Private marketplaces are shrinking, here’s why Ozone thinks it can be the exception
As the foundations of digital advertising shake, what does Ozone see as the future of digital ad buying?
As other PMPs melt away through lack of inward investment, Ozone is trying to grow its offering
Ozone started its life as an experiment five years ago. Since then the private marketplace (PMP) has added more premium publishers to its list of partners. It was originally a PMP boasting support, insight sharing, and inventory from The Guardian, News UK and The Telegraph. It joined the dots between premium news reading audiences in the UK and together, aimed to rival even Facebook’s weekly audience scale (if not the frequency of reach).
Since then, it has added many more publishers to better reflect its maturity and proven viability. But as its CEO Damon Reeve explains to The Drum, changes to the industry and fundamental issues with PMP models mean it cannot rest on its laurels.
He explains that the mechanisms of PMPs create a double-edged sword for its publisher partners. While the share of revenue they receive from sales is greater than it would be through open exchanges, some of that has to go back into improving their PMP. “Their ability to invest and innovate really goes down. If you don’t have money to be able to innovate and to invest in R&D, then you just literally commoditize yourself in a heartbeat.”
And while Ozone has some unreplicable strengths in that regard, we’ve seen that over the past few years with other PMPs that have shuttered – including the UK’s Pangaea Alliance and New Zealand’s KPEX – or which have problems attracting new publisher partners. Many PMPs flare into existence, shine brightly for a few years, then dwindle without that inward investment.
PMPs also run the risk of simply not providing enough inventory for buyers, with guaranteed buys and sponsorships often limiting the amount of space made available. It provides the artificial scarcity that makes PMP advertising valuable for the publishers but runs the risk of putting off potential advertisers. Reeve explains that Ozone has a number of advantages in that respect: “Ozone is sort of a slightly weird structure because we are very much behaving like a publisher, and that’s our mindset.
“But obviously, we also invest in a lot of technology. And we definitely see this as important: someone needs to invest because the brands don’t, and the publishers don’t. Someone has to and you don’t want it to be just Google.”
To that end, he says Ozone is investing in new formats, which can be seen from its recently launched pre-roll video ads and Stories-style ads – based in part on the conversations it has with its agency and brand partners.
That ability to think like a publisher is a rarefied advantage to which other PMPs do not have access. But Ozone is as exposed to the changes in the wider digital advertising space as any other real-time bidding platform and needs to be receptive to changing demands and requests from brands.
Reeve states that he has seen “two solid years” of a subset of advertisers adjusting to wider changes: “The people that I’d call out as being leaders in that would be Omnicom, GroupM, P&G and Samsung… there are some good innovators when it comes to buying strategy that thinks about how they can move away from this open broad mindset into well-structured, thoughtful commercial agreements that include data sharing.”
Dwindling duopoly
One of the largest changes that occurred in digital advertising over the past year has been the gradual erosion of the duopoly. With the advent of Amazon and Apple beginning to cut into the market share of Google and Facebook, the duopoly’s share of the digital advertising market is predicted to dip below 50% for the full year 2022.
Reeve argues that Ozone will not be directly affected by that change, stating that as a PMP, the buying behavior of its advertisers runs parallel to those of search and social platforms. However, he does hope that the gradual realization that the duopoly is not the only game in town will prompt more buyers to seek out alternatives: “It’s probably true that there was a period where because Google and Facebook were so strong, no one else mattered. But now that people understand that Amazon exists, Apple exists, TikTok exists… it means that sort of Duopoly mindset isn’t really true anymore.
“And if it’s not true, when they think of five, then why wouldn’t they think of six?”
Ozone is attempting to buck the trends around the lack of inward investment that hits some PMPs through constant innovation. As the industry shifts away from a monolithic buying mentality to something more fluid and experimental, that puts it and its publisher partners in a strong position.