Adtech veteran Ari Paparo, Beeswax chief executive officer, is poised to ramp up his European operations with the expansion of his UK team to better service clients across Europe.
Having served as vice president of the DoubleClick team that sold to Google for $3.1bn in 2007, and having also held senior roles at AppNexus, plus BazaarVoice and Nielsen, Paparo needs little introduction to many in adtech.
Speaking with The Drum ahead of his IAB Interact appearance this week, he shared his opinions on how adtech companies can thrive in difficult times.
Scaling across a fractured market
After raising $11m in funding for his bidder-as-a-service offering (i.e. — it can help deliver custom real-time bidding products, at a fraction of the upfront cost of clients building their own) in 2016, Paparo has now appointed Beeswax's first general manager for Europe in Chris Penfold (formerly of Criteo).
Discussing his ambitions for rate-of-growth in the region, he alludes to the balkanization of the markets across the 20-plus market European Union states and teams, many of whom separated by a different language.
“We envisage a potentially big market for bespoke bidding solutions in Europe for a bunch of reasons and we think we’ll have about four-or-five employees there by the end of the year. And with our rate of growth we could be well into ‘the teens’ throughout 2018,” he says.
“I’ve been doing business in Europe for about 10 years, and what I see is a lot of American businesses coming in, and trying to take their product and model, then apply it across that balkanized market,” adds Paparo.
He goes on to state that he believes that his outfit's offering means it can fit each market in a more custom manner, given that Beeswax's value proposition is to deploy its bidding stack individually for each customer.
"So this allows them [each] to have different algorithms, different data sources, and U/I, etc. That makes us uniquely placed to meet the needs of more idiosyncratic markets,” he adds.
Combining scale and differentiation
With several clients in various stages of implementation both in the UK and rest of Europe, Paparo observes that Beeswax’s typical customers are those that are both sophisticated in adtech and their use of technology, ergo a mixture of ad networks of different kinds or "hands-on direct marketing" clients.
“So we come into play when you have a lot of data and want to do something different with your bidding algorithm,” he adds.
For Paparo, despite the widespread talk of 'the adpocalypse' there are enough tailwinds at play for those with the right proposition to thrive, even if the market is dominated by two of the biggest names in the business.
“The reality with is that both companies in ‘the duopoly’ are doing well,” he says, although he hesitates to add, that the phrase itself is something of a misnomer.
“But I don’t think it’s like a ‘monopoly’ where it’s impossible to break through. The fact is, there’s plenty of publishers out there that are doing great, it’s just that what they’re forced to do is compete on different aspects of what customers want,” adds Paparo.
“So if you want scale and performance, ‘the duopoly’ both offer that, but you want innovation and different approaches to branding or editorial [that publishers do well] those are things that don’t scale very well.”
How to remain relevant in the current adtech environment
Much has been made of the potential effects of the industry-wide move (by publishers at least) to server-to-server header bidding, and the potential impact it will have on driving up both the operational costs for the buy-side of the industry. On top of this is the potential for bid duplication (i.e. — where the buyers find themselves bidding against themselves due to being plugged into multiple supply-side sources sharing the same inventory).
“It goes back to simple college economics. When the cost has gone up on one side, and nothing has changed on the revenue side, that causes a business model to cease working, or enter decline, so it’s hard to be on the buy-side,” he adds.
Paparo maintains the fact that his company operates in a niche setting and will help it weather the storm, but acknowledges that many demand side platforms (DSP) will struggle to transition to the above environment.
For him, the move to server-to-server can be beneficial to both sides of the market, for while it does increase infrastructure costs, this could result in a scenario whereby less trustworthy middlemen that are "manipulating the auction" could be squeezed out of the market — something that has, in part, been facilitated by recent moves from the IAB with regards to its ads.txt initiative.
However, despite those who would augur the end of most adtech companies, there is a huge opportunity for all companies in the sector given the generational shift towards digital.
“There’s a saying, that any time a New Yorker dies, the New York Times loses a subscriber,” he quips. “That’s why I’m still fairly positive about Snapchat [despite the recent disappointment of their debut earnings call], because their users are not going away, they're like 15," he adds.
"So you have this multi-generational shift towards digital, and television is just starting to see the real impact there, and now there’s still growth across the board. Now, while we may be competing a bit more tightly, with some of these larger behemoths, and some of the newer media types might be harder to monetize than normal, but these are normal types of things."