Content Recommendation’s Tipping Point

For someone who has spent the last fifteen years working in the digital marketing ecosystem, as I consider the content recommendation market today, I am reminded of the Supply Side Platform (SSP) market circa 2010.

Then, publishers were dealing with a growing ad ops nightmare of managing the increasingly complicated supply-side operations, with more and more advertisers bidding on auctions that were increasingly being decided in real-time. Ultimately, most signed up with SSPs like my then employer PubMatic, still a leading SSP in 2021.

Today in the native/content recommendation space, publishers are either dealing with rigid and exclusive vendor contracts without a transparent understanding if the revenue generated is the highest possible. There isn’t one native/content recommendation provider that has all the advertisers and campaigns that are most aligned for a publisher’s specific audience. In the same way that the SSP led the way to better yield optimization and fewer ad ops headaches for publishers a decade ago, the content recommendation market is maturing and publishers are now ready for automated solutions to improve operations while increasing revenue and including additional ad quality standards, which is a priority.

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A little-known secret: Content recommendation is one of the only digital ad channels where ads are not purchased via programmatic auctions (according to IPONWEB, 85% of digital ads are purchased programmatically). Perhaps it’s time for publishers to start benefiting from the real-time value of their content recommendation ad units which would be possible through programmatic bidding.

By opening up the content recommendation market to enable true competition, publishers could derive the benefits of a competitive market. They could receive a fair price for their online real estate based on open bidding as well as from additional sources of demand. This in turn would lead to more and higher quality demand, resulting in even greater revenue for publishers. This will be particularly relevant for niche content across a broader range of geographies, generating a significant lift for publishers.

Opening up the content recommendation market will also be good for advertisers, who will benefit from a competitive marketplace that includes more sources of traffic. Advertisers will have more opportunities to target their content recommendation campaigns, knowing that they will have access to more users and traffic across more niche market segments and geographies, thus enabling better targeting and a potentially lower cost per action.

The increase in the number of advertisers – a byproduct of unlocking the market and enabling competitive bidding – will also enable improving the quality of the user experience. As leading brands take advantage of better targeting and traffic opportunities to increase their investment in content recommendation, they will drive out some of the lower-quality advertisers.

Content recommendation is at a tipping point today. The two market leaders are now in the process of going public. Publishers are ready to move beyond the status quo and unlock the market by embracing a competitive marketplace that will both generate revenue and provide marketers with opportunities for better targeting across broader traffic sources. What are we waiting for?

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