why should a ssp or dsp buy a dmp ?

© 2016 Karthik Ethirajan, all rights reserved

Should SSP buy a DMP ? Karthik Ethirajan April 2016

© 2016 Karthik Ethirajan, all rights reserved 2

Agenda

3. Digital Ad Value Chain

4. DMP TAM

5. Data Use Cases

6. DMP One Platform

7. Platform Components

8. DMP Market

9. Competitive Landscape

10.Business Case

11.Summary Analysis

Industry

Product

Market

Strategy


In this constantly evolving digital ad value chain, data

providers (DMP) cater to all players

Advertiser Agency/

Trading Desk DSP / Ad Network

SSP/ Exchange

Publisher

• Principal buyer

• Creative arm

• Brand relationship

• Technology arm / RTB

• Campaign operations

• Creates a marketplace

• Inventory aggregator

• Ad server • Programmatic • Yield

optimization

• Inventory owner

• Audience

$ $ $ $

$5 $0.5 $1 $1 $0.5 $2.25

100% 10% 20% 20% 10% 45%

Fu

ncti

on

C

PM

V

alu

e

In

du

str

y

Pla

yers

DMP

• Provides buy and sell sides with data & insights

• $0.50-$2 CPM • 15% CPM

Source: GCA Savvian

Demand/Buy Side Supply/Sell Side


Mobile DMP market will nearly double in size from 2015-17

4

$531B $582B

2015 2017

Global Ad Spend

U.S. Ad Spend

DMP TAM

Mobile Ad Spend

34% 34%

$30B $50B

$58B $75B

$183B $197B

$1.3B* $2B*

CAGR

4.7%

3.8%

14%

29%

32% 38%

52% 67%

Global Ad Spend by Medium

Search 45%

Programmatic 59%

RTB 37%

U.S. Digital Ad Market

15% 15% 24%

Future Trend

($67B in 2016)

Source: Zenith Optimedia, eMarketer, BI, Karthik analysis

Digital Ad Spend

* DMP TAM assume 50% of all display & video ads use

data for targeting

Search 44%

Display 20%

Desktop $25B

Mobile $42B

Video 24%

Display 43%

Video 10%


Application of Big Data in advertising & adjacent markets

Market

Facing

Use Case

Analytics / Refined Data

Raw Data

Va

lue

Vo

lum

e

Examples

• Reg Data

• Lat/long

• Browse History

Providers

• Ad-tech

• Publishers

• Carrier

Providers

• Data Analytics

Examples

• Behavioral Profile

• Look-alike Model

Providers

• Ad-tech

• Market

Research

Firms

Examples

• Targeting

• Attribution

• Ad Optimization

• Insights

Targeting

Location based

user profiles

User Lat/Long

POI Map

+

Attribution

Conversion &

lift analysis

Offline / POS

+

Ad Optimization

Yield Optimizer

User Clicks

+

Market Insights*

Location tech &

heat maps

Demographics

+

Campaign Data Site Categorization Network Lat/Long

* Market Insights reports are used by many industry verticals such as financial

services, healthcare, hospitality and others for purposes unrelated to advertising


End-to-end platform that links data source with ad

serving

6

Data file

Ad Request

Data file

1st Party Data

SSP Data

3rd Party Data

Pubs Data

Coop Data

Logic

al Com

bin

ations

Premium Pubs

Data file

Ad Request

Custom • Songs played

• TV shows • Contract up

• Others

Standard • Age • Gender • IAB category

• Others

Data Dictionary

• Link to campaigns

• Generate reports

Campaign Execution

Collection Methods

Data Sources

DMP Analytics Audience Segments

Publishers decide which data fields to share (Coop data) and which

ones to keep (Pubs data) for their own campaigns

Audience Pixel

Branded Data

Standard • Branded audience segments

SSP/ Exchange


Portal An easy to use self-service Audience Builder • Layer different data

types to form custom segments

• Show avails • Link to live campaign • Pull reports

SDK/APIs Client SDK & server-side APIs • Capture user & device

data • Enrich ad request

client-side • Implement real-time

ad decisioning such as geo-fences

Data Onboarding Support variety of data collection methods • Offline ingestion • Ad request parameters • On-demand data

upload • Audience pixel

Enable data matching using PII, device ID, cookies & other match keys

Data Taxonomy Define and organize all targetable data in a data dictionary • Demographics • Behavioral • Location • Devices • Apps • Clicks & conversions

