2016 Ad Industry Forecast for Publishers

2016 Ad Industry Forecast for Publishers

Happy new year, folks! It’s the season of forecasts and trend predictions once again. Here at MonetizeMore, we keep a closer look at the movement of the ad industry and the direction it’s most likely to take – especially for publishers. As we predicted developments that pushed through in 2015, we’re now giving you our take on what’s in store for publisher monetization this year.

Check out these top 6 trends to watch out for:

1. Native ads will take a decent chunk out of standard banner ad share of ad inventories

Native ads have found their spot at the bottom of article pages. Although they can be an eyesore, they have been a great new revenue stream for publishers that attract high engagement. Native ad networks do not plan to stop there though. Their sights are on the larger prize: Standard sized display ad inventories. This is where the majority of the ad impressions come from and where the majority of publisher ad revenues are earned.

Native ad networks want a piece and they plan to do so with the same high engagement ad creatives, but with standard ad sizes. This has already begun to happen and will accelerate in 2016. These standard ad sized native units perform well within the content. They get high CTRs and low revenue per click. These equate to competitive RPMs when comparing to other ad networks running within the in-content display units.

Triple Lift plans to offer their header bid solution in Q1 2016 which we expect to be successful. Expect many other native ad networks to follow next year. Expect to see more offers from native ad networks wanting to get a piece of your standard display ad inventory and others were worth continuing to run against the other ad networks via DFP.

Read: Best Ad Networks for Native Ads

2. 50+ ad networks will support header bid solutions by the end of 2016

Header bid solutions are no longer a secret. 2015 was the year that header bid solutions really got the attention of major publishers. The fundamental header bid solution setup in combination with DFP is so optimal that every time a publisher implements a new header bid network via price priority, it’s a virtually guaranteed increase in average RPMs. If the publisher has the dev resources and expertise, it’s a no brainer to implement header bid solutions.

Currently, there are around 15 live header bid solutions available publicly and most of them are major ad networks. Ad networks cannot ignore the demand for header bid solutions anymore. Header bid solutions are the future of ad optimization and it’s clear that the ad networks that do not adopt this technology framework will be left behind. For that reason, in the classic ad industry fashion, everyone is jumping on the bandwagon. By the end of 2016, there will be over 50 header bid networks available to publishers and many more in the process of eventually offering that technology.

Read: What is the Most Optimal Setup for Header Bid Networks?

3. The display inventory battle will begin to form into a two-horse race: Google vs. Facebook

Facebook has been covering a lot of ground throughout 2015 via their acquisition: Live Rail. They bought their way into a major demand competitor in the video ad marketplace. From there they expanded into in-app monetization. The next step is native and display ad inventories, which is a large portion of the total online ad marketplace. This would be a huge move because, for the first time, Facebook would be a direct competitor of Google AdSense and Ad Exchange which are core Google products.

Google has long had an undisputed monopoly of publisher ad inventories. Google AdSense has always been the default for monetizing publisher content via banner ads. The only major competition to AdSense is another Google product: DoubleClick Ad Exchange. These two products in combination with DoubleClick for Publishers (DFP) are a fundamental basis to a publisher’s ad optimization strategy. As of right now, running a remnant ad optimization strategy without the combination of DFP and AdSense or DFP and AdX is like being in a Nascar race with a factory default car.

DFP allows you to customize the car and start maximizing the performance via custom parts and AdSense/AdX on dynamic allocation determines which parts are optimal on a race to race basis. Publishers cannot get the full benefit out of their “car” without being able to customize and maximize performance no matter how great the original car is. For this reason, Google has a monopoly over publishers’ ad inventories and has not been contested by a formidable competitor until soon.

Read: 13 AdTech Experts Predict the Future of Adsense Alternatives

Facebook has already done a great job competing against AdWords. Their differentiation is clear. Google targets based on behavior via search and in-page context and Facebook targets via social and demographic aspects of the user. Facebook’s angle has been very attractive for a huge number of advertisers of all sizes and has taken a large chunk out of AdWords market share. Facebook plans to do the same on the sell-side using similar differentiation.

