Why is this the Golden Age of Digital Advertising Technology?
We are in the midst of a Golden Age of Digital Advertising Technology. There are literally hundreds of smart companies that are now engaged actively in streamlining the process of digital media buying, selling, optimization, etc. So why is this happening now? Did everyone in digital media business suddenly get smarter? No doubt some folks have gotten smarter, but that is not the underlying cause for the amazing growth in the sector.
The answer is two-fold: Data and Technology:
DATA: The quantity and quality data that is available today is overwhelming. In 2011, the amount of information created and replicated will surpass 1.8 zettabytes (1.8 trillion gigabytes) — growing by a factor of 9 in just five years, source IDC. Social Media is the driving force behind this explosion of data. As recently ago as 2007, publishing content on the web was controlled by professionals, companies like AOL, MSN, Yahoo, NYTimes. There was very little ability for the average Joe to publish anything online. Fast forward 4 years to 2011, and the ability to publish has never been easier, with the click of a few buttons, my 80 year old Aunt can update her status on Facebook, tweet on Twitter, Tumble on Tumblr, all with relative ease. Or as my friend Peter Shankman says:
By some estimates there are more than a billion people participating in Social Media, each creating some form of content, and as a byproduct data. The sheer volume of consumers creating content exponentially increases the amount of data that is created.
But there are some differences in the data that is being created. The data is largely unstructured. When professional produce content, that organize that content very carefully, which allows the data that is created to also be easily organized. Consumers are not concerned with how they organize the content that they create, and publish content about widely different topics on the same page.
As an aside, this muddled content on the page, was the impetus for some of the first generation of Ad Technology players in the space today. When a publisher organized content on page, they created context. If everything on a web page was about Golf, then those marketers who covet golf enthusiast would be willing to pay to market to the users that viewed that page. In consumer generated unorganized pages, there is little context, rendering the ad space on the page much less valuable. What the first generation Ad Technology companies did was track a user who visited a page that had organized content, let’s say Golf, and subsequently display a marketing message about Golf, on a page that didn’t have organized content, and theoretically increasing the ad space value of the consumer generated unorganized page.
Technology is the second half of the equation. The cost to store, sort, and, process the vast amount of data has been drastically reduced. Technology, in the form of teraflops and zettabytes that was once reserved for the most essential of human activities, became accessible to us, the marketing community. We now have the means to sort through the vast quantities of unstructured data to create the value from the Data, a practice sometimes referred to as Data Mining. To give you some perspective on the accessibility of technology to the average person, take a look at this advertisement circa 1995.
In August of 2010 the cost for a 10 MB of storage was $.0008 Cents, source Seagate Techbologies.
I expect that we will see many more advancements in the coming months and years with the Ad Technology front, with Data and Technology being the agents of change. I think that the data and the technology that we are just starting to use in the Digital Space will be transposed to the more traditional forms of marketing and media in the not so distant future. Industry professionals, entrepreneurs, and investors in this space will all look back on this time, and smile.
We are in the Golden Age, like 90 years ago in the car industry. There wasn’t just 5 or 6 dominate car companies, when all the innovation hit the car industry, there were thousands of car companies, with hundreds running at any one time.
Throughout this era, development of automotive technology was rapid, due in part to a huge number (hundreds) of small manufacturers all competing to gain the world’s attention. Key developments included electric ignition (by Robert Bosch, 1903), independent suspension, and four-wheel brakes (by the Arrol-Johnston Company of Scotland in 1909). Leaf springs were widely used for suspension, though many other systems were still in use, with angle steel taking over from armored wood as the frame material of choice. Transmissions and throttle controls were widely adopted, allowing a variety of cruising speeds, though vehicles generally still had discrete speed settings rather than the infinitely variable system familiar in cars of later eras.
- How big will the Marketing Data Marketplace Get? (cliqology.com)
- World’s Big Data to Grow 50X Bigger in Next Decade (fastforwardblog.com)
- Is P&G the next digital giant? (tech.fortune.cnn.com)