Founded back in 2006 by Rajeev Goel, Amal Goel, Anand Das and Mukul Kumar and headquartered in Redwood City, California, PubMatic has grown to become one of the world’s leading Supply-Side Platform (SSP)
- Today, the company operates 14 offices and 8 data centers around the world
- It has over 171 billion daily ad impressions, 1 trillion advertiser bids per day and over 2 petabytes of new data processed daily
- Has a client list of over 61,500 companies, including Verizon Media Group, News Corp, Zynga and Electronic Arts
A Supply-Side Platform (SSP), also referred to as a Sell-Side Platform, is an automated platform used to sell advertising. Online publishers mainly use these platforms to sell and manage their ad inventory automatically. PubMatic, specifically, targets app developers and publishers.
- With PubMatic’s software, website publishers, mobile app developers and video content creators can easily get in contact with ad buyers
- The whole process is automated, which makes PubMatic even more attractive to potential customers who do not have a technical understanding of how to get a hold of ad buyers
- PubMatic’s vision is to offer clients an all-encompassing advertising technology stack for all their online advertising needs
PubMatic’s cloud infrastructure platform provides superior monetization for publishers by increasing the value of an impression and providing incremental demand through PubMatic’s growing relationships with buyer. Its programmatic ad stack is composed of 12 modules, all of which are customisable, extendable and easy to optimise to meet the client’s requirements. These modules enable for flexibility and efficiency:
- Adaptable Setup: PubMatic has different integration options that include but are not limited to SDK and non-SDK varieties. The company’s offerings are compatible with most industry-leading mobile ad stack setups
- Access To Incremental Demand: With PubMatic’s programmatic technology, clients can increase their app’s competition and additional fill. They are also able to carry out parallel auctions, all of which support multiple integration types
“There’s a whole host of things that we can do…that increases the advertiser’s ROI and causes them to spend more on our platform, which in turn allows us to generate more revenue for publishers.” Rajeev Goel, CEO, PubMatic.
- Brand Spend: One can access demand from brand advertisers, thereby gaining higher CPMs. With this, clients can increase the quality of their ads and grow their user experience
Finally, PubMatic acts as an independent intermediary as it does not own media and therefore does not have a vested interest in driving ad revenue to specific media properties.
THE PERFECT STORM?
By phasing-out third-party cookies and requiring users to allow bots to track their activities, Google and Apple are making it more difficult for advertisers to target the right consumers. These policies could severely limit the data advertisers can access and place a cap on AdTech’s growth potential.
1. Google making third-party cookies obsolete
Google confirmed that it will phase out third-party cookies by 2022. This poses a significant threat to digital marketing and industry players such as PubMatic, TradeDesk and Magnite, particularly since they will not be able to effectively target people with ads.
2. Apple enabling users to opt out of user tracking
According to Business Insider, 72% of people report feeling that all their online activities are being monitored and tracked by advertisers, tech firms and other parties interested in their data. Additionally, according to a study by Pew Research Center, 81% of individuals point out that the potential risks they face owing to data collection far outweigh the benefits.
To this effect, Apple has given power to the people. As of its iOS 14.5 update, iPhone users can now opt out of tracking, by allowing them to either accept or decline an app’s access to their unique device ID. This would see advertisers unable to target iPhone users with ads, which is a challenge for industry players such as PubMatic, Magnite and TradeDesk.
3. Ad Blockers becoming widespread
There is a growing use of ad blockers on computer devices, and even phones. According to Statista, ad blocking usage penetration rose from 16% in 2014 to 26% in 2019. This is posing a threat to advertisers as it makes it difficult for them to reach their audience and promote their business.
“Among Americans, the most popular reason for using ad blockers is that “websites are more manageable without banners”. 71% of AudienceProject respondents agreed with this statement.”
“Other commonly reported reasons for using ad blockers include privacy concerns and avoidance of irrelevant ad messages.” Brian Dean for Backlinko
The global digital advertising and marketing industry is set to grow by a CAGR of 10.3% between 2021 and 2027, fuelled by the internet user base expansion, coupled with a consumer shift towards online sales.
