Contributed by Tejaswini Tilak, Director, Global Content & Digital Media, Equinix
Do more, faster. It’s an eternal business imperative, but it looks particularly challenging when your industry is already working in transactions that start and finish in one-tenth of a second.
According to eMarketer*, Asia-Pacific digital ad spending is expected to increase from US$30.58 billion in 2013 to US$50.18 billion by 2017. In addition, digital display and ad spending in the real time bidding market is projected to rise from US$3.4 billion this year to $8.5 billion in the same time frame. Companies that will contribute to this growth include ad exchanges, ad networks, data aggregators and demand side platforms.
All are working to optimise real time bidding and get the right ads in front of the right people as fast as possible. And all are potential collaborators in the market for near real time online ads, which is poised to take off. At the end of the day, monetization of the digital ad value chain depends on successful placement of the right ad to the right customer.
Under increasing pressure to save microscopic slices of time, advertising technology (ad tech) companies are learning the importance of investing in a platform that allows them to connect to the ad tech value chain to improve performance and generate revenue through more efficient and effective ad delivery.
Through access to high performance data centres, companies can improve efficiency by directly connecting to their data partners within the same buildings. This kind of access provides an opportunity for advertisers to reach multiple markets and leverage an ecosystem of trading partners from around the world.
The right Ad-IX ecosystem
In the real time market, ad exchanges require bids on ad inventory to occur under 100 milliseconds. That’s faster than the blink of an eye. Speed matters!
Over a public data network, 80 to 90 percent of those milliseconds can be taken up with grunt work such as domain name lookup or establishing a connection while negotiating network congestion. That’s called latency, and leaves just a handful of milliseconds to analyse data and calculate a bid for the ad that’s about to appear on screen.
One of the key benefits of tapping into the right ecosystem is that it takes its companies’ data off the public network and links them directly so that participants within the ecosystem are connected to each other.
By doing this, latency within the ecosystem can drop to below single-digits, leaving exponentially more time for rapid analysis of first-party and third-party data. Such a paradigm ultimately results in improved ad bid rates and therefore higher monetization of the value chain.
Extending the ecosystem beyond regional borders
Another way of looking at an ecosystem is to think of it as a neighborhood that doesn’t get more crowded as more companies move in; it gets more efficient through various business synergies.
Advertising companies are starting to tap into the Equinix Ad-IX ecosystems with regional hubs in key growth centres. The hubs stretch from Silicon Valley, through Amsterdam, to Hong Kong or Singapore. For example, MediaMath, inventor of the demand side platform, is leveraging Platform Equinix’s global footprint to establish points of presence (PoPs) around the globe including New York, Chicago, Silicon Valley, Paris, Zurich, Hong Kong, Tokyo and São Paulo. These PoPs enable the company to peer in these markets with a wide range of partners, from supply side platforms for inventory to data suppliers in order to improve the delivery of its marketing operating system.
The future of digital advertising
The opportunities in digital advertising are increasing with the development of new technologies and availability of data on-the-go. Ad buyers have a real opportunity to improve campaign performance while managing ad budgets. New ad formats such as online video and mobile advertising provide further avenues for growth. Gartner** predicts that worldwide mobile advertising revenue will reach US$24.5 billion in 2016, more than double the US$11.4 billion expected in 2013. In Asia-Pacific and Japan, mobile advertising revenue is set to hit US$9.48 billion by 2016.
In order to capitalise on the growing market in Asia-Pacific, advertisers would benefit significantly from being part of a robust ecosystem of ad exchanges, ad tech providers and other companies.
By streamlining processes and improving efficiency, digital advertisers can effectively optimise real time bidding.
The future of digital advertising lies in the ability of ad companies to innovate and take full advantage of services data centres provide. This will enable them to remain competitive and relevant in the marketplace.