What are we Selling?

Most of us that are involved in sales, marketing, or business development (they are same thing, actually) in the media space don’t really know what they are selling. And I don’t mean that the sales director or your DSP or data company don’t really understand the way their technology works (which can be the case at times). Surely, the digital media salesman can be relied upon to deploy the latest buzzwords, acronyms, and business jargon at the drop of a two-sided, logo-besmirsched business card. (see everyone’s favorite web humor from the year 2000). We all know what product we are selling.

That doesn’t really cover it, though, does it?

What we a selling is a dream. The dream of a digital future, and the hope that technology continues to be the solution to the problem, rather than another problem itself. It’s becoming a tough sell out there for a few reasons. I think it all started with the flying car. Ever since the car was invented and the first guy has to wait more than 10 seconds for a traffic light, we have all dreamed of the flying car. The personal hovercraft…essentially the DeLorean from Back to the Future, without the time machine capabilities. That thing was promised to us (coming soon!) way back in the 1950s. It was even clear, not so far back as the 70′s, that we would–with certainty–have something like that by the turn of the century. Well, it’s 2010 and we are all still waiting. The way traffic is getting around New York, Los Angeles and China (they had a traffic jam that lasted a week, recently), we are going to need them soon. Now, even though we still want them, nobody ever talks about them anymore.

I hope that’s not what happens to us. We are out there selling the future of advertising, and the future of how it’s measured, bought, sold, traded, served, shown, billed, and reconciled. Whether you are out there “pimping uniques and impressions” as some like to say, or selling SasS model software for selling or buying display ads, or hawking premium data sets to ad networks, exchanges, and DSPs–you are selling the dream. You are an evangelist, a technology tent-revivalist of sorts, going from one campaign event to the next, trying to convince people  to take a nice sip of the technology Kool-Aid It tastes pretty sweet at first.

It seems that, with all the technology and measurement tools, that this business is worthy of being proselytized. We are offering  a world that has changed dramatically for the better. Instead of (in the print days) selling some vague subscriber that is self-described as “recalling your ad and “passing along the magazine an average of 2.3 times,” you are selling results. Doesn’t matter how they pay for it; in the end, everyone is measuring by CPA (including yours, if your software/media/data cost is counted into the equation). The basis for that CPA comes down to the numbers, and the numbers don’t lie. Or, more precisely, they lie in ways that are harder to argue against.

What you are out there selling is control, which is the ability as a buyer to control exactly who you are reaching, and where they are being reached. Control over pricing, which means knowing how that audience is being valued, whether on an impression-by-impression, or guaranteed future audience. Control over what data you use to make decisions about that audience, and control over the technology you use to disperse your messages across the many screens of the interconnected web. We are far away from the time when the dream of total transparency and control over media is as easy as, say, updating your Facebook profile.

But, after the dust settles and an emerging class of technology winners in the media space emerges, we will see how well the dream was sold…and who ended up really buying it.

(Hopefully it’s not all Google).

Chris O’Hara heads up sales and marketing for TRAFFIQ.

PLATFORM WARS #2: The Future of Display

The Future of Display Advertising will depend on Content, Data, Integration, and Control

It’s funny, but if you are around the display advertising business long enough—whether on the agency, publisher, or technology side—you tend to forget that the acronyms “DSP” and “RTB” didn’t even exist until recently. Now, we take for granted that we live in this “digital ecosystem,” surrounded by technology and data everywhere we look. But, what does the future of digital display look like?

** * Content: It is the content, stupid. Always has been and always will be. It’s why WebMD, WSJ, and TripAdvisor get $30 CPMs and everyone else gets $2. You want to buy audience? Why not buy it from the sites that have the right content to attract it? And, guess what? Those are the same consumers who have the “purchase intent” and you don’t need a million data-injected cookies to tell you that. The future of display advertising is bright for publishers that produce the kind of content that warrants high CPMs, and insist on valuing their content. I think that much of that content will inevitably be stored behind pay walls, creating two distinct Internets: the free, ad-supported one; and the paid one.

***  Data: The world is changing, and the data marketplace we know isn’t going to be very long-lived. Even if you believe (as I do) that cookies are fairly harmless and somewhat convenient (I would personally rather see relevant ads than not), you know the current situation must change. The Wall Street Journal’s recent “Data: What They Know” series simply stirred an already simmering pot a half-turn. The future is going to involve a great deal more transparency, and the ability for consumers to opt in and out of a cookie pool easily.

