MediaOcean: So wrong, yet so right…

MediaOcean: So Wrong, yet So Right!

A “platform” is a system that can be programmed and therefore customized by outside developers — users — and in that way, adapted to countless needs and niches that the platform’s original developers could not have possibly contemplated, much less had time to accommodate.  – Marc Andreessen, 2007

Last week’s news of the merger between DDS and MediaBank was certainly exciting. In digital media management terms, it’s kind of akin to rooting for the Yankees; only their fans want to see them grow more powerful, because it sure ain’t good for baseball. These two behemoths have been fighting over agency budgets for the last four years, and have managed to steal a bit of market share from one another, while advancing the cross-media efficiency agenda slightly. The stated hope for this merger is that the corporate combination will give them enough firepower to finish the golf swing and solve the insanely complicated digital media puzzle, making cross media management possible in a real way.

Is this merger good for the digital media ecosystem? Maybe. Here are the three factors that will determine whether MediaOcean will become the digital media industry’s defacto system:

Standards are good: First off, it helps when everybody is reading from the same sheet of music, and there isn’t an industry that hasn’t benefitted from a common, accepted set of standards. The IAB has done a great job in terms of helping standardize ad sizes and out clauses, and some of the systems and procedures that help oil digital business transactions. An argument could be made that having 80% of agency dollar volume running through the same system brings efficiencies to the entire media buying landscape, but I’m not sure anyone in the industry would say that this was the case when DDS had larger market share.

For digital marketers, a significant hassle has been bill/pay and reconciliation, and that has been an area of focus for DDS and MediaBank across digital and traditional media. There is no doubt they can help standardize the process by which advertisers and publishers reconcile delivery even just by being the largest player – they can bring a de facto standard to bear, but how quickly can they really react to a rapidly evolving space with myriad nuances in ideal workflows for almost every customer? If they can change their DNA, they will be a force to be contended with.

— Platforms are good:  Secondly (and most importantly),  the right approach to solving this problem is an open platform approach. But none of the leaders in this space have shown any predisposition for opening things up.  This is in large part because the technology landscape has evolved so fast that the legacy companies haven’t been able to adapt their systems to keep up.  The market needs an open, extensible platform approach to solve its numerous problems, the question is can any of the existing leaders in the space, including MediaOcean, provide that?

My colleague, Eric Picard, learned about the power of platform effects while working at Microsoft over the last several years. He recently educated me on the varieties of platform approaches that could be taken in our space, and has offered to let me publish that here:

Systems vs. Platforms: The first thing to discuss is that most companies in our space have built systems – not platforms (despite everyone using the word platform for everything.)  A system simply exists on its own, is proprietary and closed – it doesn’t allow third parties to build on top of it.  This describes almost all the offerings in our industry today.

 

Simple Platforms – or Mashups: Most of us have experienced a ‘mashup’ in one shape or another by now. This is where a tool or web site is built that calls to numerous remote services (APIs or Web Services) to build one cohesive interface.   In this case, the platform is really all the multiple different systems used ‘behind the scenes’ to create one simple application that you could use.  Many web sites use this technique, using various content management systems, ad servers, etc… A lot of the SEMs and DSPs use this approach, building their own interface that hits each of the Paid Search providers or Ad Exchanges via API.

 

Consumable Back-End Platforms: Lots of companies now offer API access to their systems.  This kind of ‘back-end’ access is then used by third parties to ‘mash-up’ the functionality with either their own or other third party functionality.  AppNexus, Right Media Exchange, Atlas, DoubleClick, and numerous others provided this kind of back-end access by API.  Some of the more sophisticated providers, like AppNexus and RMX even enable third parties to extend their functionality to some degree – but they don’t make that extension generically consumable.

 

Ecosystem-like Platforms: A great example of this is Salesforce.com – which has built out a platform that really begins to live up to the market opportunity that the industry should be looking for.  Salesforce enables numerous services that can be consumed, like the platforms and mashups we discussed above.  But they also let third party vendors come in and extend the functionality of the core Salesforce platform.  They even provide an App marketplace, similar to iTunes, that allows third party vendors to distribute their applications to existing Salesforce customers.  This is a powerful approach, but requires a whole new set of skills that most companies in the ad technology space are not quite able to pull off.

