Industry Insider Q&A: Ari Paparo on RTB, Programmatic Disruption, and What's Next for Ad Tech

Ari Paparo is CEO and co-founder of Beeswax, and one of the more credentialed voices in programmatic advertising. His career spans DoubleClick (before and after Google's acquisition), Nielsen, and AppNexus — nearly a decade and a half of watching the industry reshape itself from the inside.

You can connect with Ari on LinkedIn and follow him on Twitter.

1. Can you tell us about your background in ad tech?

I've been in ad tech for almost 15 years. I was part of the DoubleClick team through its sale to Google — specifically, I built the rich media and video business there from inception. While at DoubleClick, I wrote and drove adoption of the VAST standard in conjunction with the IAB. After Google, I served as Head of Product Management for Nielsen's digital measurement group, and later moved to AppNexus.

Now I'm the CEO and co-founder of Beeswax, which I believe is the first company to offer a platform purpose-built for RTB bidding — what we call Bidder-as-a-Service.

2. What does Beeswax do, and where does it fit in the broader advertising ecosystem?

Through my time as an executive and as an advisor to a number of venture-backed companies, I kept seeing the same gap: sophisticated media buyers needed transparency, control, and genuine ownership over their ad tech stack. DSP solutions — even those that expose an API — are basically black boxes. Homegrown bidding solutions, on the other hand, are difficult to scale and maintain, with poor ROI.

Beeswax's Bidder-as-a-Service gives customers a complete RTB bidding stack in the cloud, at a fraction of the cost and complexity of building one from scratch. Clients get everything they'd expect from a DSP — a UI, API, reporting, supply integrations — but their own engineering and data science teams can extend the stack with custom algorithms, proprietary data, targeting logic, and creatives.

It's particularly appealing to the most sophisticated buyers: those who already have tech assets and unique data they want to leverage.

3. What are the biggest shifts you've seen in online display advertising over the past five to ten years?

Programmatic has clearly been the defining disruptive force. I explored this at length in an article published in Ad Age. Before programmatic took hold, the industry looked quite different — the focus was on direct-sold rich media units, the IAB was championing "rising stars" formats, and a lot of energy went into getting order management systems on the buy side and sell side to interoperate. Programmatic effectively made all of that irrelevant.

The exchange model removed order management and workflow friction, and let buyers and sellers optimize independently within their own environments. Rich media fell out of fashion and gave way to dynamic creatives. The data business exploded — DMPs, data exchanges, data onboarding, publisher co-ops — an entirely different industry emerged within roughly five years.

The other seismic shift has been the rise of Google and Facebook as dominant forces in digital. For a while, the rest of the industry managed to operate around them and maintain older media business models at the centre of power. That's clearly no longer the case.

4. What are the biggest challenges facing ad tech and MarTech companies right now?

For venture-funded players, the financing environment has become significantly more demanding. Businesses with a media revenue component are getting roughly 1x valuations on revenue — not a compelling story for investors. For companies with non-media revenue, there's still a meaningful discount if that revenue is non-recurring, such as percentage-of-media deals. The result is more exits happening earlier, as companies struggle to raise later rounds.

From a market standpoint, there's intense competition and a lot of noise — especially in the US. Ad tech and MarTech companies run a real risk of stalling out at $10–20 million in annual revenue without being able to convert that momentum into traction with larger enterprise accounts.

5. What trends do you expect to see in ad tech and MarTech going into 2017?

Adobe's acquisition of TubeMogul is a strong signal of what's coming. Expect more of the same — major MarTech and cloud platforms acquiring scaled DSPs. Salesforce and Oracle both seem like natural candidates to make moves, but there's also a broader set of traditional technology companies looking to buy into the execution layer of the stack. That consolidation trend isn't slowing down.