***  Integration: Tomorrow’s winners will also have to embrace open technology. Everybody knows the symbiotic relationship that display and search share. Why, then, is it so difficult to mate data from the two disciplines in a meaningful way for the average advertiser? Why is it so difficult to manage audience buying and guaranteed buying with the same tools? The future in display will offer advertisers the ability to easily discover, buy, and manage display buys—powered by insights that go beyond stale panel-based analytics. Imagine being able to model, in advance, how a display buy will perform alongside a complimentary search campaign, and then optimize both with the same tool? We are very close. Display is not going to be about display anymore.

***  Control: The future is a world where the publishers and advertisers wrest control back from the technology players. Why are agencies building their own DSPs? Because they are being disintermediated by technology players who know how to get the advertising performance that they don’t. Hell, if finding a bunch of quants and coders is what it takes to stay in the game, it’s only money, right? Holding companies have never been afraid to invest their clients’ money on the latest and greatest technologies and trends over the years. Why are publishers building their own platforms (i.e., Glam)? Because they getting $1 CPMs for their content, and exchanges are selling it for $8. All of that is going to end—badly. Over the next 2 years, the winning platforms will be those that offer both sides of the market transparency and control over buying and selling media.

So, all of this speculation is certainly very exciting. Then again, it’s the year 2010 and most agencies are still buying digital media by using fax machines and collating spreadsheets. What is very clear is that the current display advertising ecosystem is unsustainable. The wide array of technology players layered between advertiser and publisher is already shrinking, as companies consolidate or are absorbed, and the winners and losers are chosen. The conversation has been dominated by data lately—and that’s where it should be. Most of the display advertising out there is the kind of commoditized inventory that is worth only 75 cents, and data can play an important role in making even the worst inventory find a relevant audience. However, one of the reasons that companies like AdVerify are gaining so much steam, is the fact that an abundance of low-quality goods inevitably leads to a gray market.

The future of display will be one in which brand advertisers use technology tools to mix audience buying and guaranteed buying—informed by search (and other) data—in the same platform. Buying campaigns from reputable publishers will be painless and easy, and marketers will be able to make optimization decisions based on real data—both historical and forward-looking. Brand advertisers will buy premium audience segments through opted-in cookie pools from top-quality sites, and pay commensurate CPMs. Performance buyers will still be able to buy audience from networks and exchanges, but may settle for lower quality audience segments (cookie pools from publisher networks with lower quality content).

I am looking forward to the future.

The Great Publisher Disruption

ADOTAS – Remember when you used to really depend on your local paper? For finding jobs, houses, getting the local weather forecast, selling that boat in your yard, and getting last night’s sports scores? I still do…but barely.

Most of what your local paper offers can be found in greater abundance (and at higher quality) elsewhere and, now that everyone is glued to their iPhone, rather than flipping newsprint on their commute, most of that content is only a click (or, more likely, a finger touch) away.

Jobs Section –> Monster.com
Real Estate Section –> MLS, Zillow
Business News –> WSJ.com
Weather Report –> Weather.com
Classified Sales –>Craigslist
Sports –> ESPN.com
Travel Section –>TripAdvisor.com
National News –> WSJ.com
Gossip –> PerezHilton.com

As the above demonstrates, the only area of superior content the local news website has left is local news, and even that has suffered as papers reduce reporting staff and rely more upon outside content providers to fill pages. Although local papers came to the online party rather late, they managed to quickly build reliable websites and leverage their most valuable content effectively.

Monetizing that content has fallen far short of revenue expectations for the most part. The AAAA’s recent report that ad agencies lose up to a third of their media cost servicing digital media buys (as opposed to only 2% with television) was eye opening, but probably nothing compared to what publishers feel.

Back when I was running sales for a Nielsen group, we were struggling with the fact that the same $100,000 once earned by selling a small schedule of print ads was now taking an enormous effort to create.

With print, you are simply selling space. The advertiser provided the content (a PDF) and you put it inside a magazine or newspaper, alongside compelling editorial. Publishers focused on producing the content they wanted and advertisers produced brand ads that appealed to a like audience.

Then, all of the sudden, advertisers started to lose interest in print advertising alone. Sure, maybe they still ran a small print schedule, but now they wanted some content to go along with it: maybe a “microsite” or a custom series of events, or perhaps an advertorial.