1. According to PR Newswire, the global digital advertising and marketing industry will be valued at $640.2 billion by the year 2027
- Representing a CAGR of 10.3% over the 2020-2027 period, and will be attributed to the extensive use of the internet for e-learning, social connectivity, e-commerce, media, file transfers and communication
“Information sharing over the internet will be so effortlessly interwoven into daily life that it will become invisible, flowing like electricity, often through machine intermediaries.” Monitis, 2017
- Representing a CAGR of 11.9%, signifying a recovery from the slow-down imposed by the COVID-19 outbreak that saw the closure of industries and commercial activities, thereby resulting in operational challenges
3. According to Juniper Research, digital ad spend will reach $520 billion by the year 2023, up from $294 billion in 2019
- Representing a 15% growth, this would be attributed to the use of AI-based programmatic advertising as a way to deliver highly targeted ads to consumers
- This would also be attributed to Amazon’s entry into the digital advertising business, thereby disrupting Facebook and Google’s duopoly
“AI will allow advertisers to provide more customized and personalized ads to consumers with the more precisely targeted messaging. AI will not only save time, resources and money but will profoundly influence behavior. That behavior will positively impact an organization’s bottom line. And improvements in voice recognition and smart speaker technology will fuel the merger of UX and marketing.” Laura Luckman Kelber, Vice President of Marketing, Flexera
4. According to the IMARC group, global mobile advertising market is set to reach a value of $ 269B by 2026
- Driven by the growing mobile subscriber base, decrease in phone prices and data plans
“Increasing mobile subscriber base, availability of cheaper smartphones and tablets, access to affordable data plans, prompt growth in 3G/4G subscriptions have further boosted the use of mobile devices for entertainment and information purposes.” IMARC Group
Rajeev Goel is the co-founder and Chief Executive Officer of PubMatic. He holds a Master’s degree in computer science from the University of Pennsylvania. Before starting PubMatic, he co-founded Chipshot, an online retailer of golf equipment. Mukul Kumar is a co-founder of PubMatic the President of Engineering.
- Co-founder and CEO of PubMatic
- Has previously served as the senior director, product marketing at SAP and principle consultant at Diamond Management & Technology Consultants. He also serves as a member of the Board of Directors at IAB, a position he has held since February 2018
- Holds a Master’s degree in Computer and Information Technology from the University of Pennsylvania and a Bachelor’s degree in Economics, Political Science and Spanish from The Johns Hopkins University
- Co-founder and President of Engineering at PubMatic
- Previously was the director of engineering at PANTA Systems, a computing startup. Prior to PANTA, Mukul served as a director at Veritas (India). There, he helped grow the company to over 2,000 employees in India. Mukul has filed for 14 patents in systems software, storage software and application software
- Holds a bachelor’s degree in Tech and Electrical Engineering from the Indian Institute of Technology, Kharagpur
- Chief Marketing Officer since November 2019
- Previously led product marketing at CPXi, where she oversaw product development and go-to-market strategies across the company’s tech and media divisions. She has held several positions in product marketing, development, and events across the technology and non-profit sectors, including Infogroup, a leading data and marketing solutions company
- Holds a Master’s degree in Business Administration, with specializations in Marketing, Finance and Strategy from New York University
TAKE A BREATH
So… This is a lot of information. Let’s summarise:
- PubMatic’s cloud infrastructure platform provides superior monetization for publishers by increasing the value of an impression and providing incremental demand through PubMatic’s growing relationships with buyer
- It acts as an independent intermediary as it does not own media and therefore does not have a vested interest in driving ad revenue to specific media properties
- The global digital advertising and marketing industry is set to grow by a CAGR of 10.3% between 2021 and 2027, fuelled by the internet user base expansion, coupled with the proliferation of self-service platforms
- By phasing-out third-party cookies and requiring users to allow bots to track their activities, Google and Apple are making it more difficult for advertisers to target the right consumers - a potential threat to the AdTech industry
- For the last quarter of 2020, PubMatic posted revenue earnings of $56.2 million, a 64% growth from the same period in 2019
- Full year revenue stood at $148.7 million, a 31% increase from 2019
- Gross profit for the year 2020 stood at $107.5 million, up from $77.7 in 2019
- Net income for the 2020 fiscal year totaled $26.6 million, up from $6.6 million the previous year 2019
- Net cash provided by operating activities stood at $15.7 million, up from $12.6 million in 2019
- Total current assets were valued at $327.1 million in 2020, a growth from $177.6 in 2019
- Total current liabilities stood at $195.8 million in 2020, up from $113.9 million in 2019
- The digital advertising market is growing at a rapid pace as consumers spend more time online and advertisers allocate a larger share of their marketing spend to digital outlets
- PubMatic’s focus on apps and mobile is paying off as spending on apps is set to reach $ 270B by 2025, for a 19.5% CAGR over the 2020 - 2025 period
- The company has been profitable for years and managed to grow its operating margins to 10.3% by the third quarter of 2020, coming from 3.3% a year earlier
- Technology giants such as Apple and Google are taking steps that prevent third-parties from tracking their users’ activity
- Regulation increasingly seeks to protect users’ privacy, potentially harming advertising platforms
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