By Brian Wong, Founder and CEO, Kiip
Global digital ad spend is on the rise, and yet the number of independent ad tech firms has fallen by 21 percent since 2013. That's what we call consolidation, and it’s not really a surprise. In some respects, you could pass it off as the natural evolution of an industry that’s finally growing up. And that would be all well and good if it wasn’t for one thing: The vast majority of our industry’s spend has consolidated with just two players, Google and Facebook. And that’s a problem.
If you need proof that a two-party system is a bad deal for everyone, look no further than American politics these days. The system has so thoroughly polarized itself into Camp Democrat vs. Camp Republican these days that nothing works, including the government itself. There are plenty of issues within the national discourse that should and could unite the American people, but they’re simply not being allowed to come together for the betterment of society. Both parties have chosen to divide, rather than come together.
The fact is, in politics as in the private sector, independents play an important role. In American politics, that role has been thoroughly lost, and we’re now seeing the results. The system lacks trust. It lacks cooperation. And it lacks a basic moral compass that can be used to elevate society as a whole.
In ad tech, those are precisely the mediating forces that independents bring to the table. And it’s why we need independents to play a larger, not smaller, role in shaping the industry’s future. Here’s what’s at risk:
Trust: For everything that the walled gardens deliver in terms of reach, they lack in transparency. This is a known problem that’s manifested in countless headlines in recent years, from brand safety crises to attribution scandals. Independent ad tech provides a much-needed check against Google’s and Facebook’s moves to grade their own homework. And that check is vital to a functioning industry.
Cooperation: Sure, it’s a cutthroat competitive playing field out there. But you know who suffers when ad tech industry players refuse to play nicely in the sandbox? Our clients. For advertisers, the ability to create a cohesive, personalized journey for customers is everything, and such a journey becomes impossible when the various touchpoint owners refuse to share information. Independent ad tech players foster a spirit of collaboration within the industry that is largely absent within the walled gardens.
Collective Progress: The fact of the matter is that our industry hasn’t come nearly far enough when it comes to defining terms, standardizing processes and technologies, and just generally making it easier for advertisers to achieve their goals. These efforts are ones that most independent ad tech players are eager to advance, but it becomes difficult—not to mention, disheartening—when the companies that control the majority of ad spend aren’t coming to the table to discuss collective progress. It’s only when the independents of ad tech make progress in their efforts that advertisers will put pressure on the walled gardens to do their part as well.
To ensure the digital advertising ecosystem remains viable over the long term, we need to reverse our path toward a two-party system. Google and Facebook undoubtedly fill important needs within the industry, but their wholesale dominance cannot be allowed to polarize and shut down industry progress. It’s time for the independents to rise and unite for a more trustworthy, collaborative and productive future.