20150923-高盛-The_changing_fabric_of_digital_advertising,_implications_across_the_ecosystem_41页_3mb

Summary of "New Ads on the 'Block'"

Core Content

This report from Goldman Sachs outlines the impending restructuring of the digital advertising ecosystem, driven by technological advancements, user experience improvements, and the growing adoption of ad blocking tools. It emphasizes the shift from a fragmented, ad-tech-heavy model to one centered around scaled platforms and content owners.

Main Views

• Digital ad ecosystem will be rebuilt: The current model, which relies on a vast number of undifferentiated content sites and a complex ad tech infrastructure, is expected to consolidate around major platforms and content owners.
• Mobile is a key driver: The shift to mobile has altered ad tracking, measurement, and delivery, favoring platforms with logged-in users and proprietary data.
• Ad blocking is a catalyst: While ad blocking is not new, its integration with Apple's iOS and the increasing user demand for ad-free experiences could accelerate the transformation of the ecosystem.
• Google and Apple are central to change: Both companies are influencing the direction of the industry through privacy initiatives, user experience improvements, and the potential restructuring of ad formats and data usage.
• Value accrues to scaled platforms: Companies like Facebook and Google, with large user bases, proprietary data, and engineering capabilities, are best positioned to benefit from the new landscape.
• Content publishers must adapt: Publishers need to streamline their ad tech partnerships, invest in better ad formats, and focus on high-quality content to remain competitive.
• Ad tech will consolidate: Smaller, undifferentiated ad tech firms may face attrition, while those with unique data assets or direct relationships with publishers are likely to thrive.

Key Information

• Ad blocking adoption: Estimated between 12% and 16%, with recent Apple developments likely to accelerate this trend.
• Impact of ad blocking: Sites with heavy ad tech load more slowly and consume more data and battery. Ad blockers can improve load times by over 80% and reduce page sizes by over 60%.
• User experience and performance: Site performance and data costs are significant drivers of ad blocking, not just the annoyance of ads.
• Native ad formats: These are more user-friendly and perform better, with Facebook and Twitter leading in their adoption.
• Role of logged-in users: Platforms with logged-in users can better track and target users across devices, giving them a competitive edge.
• Mobile vs. desktop usage: Mobile usage is growing rapidly, with 60% of time spent on mobile apps in 2015. Desktop usage is expected to drop to 60% of total by 2016.
• Ad revenue split: iOS leads in ad revenue, while Android leads in ad inventory. This is attributed to the higher income levels of iOS users.
• Digital ad growth: Global digital ad spend (excluding search) reached $71bn in 2014, growing at 22% YoY. It is forecasted to grow 17% and 15% in the next two years.
• Ad tech fragmentation: The ecosystem is highly fragmented with many third-party tools, but this is expected to rationalize as the industry evolves.

Strategic Implications

• For publishers: They need to streamline their ad tech stack, focus on quality content, and possibly move toward platform-based distribution to remain relevant.
• For ad tech firms: Those with unique data assets or direct publisher relationships are likely to benefit, while smaller, less differentiated players may face challenges.
• For platforms: Companies with scale, logged-in users, and engineering resources are best positioned to capture value in the new ecosystem.

Conclusion

The digital advertising ecosystem is undergoing a significant transformation due to the rise of ad blocking, mobile adoption, and privacy concerns. This shift is expected to lead to consolidation, with scaled platforms and content owners emerging as the dominant players. Ad tech will become more rationalized, and the focus will shift from mass inventory to high-quality, user-centric ad formats. Investors should consider the implications of these changes when evaluating opportunities in the digital advertising space.