Data Science Data analytics capabilities • Supplement

reported/reg data with derived data to help boost scale

• Look-alike modeling • Data normalization • Device fingerprinting • Attribution report • Lift analysis

Integrated Platform Seamless end-to-end platform with an integrated DMP & ad server • No data leakage • Yield optimization

Key components of an ad-tech DMP


DMP players can be classified by many dimensions.

Successful players are able to offer differentiated

services across multiple dimensions.

8

DMP + VAS VAS such as ad serving, reporting

Pure Play DMP Standalone DMP

Many Pubs Premium & diversified

Single Pub Large but walled garden

Mobile Cookieless tracking

Online Desktop legacy

Mainstream Analytics Combination such as location, user agent, sub-ID, app verify, etc.

Niche Analytics e.g., Location, Census, Credit agency

Success Factors

Ad-Tech DMP


Relative strengths of DMPs in enabling ad-tech compared

to industry behemoths

9

Feature Walled Garden Location DMPs Online / Legacy

Integrated platform No data leakage

O&O inventory Premium & diversified

Mobile expertise Cookieless, deterministic

Toolkits Data layering, avails calculator, etc.

Data analytics POI graph, modeling, inferred data

Cross screen Mobile, tablet, online

Attribution Offline / online

Data onboarding Device ID, PII, cookie matching

SDK / APIs Client-side, server-side enrichment


Buying is better if DMP platform can be integrated fast

and its data usage ramped up rapidly in campaigns

Impre

ssio

ns

Data CPM $1 $2

Demographics Behavioral /

Location Custom

0%

5%

10%

15%

20%

25%

30%

35%

0 20 40 60 80 100 120

Months before breakeven

Data

Usage

~1 year BE

period if data

usage >5%

Partner Data Cost

Buy Breakeven Analysis

10

Breakeven Analysis

Buy DMP for $150M

Average market value of 3rd party data is $1.50

CPM

M&A cost in impressions: $150M / $1.50 CPM

Equivalent of 100B impressions

SSP traffic is about 100B per month

BE point (in months) is SSP traffic / portion of

SSP traffic that utilizes DMP data

Bu

sin

ess C

ase

Gro

wth

Str

ate

gy

Buy DMP sales $50-100M

DMP valued at 2-3x sales multiple

M&A cost will be between $100-200M

Build DMP team of 10 at $200K for a year

Build cost will be $2M

Partner DMP data cost is $0.50 - $2 CPM

Equivalent of 20-30% top line revenue


Strategic considerations of buying a DMP

11

Pros Cons

Synergy Strong tech play including toolkits, location, analytics, etc. Strength in mobile

DMP tech not related to ad-tech

Integration Data collection from offline and real-time data sources

DMP still needs to be integrated with SSP platform components

Scale Many DMPs do not “own” data Tech may be available but user data may need to be built from scratch

Business Model DMP data available for consumption on the SSP platform

May need to deprecate “selling” data for consumption outside platform

Business Case Better targeting commands higher CPM. SSP gets to keep all of incremental revenue.

Data centers incur Opex

Brand Source new campaigns by marketing DMP brand

Advertiser may ask for data from a different DMP requiring us to still partner with other data providers

Str

ate

gic

Co

ns

ide

rati

on

s

Recommendation

Buying a DMP will speed time to market by providing the

needed tech. However, SSP will still need to partner with

other data providers to satisfy customer interest

why should a ssp or dsp buy a dmp ?

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