Then publishers found themselves allocating resources to writers, designers, and photographers—and acting like a small agency on behalf of their clients. Kind of cool, but the problem was that the advertiser had the same $100,000 to spend. They were all over you, and they wanted stuff like “ROI.” Publishers’ margins were compressed, resources (once dedicated mostly to producing their own content) were misallocated, and their employees were getting burnt out.

Let’s take this to 2007, and the emergence of social media. Now advertisers didn’t even need publishers to develop their content, because they could create their own blogs from scratch (Blogger) and start building online communities (Facebook). Enter Twitter and now every employee in the building has their own mini PR platform which could be leveraged for the company.

Talk about disruption. With thousands of really smart writers, photographers, and designers willing to work cheaply, from home — and with access to free, web-based tools equal or more powerful than any in-house software a publishing company could provide, now publishers were losing the only edge they had: the ability to produce content at scale.

The Googles of the world will always argue that they “need” content providers like The New York Times to continue to provide thought leadership, but web-based content marketplaces like Associated Content and others have only validated the concept that traditional publishers (no matter how big their websites are) are losing their power positions when it comes to content. (Except WSJ, which produces content so exceptional that people are willing to pay for it, but that’s for another article).

So, in this new reality, the publisher is left trying to protect his last tangible asset: his online advertising inventory. He can’t sell subscriptions, he can’t pay to have leadership in any other category besides local news, and now huge sites can geotarget ads to create larger audiences than he has. Spot quiz: who has more unique users in the Anchorage, Alaska DMA: Yahoo or the Anchorage Daily News? I don’t know either, but this is part of the problem.

When the starting point for most computers is search, local media misses the boat on what used to be their wheelhouse. Search for “Anchorage restaurants” on Google, and Fodors, Yahoo, and the local visitor’s bureau sites come up before ADN.com.

In response to this atmosphere of ever-increasing margin compression, competition, customer dilution, and constant need to understand and embrace new technologies, local publishers turned to the experts in online revenue monetization: networks, exchanges, and aggregators. Now (with networks and exchanges), as simple as placing a few ad tags throughout their pages, newspapers could monetize the 70% of inventory they couldn’t sell directly.

Establishing a daisy-chain of ad calls to backfill their unsold inventory was easy, and at least there was some visibility into revenue (amount of impressions available, divided by 1,000, times 65 cents). Despite the ease of use, the rates continue to be painfully cheap, and you never can really tell what the tolerance level of your audience is for an endless stream of teeth whitening, tanning, diet, or Acai berry offers will be.

Aggregators like Centro, LION New Media, Quadrant One, or Cox Cross Media offer a much better solution: real advertisers that need and respect real local inventory. These aggregators provide a great one-stop shop for advertisers and agencies that may not have the depth of knowledge (or personnel) to negotiate and service a multitude of small buys on dozens of local media sites.

As a result these aggregators earn the money they arbitrage by providing the expertise to buy local media at scale. Smarter companies like Centro are leveraging the in-house systems they have developed over the years to navigate this process and making it available to agencies directly (Transis).

However, when it comes to selling premium inventory, specialized sponsorships, or anything beyond standard inventory, the aggregators can’t really play in that space at scale; advertisers still need to partner with local media to make those deals happen.

Ultimately, I see local websites winning by being able to offer more than just inventory. For them, hustling uniques and impressions is a zero sum game. They will never compete against the networks and (with 65-cent CPMs on their remnant space) the networks and exchanges aren’t exactly their best allies.

What agencies need is for technology to help them scale the way they reach advertisers, in an open and transparent way—and systems that give them the ability to do more than place an ad tag on their pages and pray for a good campaign to hit the transom.

We feel the future for publishers is an open marketplace that enables good local media sites to package their premium inventory to advertisers who truly value the local audience: the regional ad agencies across the country who service the local hospitals, schools, banks, and businesses that need local content aimed at local customers.

Ultimately, publishers need systems that can give them placement level control over their inventory, total pricing and deal point control, and access to both agencies and direct advertisers in the same environment. There should be a place between getting a 75-cent Acai berry ad on your homepage and running a $50 CPM rich media expandable.

Publishers need to be able to negotiate both types of deals, and do them at scale, with total control. An open and transparent marketplace that enables publishers to market their entire inventory—not just remnant—is where the future is headed.

[first published in Adotas, 4/1/2010]