The creatives that publishers will display are based on social targeting criteria and Facebook’s system will optimize to maximize ad engagement. Stay tuned folks, the entrance of a legitimate competitor to Google could make things very interesting for publishers. At the end of the day, publishers win when competition like this builds.

4. The top ad networks will have built a unified header bid solution for publishers but the most popular will be a from an unbiased non-ad network company

The copycat game began in 2015 and will continue into 2016. Top header bid networks like AppNexus built their consolidated header bid solution followed by Index Exchange, Yieldbot, OpenX, Yellow Hammer, and many more header bid networks are hard at work so they could have one too. They have similar traits such as:

  • Able to run multiple header bid networks at once via a wrapper code.
  • Timeout functionality to prevent long page load times.
  • Require significant dev team resources and ad ops expertise to integrate.
  • Integrates with ad servers, namely DFP.
  • Chooses the highest bidder and sends this info to the ad server to compete against all other campaigns/line items.
  • Free to use.

The biggest differences are the marketing/presentation and how the aggregated header bid solutions are upgraded. Of all the ones mentioned, I would have to say AppNexus has done the best job. So why is it free? What’s the catch? Did all of the executives at each header bid network happen to feel gratuitous all at the same time? Not likely. This is a long term play for each header bid network. Each one knows that header bid solutions are the future of ad optimization and that their header bid solution strategy is key to their long term success.

Read: The 6 Best Header Bidding Networks of 2015.

They want to control the meta header bid solutions across the major publishers because that puts them in control of the auction. There have already been attempts to hijack the header bid process via direct header bid implementations from OpenX and Sonobi. Hijacking the bidding process will be so much easier when owning the auction infrastructure. Once a header bid network hits critical mass with their meta header bid solution, they can flip a switch and all of a sudden their header bid demand has several unfair advantages within the auction. These unfair advantages can be a combination of the following:

  • Access to the data of the bid prices, cookies, bid load times and bid variances of all their competitors.
  • Every competing header bid network bids on net CPMs while the primary header bid network can bid on gross or at least have a percentage bid lift over the other header bid networks.
  • The primary header bid network has a latency advantage from controlling centralized technology. All competing header bid networks would most likely have higher bid load times from the start.
  • The primary header bid network would have a holistic view of 100% of the data of all pages that has the meta header bid solution implemented. This allows them to do what they wish with the publishers’ data like sell it to third parties or even competitors of that publisher.

For an aggregated header bid solution to be a great long term solution for publishers, the goals need to be aligned. Unfortunately, this is not the case with header bid networks offering meta header bid solutions for publishers for free. Publishers will benefit the most by either creating an in-house header bid solution wrapper or outsourcing it to a partner that is not a header bid network. This ensures that the publisher and non-header bid network’s goals are aligned. Meta header bid solutions are going to be a very important part of publishers’ future monetization strategy.

To ensure maximum benefit, flexibility, transparency, and security of a meta header bid solution, this should either be developed in-house or be outsourced to a partner that does not have ulterior motives. For that reason, the market will shift towards a meta header bid solution product that is offered by an unbiased party.

5. The Ad Blocker vs. Ad Network arms race has just begun

There’s no doubt that ad blockers have become more accessible and popular. There has been talk about including ad blockers as toggle tools rather than extensions or apps that need to be downloaded. There have even been talks about making ad blockers opt-out tools which would create big rifts in the display ad industry and might very well happen. Ad blockers have been an afterthought for publisher for the longest time because the users that used it would only be around 3 – 4% and those users would never engage with ads otherwise.

