Marketplaces' rising share of the digital display market
A colleague of mine recently worked through the changes in the digital display ad market over the last three years (2015, 2016 and 2017).
He used SMI data, which to those unfamiliar is the digital ad spend reported by agencies. SMI can represent a proxy for the ‘premium’ end of the display market where advertisers pay CPMs of about 10x what is paid for an exchange impression or Google Display Network impression.
So what happened in the 'premium' display market?
1. The top ten players are taking a smaller proportion every year of the total spend showing the market is fragmenting - collectively the top ten took 63% of the total spend in 2015 and have fallen to 53% in 2017.
2. The top 3 publishers News, Fairfax and Nine are losing share but remaining at the top of table – they have fallen from 36% of the total spend in 2015 to 26% in 2017.
3. Marketplaces like REA, Carsales and Finder have taken share in an increasingly fragmented market – they have risen from 12% to 15% across the same years.
And… the performance of marketplaces is startling when indexed to the top 3 publishers – marketplaces have outperformed publishers by 61% over the three year period.
So why have marketplaces taken share while publishers have lost?
My best answer is the market has moved on, and done so in a handful of ways, which suits marketplaces but does not suit publishers. For example:
1. With the rise of programmatic the display market has shifted towards performance.
2. On top of the shift to performance, programmatic traders can easily create a large pool of inventory by whitelisting a number of sites – making the ability of publishers to supply a large amount of inventory arguably less relevant.
3. Marketplaces do a better job of attracting punters that have some sort of intent to transact – they are more efficient at finding consumers that are further along the purchase journey.
4. Marketplaces are investing in their data position and understand what content will convert.
What should publishers do?
Publishers need to react to the realities of performance and shift some of their content model from attracting bigger and bigger audiences to content models that drive marketplaces and transactions. There are plenty of un-won digital marketplaces that are available outside the traditional ones that emerged out of the listing models (eg. real estate, jobs, cars). At Scaleup Mediafund we’re seeing marketplaces every day and some of them are growing at incredible rates – such as MadPaws which offers dog walking and pet sitting and Bettercaring which offers a place to find an aged or disability care worker.
In hand with marketplace or vertical models publishers need to double down on data and specifically, who in their audience has what intent and knowing this what is the right ad to serve.