 

Within this overall context of platforms verses systems, you can see the variety of approaches being taken by the various parties in the ad ecosystem:

Google offers third parties APIs to write against, but keeps the vendors playing in the search ecosystem on their toes by frequently changing the APIs, and it’s fairly clear that their goal is to be both the platform and the applications that run the advertising ecosystem.  They support third parties, but only as it furthers their end-game. 

The ad servers understand that their value is in the engine, much more-so than their workflow.  And they’ve opened up APIs to let other workflows plug in and become mashups that ultimately are powered by the smarts of the ad servers behind the scenes.   

Donovan Data Systems has brought one mashup workflow to market, their iDesk product.  It interfaces with DDS’s other applications fairly well, and can integrate with the dominant ad servers.  MediaBank has done somewhat similar things with their application suites, but has taken a more “Google-like” approach when it comes to their business – investing in their own DSP and automated media buying systems. This investment in products that compete directly with the very vendors that would need to integrate into the combined system causes me to pause a bit.

At the end of the day – it’s hard to understand who might have the right DNA among these constituents to actually roll out the right platform to solve the industry’s needs.

–Creativity is good: Finally, I think a development like this is excellent, if it actually creates an environment that transforms where digital media people spend their time. Right now, digital agencies spend most of their time and effort trying to wrangle an “ecosystem” of nearly 300 technology, data, and media providers. They spend the bulk of their time trying to execute media plans, rather than coming up with creative strategies to engage consumers. The mess of systems, lack of standards, multiple log-ins, and unmanageable hoards of data that each system throws off has created the ultimate irony: digital media is becoming the least creative, least profitable, and least measurable channel for marketers. If the merger brings us one step closer to making the digital execution piece easier, and gets the conversation back to creative, than I think it’s a step in the right direction.

After being out in the field, and talking to over 400 agencies about their digital media needs, I know that a standardized platform is what everybody wants. Whether or not MediaOcean is going to be nimble and creative enough to deliver a system that meets the needs of our growing ecosystem is very much in question. Technology has always thrived on choice, flexibility, and open standards. I believe that the company that can deliver on all three will end up winning.

[This commentary appeared in Adotas on 9/29/11]


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Traffiq integrates Nielsen site audience data (Interview)

Media management software firm Traffiq has partnered with audience measurement company The Nielsen Co. to provide advertisers access to Nielsen’s target-marketing platform @Plan. The integration will go live on Sept. 21 for all roughly 400 registered customers of Traffiq’s display ad-buying platform, said Chris O’Hara, SVP of sales and marketing at Traffiq.

Customers “are able to come into Traffiq, throw on a campaign and get @Plan data appended by Nielsen [which is] really great demographic information and do decisioning on whether they should advertise based on that information,” O’Hara said.

Nielsen’s @Plan platform will display websites’ number of monthly unique visitors as well as site visitors’ demographic information, such as gender, age, education level, household income, ethnicity and marital status.

Previously, Traffiq customers only had access to publishers’ self-reported data, which was “not that accurate,” said O’Hara. In addition to supplementing site audience data for the 3,000 publishers available on Traffiq’s platform, the partnership adds data for 7,000 publishers collected by Nielsen, he said.

O’Hara said the partnership marks the first time Nielsen has made the @Plan platform available to non-@Plan customers.

[This post appeared in Direct Marketing News on 9/21/11]

Digital Marketing Questions in Search of Answers

Over the course of the past year, my colleagues and I have gone around the country speaking to more than 400 agencies about their digital advertising businesses. These agencies represent the lifeblood of American business: They are the regional shops that market the local hospital chains, regional tourism, restaurants, and retailers. Whether they are in Anchorage, Miami, Sioux City, or New York City, they are all facing similar digital media challenges.

The 300,000-channel world of digital marketing is exponentially more complicated than the not-so-distant past when radio, broadcast, and out-of-home advertising were the only games in town. “Most clients expect some level of digital services from their agency,” according to Tammy Harris, the media director of Neathawk Dubuque & Packett, a leading healthcare marketing firm based in Richmond, Va.

