabling technology players can attain and sustain their competitive edge in the marketplace.







How can video ad technology companies stay ahead?

This following sections aim to highlight certain key strategies that could help Ad serving technology providers excel in this highly evolving marketplace.

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VIDEO AD SERVING TECHNOLOGY: SCENARIODigital Video Advertising was born at the late stages of the 1990’s and growth began to accelerate in the mid 2000’s after the burst of the dot com bubble. Customers began to recognize the fact that video was tipped to become the holy grail of advertising and began media buys on video platforms.

The earliest Video Ad serving Technology companies appeared at around the same time. Ad Serving Technology companies occupy the middle space between advertisers and content publishing networks. They provide the technology and services that mobilizes the entire ad serving ecosystem. Many of these companies offer specific solutions for advertisers and publishers. Advertisers, brands and advertising agencies utilize these platforms to manage their video buys and inventory, target consumers and track performance. Content publishers such as video hosting sites, news sites and even mobile apps use such platforms to optimize their video views and generate revenue.

AD SERVING TECHNOLOGY COMPANIES PROVIDE THE TECHNOLOGY AND SERVICES THAT MOBILIZE THE ENTIRE AD SERVING ECOSYSTEM.

Ad insertion, ad exchanges and rights management are just some of the ad management solutions provided by such vendors. Players such as BlackArrow and YuMe have extended this serving functionality and offer the ad management services to even Pay TV and Video on Demand domains.

Some more widely known Ad Serving Technology Companies include

● BrightRoll (Acquired by Yahoo)

● Adap.Tv (Acquired by AOL)

● LiveRail (Bought by Facebook)

● mDialog (Google)

● FreeWheel (Purchased by Comcast)

● BlackArrow (Provides ad serving technology for Pay TV and VOD)

● Acudeo (Part of Tremor Video)

AD SERVER

ADVERTISERS /BRANDS /

AD AGENCIESPUBLISHER

VIDEOBUYS

TARGETCUSTOMERS

TRACK PERFORMANCE

The Ad Serving Ecosystem

Digital Video Advertising was born at the late stages of the 1990’s and growth began to accelerate in the mid 2000’s after the burst of the dot com bubble. Customers began to recognize the fact that video was tipped to become the holy grail of advertising and began media buys on video platforms.

The earliest Video Ad serving Technology companies appeared at around the same time. Ad Serving Technology companies occupy the middle space between advertisers and content publishing networks. They provide the technology and services that mobilizes the entire ad serving ecosystem. Many of these companies offer specific solutions for advertisers and publishers. Advertisers, brands and advertising agencies utilize these platforms to manage their video buys and inventory, target consumers and track performance. Content publishers such as video hosting sites, news sites and even mobile apps use such platforms to optimize their video views and generate revenue.

Ad insertion, ad exchanges and rights management are just some of the ad management solutions provided by such vendors. Players such as BlackArrow and YuMe have extended this serving functionality and offer the ad management services to even Pay TV and Video on Demand domains.

Some more widely known Ad Serving Technology Companies include

● BrightRoll (Acquired by Yahoo)

● Adap.Tv (Acquired by AOL)

● LiveRail (Bought by Facebook)

● mDialog (Google)

● FreeWheel (Purchased by Comcast)

● BlackArrow (Provides ad serving technology for Pay TV and VOD)

● Acudeo (Part of Tremor Video)

(Acquired by Yahoo)

(Acquired by AOL)

(Google)

(Bought by Facebook)

(Purchased by Comcast)

(Part of Tremor Video)

(Provides ad serving technology for Pay TV and VOD)

The Internet giants have been alive to the potential of Ad Serving Technology Companies

CHALLENGESVideo Ad Technology Serving companies are faced with their own set of challenges.

● COST COMPETITION

Companies are increasingly seeking shortcuts to gain that little bit more of market share. And competing on cost is seen to be the quickest way. With the marketplace crowded with competitors and alternates, Video Ad Technology companies see no other way than drastically undercutting their competitors to stay at the top of their game. However, this myopic approach is just the beginning of a vicious circle that only leads to a path of incessant price cutting, reduced revenues and smaller margins that undermine the entire industry.

