Going Native

GoingNativeTalk of ghost publishers and robot traffic has digital brand advertisers questioning some long-held beliefs. They’re wondering whether the promise of efficiency in media is outweighed by the prospect of buying ads that only machines will ever “see.”

As Mike Shields pointed out in an excellent AdWeek article the other day, brand advertisers have found themselves at the mercy of phantom publishers who live to exploit the programmatic technology systems that deliver banner ads. It’s a problem that until recently has largely been ignored, even as gullible advertisers shell out millions of dollars only to receive fake clicks and “views” in return. Writes Shields:

Increasingly, digital agencies and buy-side technology firms are seeing massive traffic and audience spikes from groups of Web publishers few people have ever heard of. These sites — billed as legitimate media properties — are built to look authentic on the surface, with generic, non-alarm sounding content. But after digging deeper, it becomes evident that very little of these sites’ audiences are real people.

Among the money-sucking ghosts that Shields names are an outfit called Precision Media, running some 25 content sites like Toothbrushing.net; Alphabird, running 80 sites; and DigiMogul, operating something called Directorslive.com that has reported a rather unlikely 326 million monthly page views. These and other such scammers, the AdWeek man reports, are less than forthcoming about their operations or owners.

All of which is driving more interest in native advertising, or what we are now calling sponsored content, or “advertorials,” as they were called once upon a time. The idea behind native advertising is a simple and well-proven one: Tailor ad messages to the format of the media. A tweet becomes an ad when it’s a “sponsored tweet” and a Facebook message can become a “sponsored post.”

Companies like BuzzFeed have worked with brands like Old Navy to populate the web with pictures of squirrels in Christmas sweaters to grab mindshare and thus bring their irreverent style to millions of consumers where they are used to consuming content.

Today’s web-based platforms are enabling marketers to be publishers, and engage with their audiences in real-time. Brands brave enough to produce content, or that have a unique point of view — take Red Bull, as an example — are finding that making investments in content and aiming marketing into other content platforms with native advertising efforts are paying dividends that go beyond traditional marketing efforts.

Suit to fit
Your company website may have a blog, but it is meant to broadcast, not listen to, consumers. Native advertising and sponsored content give consumers the ability to extend messages through social sharing, commenting, and mingling user-generated content with content that has been created by brands.

For Scott Roen, vice president of digital for American Express, whose Open Forum is the leading small business website, the idea of tailoring advertising to the format of the content is an obvious advantage. “Where can we be part of a conversation where people want us? It’s getting back to the roots… [native advertising] is not a fad.”

Is native advertising better than the banner ad? “It’s certainly better than what we had before. Anything that makes the user feel the advertising is more seamless is good,” said Mary Gail Pezzimenti, vice president of content strategy for Federated Media. “The brands that have taken the time to establish thought leadership and provide high quality content have permission to engage in those conversations.”

So, is the native advertising trend just a retread from the past, or is it a legitimate new advertising tactic, brought about by platforms such as Facebook, Twitter, Pinterest, and Tumblr? For Benjamin Palmer, CEO of the digital creative shop Barbarian Group, who works with huge global brands like GE, “Native ads will be around as long as the platforms that support it are.”

[This post originally appeared on 3/26/13 in The CMO Site]

The Data-Driven CMO

talkdataMark Zagorski, the CEO of data management platform eXelate has worked with dozens of big marketers to help them put all kinds of data to work, including their own.

“Right now most organizations are dealing with terabytes of data. Over a third [manage] more than 10 terabytes of data and one-fifth will manage half a petabyte of data within three years,” Zagorski tells me. “The key objective for marketers seeking to harness the power of big-data is to make it actionable.”

As a marketer, it is likely that you have access to a great deal of data, and maybe even the kind of big-data we’ve been hearing so much about. CRM data grows every day; point-of-sale data gets easier and less expensive to store; tag-collected data from websites and social sites expands daily; and there is a seemingly infinite amount of third-party data available for purchasing and mixing in with your own.

The modern CMO must find a way to value the data assets she has, learn to listen for the real signals among the noise, and find a way to put that data to use. Mostly, that means understanding customer attributes, what drives them to transact, and how much it costs to get them to do so more frequently.

For Darren Herman, in charge of digital media at forward-looking agency Media Kitchen, data is all about the way it can be leveraged for his clients. “We care less about big-data and more about actionable data. Our clients have tons of first-party data,” Herman tells me, adding that the real challenge is in “uniting the data between silos (usually within client organizations) and making them available and actionable for advertising and marketing decisions. Much of the time, the clients’ data is available through the IT organization, and it’s not quite understood how it will be used for marketing decisions.”

In many ways, data-driven CMOs face two challenges: Firstly, winning the internal battle with the CTO to get access to disparate data sources, and bringing them together in a way that creates the opportunity to glean global insights; and secondly, building the platform that enables them to normalize many discrete data types, query that data quickly, and “activate” that data to produce a sales outcome.