This makes it much harder for agencies to deliver impeccable plans, provide great analytics, and continually ensure better rates and performance. Plus, clients want to use analytics to uncover how their products are selling in a new, connected age. The old black box of television offered a model that worked for a long, long time; if you had enough money to feed it, the television produced an audience broad enough to justify the marketing expense. Agencies fed the beast with commercials and earned market share. Now, with an audience splintered into hundreds of cable and satellite channels, and with 25 percent of the audience fast-forwarding through the commercials with their DVRs, that model is broken. Radio is better off, but even that is being corroded by pay-to-play models. Besides, it has always been hard to build a brand verbally.

So, agencies are faced with the need to build client brands online through websites and Facebook pages. They have to get customers to those pages via search marketing and display ads. Is it that hard to figure out where the digital audience for a product lives? Of course not. Agencies that want to reach young men can find themselves on ESPN or Break.com’s media kit within the space of 60 seconds. Want to reach people with hyperhydrosis (excessive sweating)? There’s a whole section of WebMD dedicated to it, and the site would be delighted to sell you a sponsorship. Want to build a Facebook page and stock it full of fans you can constantly tweet to? A few recent college graduates can have that up and running and packed full of content in a week or two.

The problem isn’t executing a digital marketing strategy or finding an audience. The problem for agencies is that is really hard to do it at scale — and even more difficult to make any money doing it. A recent study by AAAA cited that the cost of servicing digital campaigns averages 30 percent of an agency’s media cost, as opposed to 2 percent for television buys. That sounds hard to believe, but not when you think about the back-end an agency needs to be truly successful in the digital space.

As Harris puts it, “The bulk of the time required to plan and place traditional media happens up-front, while digital media requires attention throughout the run. The ability to track, optimize, and report so many metrics requires many hours, and because digital media often costs less than traditional, it means agencies are doing more work for less money.”

Even if you are just a media shop, you need some serious tools to get the job done. First off, you need to be able to build and maintain cutting-edge websites, and that capability encompasses a lot of expensive, technical personnel. Researching sites with any credibility means having access to expensive Nielsen or comScore subscriptions. Doing SEO and SEM? You better have a young employee to head up your search and analytics practice, and these folks aren’t cheap. If you want to serve ads with any volume, and have access to your own data, you will need your own ad server. How about tracking website activity? Enter Omniture, or other analytics software. What about optimizing campaigns, tracking conversions, putting up and taking down ad tags? Get ready to hire and maintain a serious ad operations team. And it doesn’t end with the campaign.

After all of this, in even the most successful online marketing effort, the billing and reconciliation game is just beginning. A client might ask, “My server says you served 100,000 impressions, and you are charging me for 125,000?” To which the agency might respond, “Who pays, based on whose numbers, and when am I getting paid anyway?” It goes on and on. In some ways, it’s hard to imagine how agencies make any money on digital advertising at all.

For Marci De Vries, former head of media of Baltimore-based IMRE, and now a small-agency owner herself (MDV Interactive), digital marketing can quickly become a zero-sum game. “If the developer of these tools can make money on expensive tools, then good for them,” she says. “What I’ve seen lately is that those expensive tools are bought by 10 percent or less of their market, and then are underutilized because only a few license seats are purchased. The overall value to an agency of expensive software is close to zero. Meanwhile, the web community is copying the functionality, databases, and ability to provide meaningful information and distributing it for free or almost free. The overall value to agencies is very high, although it also levels the playing field between small shops and big shops. The web community likes to level the playing field.”

Kent Kirschner, the owner of The Media Maquiladora, a Latin American specialty agency with offices in Sarasota and Mexico City, says the problem is starting to get even more pronounced as multicultural agencies begin to come to the digital party. “Margin compression is a phenomenon affecting all aspects of the industry,” he says. “The rise of CPC, CPA, and other performance-based pricing has compelled all marketers to think that our profession now should be held to a different measure. Our creative and strategic work is now almost inevitably met with skepticism if there isn’t some direct and easily identifiable performance metric attached to it. So clients value what we do less and drive us to wring more and more out of our media partners and our teams. In many cases, they don’t pull their own weight in developing appropriate data measurement systems to identify the impact of our work.”

