The Pulse of RTB

A view through the crystal cube

August 16, 2012By: Sunil Sharma

CEO, InferSystems

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Anything can be called “optimization” these days

Calibration

Thrust vector fulcrum

But, is it meaningful and valuable, or jargon? What really matters?

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Today’s discussion points

1. The “Crystal Cube” market dynamics model

2. How IBM reached Utopia (the real story)

3. Ad tech DNA types

4. Implications surrounding ad tech’s key elements

• Data

• Technology

• Mathematical systems

• People

5. Obstacles to the market’s advancement

6. Final thoughts

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RTB’s future is likely to move to effective advertising along three key vectors: scale, efficiency, and advertising impact

(Utopia)

Best strategy: meaningful contribution(s) toward Utopia (effectiveness)

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A classic example of success by focusing on the market and its future is IBM’s turnaround under Lou Gerstner

The IBM story has been told countless times, but not correctly…

…. That IBM divested hardware and became a services company is a myth…

…. IBM jettisoned the commoditized crest, doubled down on mainframes, and launched services and software businesses to become more client focused…

….Need proof?

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IBM’s Sequoia is the world’s fastest supercomputer; and 5 of the top 10 fastest supercomputers are made by IBM

Speed Rank Name Company

1 Sequoia IBM

2 K computer Fujitsu

3 Mira IBM

4 SuperMUC IBM

5 Tianhe-1A NUDT

6 Jaguar Cray

7 Fermi IBM

8 JuQueen IBM

9 Curie Bull

10 Nebulae Dawning

IBM changed aspects of its strategy, not its DNA

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A company’s DNA can be anything, but it survives and thrives only by moving a market toward the future, toward Utopia

Data: aggregate and organize

Technology (any methodology): scalable, efficient, effective execution

New mathematical systems: redefine meaning and usage of data; find hidden value fast

People: Vision and strategy

Differentiation potential

There are 4 key competencies available around which an ad tech business can be built

•But effectiveness (Utopia) cannot be achieved without all 4•So, to thrive, a company must either excel at all, or collaborate

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Data is the most basic element because it contains the information; but it is largely poorly defined and misused

Data: aggregate and organize

Technology: scalable, efficient execution

New mathematical systems: redefine meaning and usage of data; find hidden value fast

People: Vision and strategy

What is data? An audience segment only?

Url is dataContent and context is data

Ad location is data

Creative type is data

But most of this data is currently wasted, resulting in wasted ad spend and a less than “fair shake” for premium publishers

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Technology is the infrastructure, the backbone of ad tech and RTB media buying

Technology: scalable, efficient execution

New mathematical systems: redefine meaning and usage of data; find hidden value fast

People: Vision and strategy

Publisher Ad server SSP

ExchangeDSP

DMP

Trading desk Agency Advertiser

NetworkConsumer

DMPDMP DMP DMP

Supply DemandTechnology: provided by intermediaries; valuable but commodity; pricing, scale, dependability, services matter

Commodity isn’t necessarily a bad word; oil and water are commodities

Mathematical systems

Data providers

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Mathematical systems: must simultaneously, quickly, and repeatedly model all variables to know what is really valuable

Variables Audience segments Ad placement, creative, browser, time, etc.

Variables Thousands of variables: used to find campaign level performance fast

Typical (regression based) optimization systems

More advanced mathematical systems

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Used Unused

Thousands of variables are wasted

•Advertisers get efficacy benefits from their valuable data•Publishers get a fair deal; credit for the real value they deliver•Agencies are able to take advantage of their creative talents

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The most important thing to remember about data is that it is deaf and mute; it cannot tell us anything

We tend to hear and see what we want to; what aligns with our incentives

…. Which resulted in tragic consequences for poor Galileo

But he was right because he used science and didn’t take the path of least resistance

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And, the human being is still the single most important factor; asking the unasked, imagining the unimagined

This is self evident; and needs no explanation….

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But as always, our greatest strength is our greatest weakness

Ad tech suffers from “innovation fatigue” and turf wars over arid land

But with so many pages unwritten, the winners will be those who keep moving toward the pastures of Utopia… and aren’t afraid of a few rough patches….

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(Utopia)

Ad tech is not a zero sum game… Let’s imagine Utopia, chart a course, and get there together…