Think of a large, global consumer products organization. A company that sells soap suds around the world may have up to 20 regional operating companies, and as many as 200 separate datacenters throughout the organization. Within all of those data silos are digital stories of marketing success and failure. Imagine if you could duplicate the promotional dynamics that drove a 20 percent increase in Italian diaper sales across the entire global organization, or leverage the learnings that one operating company had when a key discounting scheme failed?

These types of insights can be obtained when the CMO asks the right questions, and when he has data management platforms behind him that can make it possible to get the answers. Being a data-driven marketer isn’t about how much data you can centralize in a single platform. The data may be big, but ultimately the data you store is only as valuable as your ability to extract insights from it — and act upon it.

[This post originally appeared in the CMO Site on 3/20/13]

The Hourglass Funnel

HourglassSocial media stands to help marketers better work the newly-emerged hourglass funnel.

Marketers have been using the AIDA model in one form or another since its invention in 1898. The path of “awareness, interest, desire, and action” has been relevant for more than 100 years, and even if individual marketing channels have their differences, the way people are brought through the purchase funnel has changed about as much as human nature over the same time period.

That is to say, very little.

Consumer behavior is the same, even if the tools of the trade are different. For example, Pinterest activity demonstrates “desire” in the lower part of the funnel just as much as clipping a coupon does. The fact that Pinterest activities are measurable (and infinitely more cost-effective and scalable) makes all the difference.

What has changed a good deal over the past several years is what happens when a consumer drops out of the bottom of the funnel. It used to be that a purchaser was put into a marketer’s CRM system, where he or she would start to receive new marketing messages via established channels like mail, telemarketing, and loyalty programs.

Of course, that is still happening, but now there is a whole new part of the funnel to work through. This new, inverted funnel explains, for instance, why Salesforce purchased Buddy Media and Radian6 — the marketing is just getting started after the consumer purchases.
Today’s CMO has to have a more developed strategy for what happens after the purchase than ever before. This new socially-enabled funnel means closely linking the traditional CRM to social platforms — not only for “listening” to what your customers are saying, but also to give them an opportunity to start selling on your behalf.

After purchase, you need to encourage your buyer to join your social sphere, and start extending the conversation. This means not only listening to sentiment, but also giving the consumer the incentives to get to the next phase in the post-conversion funnel: social activation.

Migrating customers from being passive “likers” and “followers” to socially-activated users with true brand affinity is difficult. How you communicate within platforms like Facebook and Twitter (both on an earned and paid basis) is critical, along with providing key incentives for such participation. Ultimately, the affinity group you curate can be turned into sellers, either real affiliate salespeople or, in a softer sense, “brand ambassadors” that go beyond social sharing to influence others to purchase.

Today’s successful CMOs have been seeing through the bottom of the funnel for a long time, and putting together the tools and support needed to migrate post-purchase marketing activity from CRM-driven tactics to social activation strategies.

[This post originally appeared on The CMO Site on 3/15/13]

A Publisher’s History Of Programmatic Media

EvolutionIt’s hard to argue that the banner ad era has been good to publishers. After a brief initial period in which banner inventory matched audience availability, publishers enjoyed double-digit CPMs and advertisers enjoyed unique access to a valuable audience of online “early adopters.” Prognosticators heralded a new golden era of publishing, and predicted the eventual death of print. Fifteen years later, print is barely breathing, but publishers are still awaiting a “golden era” where the promise of online media matches its potential. What happened on the long road of publisher monetization, and how did we arrive in this new “programmatic” era?

It didn’t take long after HotWired sold the first banner ad to AT&T for other online properties to start making banner ads part of every page they put onto the Web. Not immune to Adam Smith’s economic theory, banner CPMs lowered as impression availability rose. Suddenly, publishers were in the single digits for their “ROS” inventory, and had plenty of impressions left over every month. Smart technology companies like Tacoda saw an opportunity to aggregate this unsold inventory, and sell it based on behavioral and contextual signals they could collect. Thus, the Network Era was born. Because networks understood publishers’ audiences better than the publishers did, they were able to sell ads at a $5 CPM and keep $4 of it. That was a great business for a very long time, but is now coming to an end.

While not creating tremendous value for publishers, the Network Era did manage to pave the way for real time bidding, and the start of the Programmatic Era. Hundreds of millions of cookies, combined with a wealth of third-party data on individuals, presented a truly unique opportunity to separate audiences from the sites the visited, and enable marketers to buy one impression at a time. This was great for companies like Right Media, who aggregated these cookies into giant exchanges. For advertisers, being able to find the “auto intender” in the 5 trillion-impression haystack of the Web meant new performance and efficiency. For publishers, this was another way to further segregate audience from the valuable content they created. The DSP Era ensured that only the inventory that was hardest to monetize found its way into popular exchanges. Publishers ran up to a dozen tags at a time, and let SSPs decide which bids to accept. Average CPMs plunged.

