Video Advertising Needs More Innovation and Less Arbitrage

Jeremy OstermillerAltitude Digital, a US-based video SSP which will soon be launching in Europe. VAN spoke to Jeremy Ostermiller, CEO of Altitude Digital to discuss his company’s cooperative approach to the market, Altitude’s AIR technology, and why the city of Denver is succeeding in ad tech. While Ostermiller’s company have benefitted from video advertising’s growth, he still feels the real tipping point has yet to be reached. 

Could you provide some background on Altitude Digital and what you bring to the video advertising market?

Altitude Digital was founded in 2009 in Denver, Colorado with the mission to help publishers navigate the complexity of online advertising. We have been doubling in size every year and now have more than 75 employees, 4 offices and deliver billions of video ads per month. Our business is focused on video and mobile but our platform also manages display monetisation for publishers.

As one of the largest video platforms, we supply video at the scale and quality level that advertisers are looking for, but it is our publisher focused products that continue to drive our growth. Today there are a few large video platforms that work directly with publishers. What makes Altitude unique is that we have not only learned to co-exist with them, but to cooperate to better meet the needs of publishers. In an environment where there are few exclusive relationships with publishers, technology best serves the publisher when it can work with a variety of partners to improve overall performance. Our platform is designed to help all partners perform better. Our ARENA platform is purpose built to address the challenges video publishers face including errors and opt-outs, low fill rates and creating greater competition between buyers to drive the highest value for publisher inventory.

Like SpotXchange, you’re headquartered in Denver, Colarado. Why are we seeing a disproportionately large number of video SSPs coming out of Denver?

There are several ad tech companies in the Denver-Boulder area of Colorado. We have reached a point of critical mass that has created a skilled talent pool with relevant digital media experience. The success of a handful of ad tech companies has spawned new ideas and companies. It’s a great place to build a company with a favorable business environment, entrepreneurial spirit and a much lower cost of operations than the East or West Coasts, where we also have offices.

Could you explain how your AIR product works?

AIR technology detects errors and impression losses that often occur between video advertising systems. The technology sits between the publisher’s ad server and the publisher’s demand partners, or in some cases their mediation layer. AIR monitors the ad call to identify anomalies, missing information and other errors. Rather than allowing a lost opportunity or timeout, AIR resends the opportunity back to the demand partner. The result for publishers is generally significant increases in fill rates and revenue. And the net result for the marketplace is great efficiency.

We’ve seen a lot of consolidation in the video advertising market lately. Do you think there’s a lot of M&A action still to come?

Programmatic video platforms are perhaps the hottest commodity in ad tech right now, with several high-profile acquisitions taking place in the past six months alone. This activity proves that programmatic video is an increasingly important part of the digital media landscape.

That being said, we are in the third or fourth inning of a nine inning ball game. The platforms rewarded with recent acquisitions managed to set themselves apart through technology.

These acquisitions don’t signal a sudden maturation in video advertising but rather they are a strong indication that there remains tremendous growth and upside for video technology companies. There is room for independent companies to emerge and solve the issues brands and publishers face in order to better leverage the power of video advertising. Additionally, the remaining independent companies are not constrained by the sometimes competing interests of operating as both a media and technology company.

What do you think are going to be the major drivers of growth in the video advertising market over the next five years?

There are still inefficiencies in video advertising that need to solved. There are still too many companies sitting between the advertiser and the publisher, creating friction in the online advertising marketplace. The industry needs more innovation and less arbitrage, and we believe that with inefficient markets come a great business opportunity for technology companies to optimize connections between partners. Additionally, there are still technology challenges in video advertising that make it difficult for both advertisers and publishers to transact. Our mission is to design and build solutions in the ad tech marketplace.

We’ve been talking about the potential shift of ad dollars from TV to online for some time and that’s been slower than expected. In fact, traditional television is holding strong while online video continues to grow annually by double digits. The whole pie is getting larger, but online is not yet close to eclipsing TV ad spend. As a young and evolving industry, we are beginning to address issues that are constraining the explosive growth we all expect, but we aren’t at a tipping point just yet. When these issues are addressed—and dollars begin to shift at scale—we will experience even more explosive growth in online video advertising. Technology companies that help create efficient and optimized connections between video publishers and advertisers will be positioned to deliver on the promise of better performance, increased engagement and highly targeted advertising through video.

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