The usage of ad blockers has been growing and it has never been so close to mainstream as 2015. It isn’t there yet but publishers and ad networks are now paying attention. Read: The Cost of Ad Blockers

While ad blocker usage is growing because their tech is becoming more usable, accessible, and streamlined, ad networks and publishers are innovating as well. Some publishers are complying with AdBlocker Plus, paying the monthly fee and limiting their ads per page for the AdBlocker Plus users. Many publishers are able to detect ad block users now and can run ad networks that are currently immune to ad blockers, run their own house ads, paywalls or include pleads to turn off ad blockers so the publishers can monetize the free content offered to that user.

Ad networks are developing new methods to prevent being blocked by ad blockers. They have created specific WordPress plugins and customized internal setups for publishers. The combination of being able to detect ad block users and serve immune ads to these users is the publishers/ad networks response to ad blockers. Many publishers will adopt this response to ad blockers in 2016.

Read: 5 Ways Publishers Can Fight Ad Blocking through Better User Experience

There’s no doubt, ad blockers will learn about this workaround and adjust their algorithms to block the new type of ads. This is merely the beginning of an indefinite arms race of trying to outsmart the other side. Who will come out on top for 2016? It will be hard to say even when we’re at the end of 2016. This battle will be dictated more so by the journey than by the destination.

6. Google will counter header bid solutions by more aggressively charging for DFP

Google’s current response to header bid solutions is Google First Look. On the first inspection, this is exciting to publishers, however, Ad Exchange via dynamic allocation already fits nicely with header bid solutions. When digging into the details of Google First Look, it doesn’t seem like this product will in fact be a sustainable response to header bid solutions because the additional value provided to publishers like the value of implementing new header bid networks isn’t there. Google First Look will be released with great anticipation but with be underwhelming results.

In reaction to header bid networks taking greater shares of major publishers’ ad inventories and Google First Look underperforming, Google will have to explore other avenues to respond. There have been many attempts to charge for DFP. Remember that 90M ad impressions per month limit and that DFP rep that doesn’t exist?

With Google getting smaller portions of DFP ad inventories, they will turn the pressure on publishers paying for non-Google demand ad impressions. This requires DoubleClick to actually hire the necessary DFP reps to sell their product which will most likely happen to facilitate the requirement for medium to large publishers to migrate to DFP Premium and pay a CPM on non-Google ad impressions. It’s not pretty, but you can’t say they didn’t warn you.

Conclusion

To sum up, what we envision for 2016, Google’s share of ad inventories will shrink and we’re excited to see what they’ll do to react. Google First Look is for certain and we expect tougher follow through from DoubleClick about charging for DFP. This might turn off publishers and create more competition within the ad server market, however, even if DFP wasn’t free, it is still head and shoulders above the alternatives.

If header bid solutions were to better integrate with other ad servers or simply run independent of an ad server, that would be a significant threat to DFP’s monopoly of publishers’ ad inventories.

Native ads will take a small chunk out of Google’s market share, however, they are offering their own native ad offering publicly soon. Facebook will be the single most formidable competitor to Google. It will take Facebook time to gain some ground in the display ad market but they have the brand, advertisers, and infrastructure to give Google a run for their money. It’ll be interesting to see if the get into the header bid solution game. I would be surprised if they didn’t but it might take till 2017 before that happens.

Either way, competition, innovation, and news have accelerated in the second half of 2015. Expect that to accelerate going into 2016. The industry is moving faster than it ever has. This is an exciting time for publishers and no better time to begin or re-think one’s ad optimization strategy. The last thing you want is to be caught with your pants down and have no ad optimization strategy.

Things are changing quickly and ad optimization has never been so complex and demanded so many resources. Serious publishers are required to either hire an ad ops team with dedicated developers or outsource the ad optimization to a proven partner with aligned goals.

If you’re interested to discuss your ad optimization strategy going into 2016, please contact us here.


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image credit: gronex.com.sg

Kean Graham

CEO and Founder at MonetizeMore

Kean is the resident expert in Ad Optimization covering areas like AdSense Optimization, DFP Management, and third-party ad network partnerships. Kean believes in the supremacy of direct publisher deals and holistic optimization as keys to effective and consistent ad revenue increases.

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