● COMPETING ON REACH

One often claimed metric by Ad serving companies is ‘Reach’. Companies promote their ‘Reach’ as the be-all and end-all of their offerings, as ‘Reach’ is a measure of how much end user viewability can be offered. However, brands and ad serving companies alike

...THIS MYOPIC APPROACH IS JUST THE BEGINNING OF A VICIOUS CIRCLE THAT ONLY LEADS TO A PATH OF INCESSANT PRICE CUTTING, REDUCED REVENUES AND SMALLER MARGINS THAT UNDERMINE THE ENTIRE INDUSTRY.

seem to forget the fact that end users tend to switch loyalties frequently. The ‘Reach’ figure is highly subjective and is in a constant state of flux. And with no short of competitors, basing a value proposition solely on ‘Reach’ is counterproductive more often than not.

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● MULTIPLE OFFERINGS

Ad serving companies do not just offer technology for video ad distribution. They also offer a host of related offerings that seemingly add ‘more value’ to their customer experience. Such ‘logical pairings’ are aimed at increasing brands’ share of advertising spends. However such a strategy is built on the blind belief that customers can be persuaded to buy anything that is remotely connected to their advertising needs. Such bundles are offered at cut rate prices and in an already cost driven space profit margins become more unsustainable.

With so many complex challenges, ad serving companies are at a loss to fathom their next move. Many are faced with the question as to how can they continue to innovate while continuing to offer value to their customers and stay relevant to their operating space.

Video Ad Technology Serving companies are faced with their own set of challenges.

● COST COMPETITION

Companies are increasingly seeking shortcuts to gain that little bit more of market share. And competing on cost is seen to be the quickest way. With the marketplace crowded with competitors and alternates, Video Ad Technology companies see no other way than drastically undercutting their competitors to stay at the top of their game. However, this myopic approach is just the beginning of a vicious circle that only leads to a path of incessant price cutting, reduced revenues and smaller margins that undermine the entire industry.

● COMPETING ON REACH

One often claimed metric by Ad serving companies is ‘Reach’. Companies promote their ‘Reach’ as the be-all and end-all of their offerings, as ‘Reach’ is a measure of how much end user viewability can be offered. However, brands and ad serving companies alike

seem to forget the fact that end users tend to switch loyalties frequently. The ‘Reach’ figure is highly subjective and is in a constant state of flux. And with no short of competitors, basing a value proposition solely on ‘Reach’ is counterproductive more often than not.

● MULTIPLE OFFERINGS

Ad serving companies do not just offer technology for video ad distribution. They also offer a host of related offerings that seemingly add ‘more value’ to their customer experience. Such ‘logical pairings’ are aimed at increasing brands’ share of advertising spends. However such a strategy is built on the blind belief that customers can be persuaded to buy anything that is remotely connected to their advertising needs. Such bundles are offered at cut rate prices and in an already cost driven space profit margins become more unsustainable.

Challenges confronting the Video Ad Technology Serving companies

COST COMPETITION

COMPETING ON REACHCHALLENGES

MULTIPLE OFFERINGS

Is cost cutting the only way to gain market share?

Are “value adds” really adding more value?

Is this the most misleading metric yet?

With so many complex challenges, ad serving companies are at a loss to fathom their next move. Many are faced with the question as to how can they continue to innovate while continuing to offer value to their customers and stay relevant to their operating space.

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WHAT DOES IT TAKE TO SUCCEED?Differentiation is the need of the hour, and the panacea for ad serving companies is a systematic approach to the same, that simultaneously drives innovation, sustainable value and competitive advantage. A value proposition that fails to do so does not have a place in the mercurial marketplace of today and is most likely to end up as an anachronism.

AD SERVING COMPANIES MUST FOCUS ON CONTINUOUS INNOVATION AND CUSTOMER CENTRIC ENDEAVORS

Renée Mauborgne and W. Chan Kim formerly of INSEAD, allude to the above concept as the ‘Blue Ocean Strategy’. In the eponymously titled work, Mauborgne and Kim propose that companies can succeed in a competitive marketplace by creating ‘Blue Oceans’ of uncontested market space ripe for growth and by making competition irrelevant. This is as opposed to indulging in cutthroat tactics in the ever commoditizing marketplace and fighting over shrinking market share (referred to as ‘Red Ocean Strategy’).

