Wednesday, February 8, 2012, 9:49 AM ET|Posted by Will Richmond
There's little subtlety in Adap.tv's current placeholder web site that asks the question, "What does it take to destroy the inefficiencies in TV and video advertising?" Unlike other online video ad technology providers who are positioning themselves to complement the current TV ad buying process, Adap.tv is looking to blow up the traditional approach, replacing it with what CEO/founder Amir Ashkenazi's calls a "programmatic" technology-based alternative. Last week I caught up with Amir to learn more about Adap.tv's mission, and also how it landed as the number 2 video ad provider (just behind Hulu) in comScore's December, '11 ranking, with over 1.1 billion ads served.
Amir believes the TV advertising business has changed little since the 1960s, and is fundamentally broken. Agencies buy ad inventory in bulk without really knowing a lot about what they're buying or about their ads' actual performance. The massive degree of waste and inefficiency leads to inevitable questions about "what's really going on here?" as brands and agencies struggle to understand how their dollars are working for them. In Amir's view, buyers wouldn't stand for other products being sold this way, and the video advertising business should be no different.
Adap.tv's "programmatic" approach is intended to enable buyers (and sellers) with the self-service tools to customize exactly how many impressions they want, at what prices, in what formats, on which screens and from which publishers/inventory pools. It's meant to provide visibility into exactly how those ads performed so that additional spending can be allocated accordingly.
But Amir sees the platform as only half the equation; the other part is a marketplace where publishers are able to expose chosen inventory and buyers are able to access what they want. This is akin to how airlines and hotels, for example, have used the Internet to expose their flights and rooms to potential buyers, allowing them to pick and choose what they want. Importantly, the publishers, like the travel companies, retain control over which inventory they want to offer, its pricing, and how to access it (real-time bidding, advance buying, bulk approach, etc.). Going a step further, Adap.tv offers the marketplace technology to larger publishers to create their own private marketplaces, with just their inventory, available to their pre-selected set of advertisers.
By marrying the platform tools with the marketplace, and allowing access by third-parties, Amir believes that Adap.tv has a complete solution for disrupting the traditional TV advertising approach. Amir sees that as brands become ever-more demanding about the ROI of their spending, they will require more transparency and analytical tools, as well as more transactional efficiency. In fact many agencies have begun moving in this direction anyway, setting up "trading desks" to become more agile. And numerous publishers and aggregators like YouTube, Hulu and others have been driving performance and viewers choice-based approaches into the industry.
Amir believes that all of this will contribute to a transformation of the video ad business over the next several years. Adap.tv is positioning itself to be in the middle of the action, and Amir asserts that its December comScore ranking, showing it accounted for one out of every 7 video ads delivered, is early proof of its success. In December Adap.tv handled over 1,500 campaigns and has 10K publishers listed in the marketplace, being accessed by hundreds of buyers. The marketplace approach helps publishers too, as CPMs are growing.
I continue to believe that as early as it is in online video's ultimate evolution, it's even earlier in online video advertising's evolution. There's extremely strong inertia around existing media buying practices that will take years to change. However, Adap.tv - and others - are laying the right groundwork for this change to occur. Ten years from now the video advertising industry is going to look very different than it does today.