It’s not only measurement that impacts an agency’s margin and daily workflow. Real in-house innovation must continue to be what differentiates agencies from each other — and the host of widely available tools on the market. “The internet continues to drive the price point for traditional agency materials down to zero every day,” De Vries says. “There is a community on the web that is in favor of sharing repeatable work so that more money can be spent on real innovation. To help eliminate what they consider mundane tasks, they offer free design templates, CMS platforms with extreme performance, and in some cases even free logo work.”

Peter Gerritsen, well-known ad man and now Transworld Advertising Agency Network (TAAN) head, feels the same way. “The squeeze of economic conditions on the advertising community, and on marketing budgets, has created an environment of cost-control at any price, even to the detriment of quality,” he says. “While this is short-sighted, it has become the lead in negotiating compensation. In many areas, it has become not about the value of doing it best, but how little it will take to just get it done. The advertising industry has commoditized many of the steps required to produce communications. A commodity is measured by cost, not by quality. Expertise is measured on outcomes and value. The experts command premiums for their work. Agencies need to position themselves as experts in defined businesses. Deep expertise is better than commoditized capabilities.”

Agencies are now forced to do what they always do when it comes to margin compression: share the pain with their publishing partners. The good shops send out a brief to 20 sites, collect creative ideas from them, and collate the best five into a plan that fits from the standpoint of budget and practicality. Usually, the largest sites get on those plans simply because the agency wants to create the least amount of friction when closing a deal. Want to reach young men? Look no further than ESPN.com.

Agencies that are charged with performance simply go to networks, which find them the cheapest “targeted” inventory they can. Agencies don’t know where their clients’ ads are running, but how else do you get geo-targeted, contextually targeted, user-targeted, and re-targeted inventory for less than a $10 CPM? But what have the agencies really done? They don’t know how they got the performance, or how to find it again. They don’t own any part of the value chain of that process: the sites, the targeting, the data, or the analytics. Scary. Sounds like something the client can get directly — for 15 percent less.

Gerritsen values the media mix more on performance than delivery. “The value is in the insights and the delivery of successful outcomes,” he says. “How this is delivered may not be through internal resources, but as a trusted method of information exchange between media, agent, and marketer. It’s not necessarily about who owns the data, but rather, about the creative use of the information to produce success. I don’t like the term ‘aggregator.’ It doesn’t demonstrate any value, just the ability to cobble together a pile of stuff. The value of the best networks and exchanges is the shared responsibility to balance costs and benefits to all participants.”

For agency owners like Kirschner, there is no question about maintaining control of publisher relationships. “Despite the fact that there is such a proliferation of options in the digital space today, it has never been more important for agencies to maintain direct relationships with publishers,” he says. “While networks and exchanges offer convenience and supposedly compelling pricing, the reality is that the publisher at the end of the loop ultimately wants to see a campaign succeed, and he or she has the direct experience and audience knowledge to ensure that happens. There are many tools available that allow these personal relationships to scale within a large media department, so the appeal of networks and exchanges diminishes.”

I currently work for a company that is trying to help small to mid-sized agencies tackle some of the technology aspects of buying and selling digital media. In most sales jobs, it takes a while to get a meeting with a decision-maker. Frankly, I was surprised at how quickly CEOs, CFOs, and digital media VPs agreed to meet with our company at first. Sure, we have a captivating sales pitch, but the reason we get so much uptake is that there is real pain out there on the agency side.

The online media industry is far from being sorted out. Until a standard set of practices and tools gets established (which might never happen), agencies are going to need reliable, trusted partners to help them profitably navigate the digital landscape. Agencies will forever be evaluating new platforms, networks, exchanges, ad servers, data providers, and myriad other tools and services. But, for the agencies we talk to every day, it’s not the tools that make the agency — it’s how the tools are used that ultimately makes the agency successful.

As De Vries says, “Agencies that were built on a manufacturing model (paying inexperienced employees to send mailers all day long) now need to focus on innovation instead because that’s where the money is now. It’s hard to innovate every day in an agency.”