Make the effort to ensure that you stand out from the competition

Therefore, rather than battling with competitors and hacking away market share through brute force methods, ad serving companies must focus on continuous innovation and customer centric endeavors. Companies must provide value and meaning to client engagements beyond the hygiene of service excellence that are not available with the competition or alternates. Identifying and leveraging such areas within the competitive landscape can help differentiate one from the competition and ultimately generate bilateral value for themselves and their customers.

Renée Mauborgne and W. Chan Kim formerly of INSEAD, allude to the above concept as the ‘Blue Ocean Strategy’. In the eponymously titled work, Mauborgne and Kim propose that companies can succeed in a competitive marketplace by creating ‘Blue Oceans’ of uncontested market space ripe for growth and by making competition irrelevant. This is as opposed to indulging in cutthroat tactics in the ever commoditizing marketplace and fighting over shrinking market share (referred to as ‘Red Ocean Strategy’).

CREATE

Blue Ocean Strategy - Four Action Framework

Which factors should be created that the Industry has never offered?

RAISEWhich factors should be raised well above the industry’s standard?REDUCE

Which factors should be reduced well below the

industry’s standard?

ELIMINATEWhich of the factors that the

industry takes for granted should be eliminated?

RENÉE MAUBORGNE

W. CHAN KIM

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CREATING THE ‘BLUE OCEAN’In this section we look at some Blue Ocean opportunity examples and how they can typically be leveraged by Ad Serving companies to generate value.

● RICHER ANALYTICS

Ad serving companies are rightly poised to leverage the vast variety of customer behavioral variables with the millions of individual needs that they currently handle. With the variety and quantity of data at their disposal, Ad Servers can provide clients with richer insights.

● Incorporate Predictive Analytics Foresight

Current Analytics heavily focus on reporting past audience behavior and provide very little in the form of foresight. By introducing predictive analytics capabilities, ad servers’ customers are empowered to take best course of action based on audience data. Ad serving companies can expect to witness benefits such as personalized communication at a household or individual level and be able to map ad content type for various audience segments.

WITH THE VARIETY AND QUANTITY OF DATA AT THEIR DISPOSAL, AD SERVERS CAN PROVIDE CLIENTS WITH RICHER ANALYTICAL INSIGHTS.

● CREATE CONTEXT BASED REAL TIME ADVERTISING INFRASTRUCTURE

A real-time context based advertising mechanism can help Brands, Media Planners and Ad Agencies reach out with advertising communications to the right audience at the right time. Hence, ad servers would be well advised to invest in algorithm or engine driven, in stream advertising. This can enable enhanced branding and higher conversions which in turn can be instrumental in generating higher revenue and better ROI.

Add predictive analytics to yourstrategy mix for sustained success

In this section we look at some Blue Ocean opportunity examples and how they can typically be leveraged by Ad Serving companies to generate value.

● RICHER ANALYTICS

Ad serving companies are rightly poised to leverage the vast variety of customer behavioral variables with the millions of individual needs that they currently handle. With the variety and quantity of data at their disposal, Ad Servers can provide clients with richer insights.

● Incorporate Predictive Analytics Foresight

Current Analytics heavily focus on reporting past audience behavior and provide very little in the form of foresight. By introducing predictive analytics capabilities, ad servers’ customers are empowered to take best course of action based on audience data. Ad serving companies can expect to witness benefits such as personalized communication at a household or individual level and be able to map ad content type for various audience segments.

● CREATE CONTEXT BASED REAL TIME ADVERTISING INFRASTRUCTURE

A real-time context based advertising mechanism can help Brands, Media Planners and Ad Agencies reach out with advertising communications to the right audience at the right time. Hence, ad servers would be well advised to invest in algorithm or engine driven, in stream advertising. This can enable enhanced branding and higher conversions which in turn can be instrumental in generating higher revenue and better ROI.

Deliver the right product / service at the right moment

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CONCLUSIONAd serving technology companies must aim to compete in the marketplace with an aim of creating value and not just encroaching market share. While the above recommendations are just a few examples of how a Blue Ocean Strategy can be relevant to the digital ad serving industry, companies must be prudent to recognize the benefits of this approach and leverage the opportunities to create perennial brand equity and differentiation in the competitive marketplace.

ABOUT XERAGO07.................................................

Xerago is a new age marketing solutions company with a footprint across Asia Pacific, now making its foray into USA. Clients include Citi, DBS, HDFC Bank, SM Retail, Celcom, Starhub, Intel, BharatMatrimony, and a number of other market-leading and start-up brands.

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