Over the last several years, it seems like publishers — at least those with enough truly premium inventory — are fighting back. Sellers have brought programmatic efficiencies in two ways: implementing DMP technology to manage their real programmatic (RTB) channel; and leveraging programmatic direct (sometimes call “programmatic premium”) technologies to bring efficiencies to the way they hand-sell their guaranteed inventory. Let’s look at both:

  • Programmatic/RTB: Leveraging today’s DMP technology means not having to rely on third-parties to identify and segment audiences. Publishers have been trying to take more control of their audiences from day one. The smartest networks (Turn, Lotame) saw this happening years ago and opened up their capabilities to publishers, giving them the power and control to sell their own audiences. With the ability to segment and expand audiences, along with new analytics capabilities, publishers were able to capture back the lion’s share of revenue, previously lost to Kawaja-map companies via disintermediation.
  • Programmatic Direct: Although 80% of the conversation in publisher monetization has revolved around the type of data-driven audience buying furnished by LUMAscape companies, 80% of the display advertising spending has been happening in a very non-real-time way. Despite building enough tech to RTB-enable the globe, most publishers are selling their premium inventory one RFP at a time, and doing it with Microsoft Excel spreadsheets, PowerPoints, PDFs, and even fax machines. RTB companies are trying to pivot their technology to help publishers bring efficiency to selling premium inventory through private exchanges. Other supply-side companies (like iSocket, ShinyAds, and AdSlot) are giving publishers the tools to sell their premium ads (at premium prices) without bidding—and without an insertion order. On the demand side, companies like Centro, Facilitate, MediaOcean, and NextMark (disclosure: I work there) are trying to build systems that make planning and buying more systematic, and less manual.

As programmatic technology gains broader acceptance among publishers, they will find that they have turned the monetization wheel 180 degrees back in their favor. DMP technology will enable them to segment their audiences for targeting and lookalike modeling on their own sites, as well as manage audience extension programs for their clients via exchanges. They will, in effect, crate a balanced RTB playing field where DSPs and agency trading desks have a lot less pricing control. Programmatic Direct (or, more correctly, “systematic reserved”) technologies will help them expose their premium inventory to selected demand side customers at pre-negotiated prices, and execute deals at scale.

The Programmatic Era for publishers is about bringing power and control back into the hands of inventory owners, where it has always belonged. This will be good for publishers, who will do less to devalue their inventory, as well as advertisers, who will be able to access both channels of publisher inventory with greater efficiency and pricing transparency.

This article originally appeared on 3/14/13 in AdExchanger.

If it’s Not Programmatic Premium, Then what is it?

CountryAndWesternI recently returned from an exciting IAB Annual Leadership Meeting in Phoenix, where a packed Arizona Biltmore resort was host to over 800 digital media luminaries. On the tip of many tongues over a two day session was “programmatic premium,” the term our industry is using to describe the buying of digital media in a more automated way.

One particular “Town Hall” type meeting was particularly spirited, as leaders sparred over what “programmatic” meant, whether or not publishers should be using it, and how agencies were leveraging it. Here is what I heard:

We are calling it the wrong thing. Like it or not, the term “programmatic” is tied to the concept of real time bidding. This is natural, given the fact that the last 5 years in ad tech have largely revolved around DSPs, SSPs, and cookie-level data. This creates a problem because, when you add the word “premium” into the mix, you have a really big disconnect. Most folks don’t really consider the large majority of exchange inventory “premium.” Doug Weaver said we should just call it “process reform,” since we are really talking about removing the friction from an old school sales process that still involves the fax machine. Maybe the term should be “systematic reserved” for deals that happen when guaranteed buying platforms (like NextMark, Centro, and MediaOcean) plug into sell-side systems (like iSocket, AdSlot, and ShinyAds) to enable a frictionless, tagless, IO-less buy. It is early days, but I suspect this may be what people are talking about when they utter the term “programmatic premium.”

Private Exchanges Seem like a Fad. For programmatic premium to take off inside of RTB systems, something like having “Deal ID” and “private exchanges” need to be implemented at scale. Yet, for all of the conversation around programmatic premium, I heard very little about private exchanges, Deal ID, and the like. I really think this is because of publishers enjoy having RTB as a channel for selling lower classes of inventory. They are getting better average CPMs from SSPs than they were getting in the network era, and they can experiment with who gets to look at their various inventory and play with floor pricing—a much higher level of power and control then they recently enjoyed. But do they want to sell the good stuff like this? The answer is no. They do, however, want to find ways to get out of the RFP mill that makes the transactional RFP business they manage so cumbersome and people-heavy. Again, that seems to be in the domain of workflow management tools, rather than existing supply-side platforms. If any of the many publishers at the conference were leveraging private exchanges to sell double-digit CPM inventory to a select group of customers via RTB, we didn’t hear a lot about it.

Agencies Love Programmatic. We heard programmatic perspectives from many major agencies throughout the conference, mostly in bite-sized chunks in networking sessions. When asked whether large agencies had less of an incentive to create efficiency in media planning and buying (since they get paid on a cost-plus basis), some agency practitioners admitted this was true but offered that “times were changing quickly.” Clients, having access to many highly efficient self-service buying platforms for search and display (and some, like Kellogg Company, having their own trading desks) there is a lot less tolerance for large billable hours related to media planning. It makes sense; the easier it is to plan a campaign, the cheaper it should be. Marketers would like a bigger chunk of their money going to the media itself. That said, we also heard that agencies are being pushed hard on meeting KPIs—and that even goes for brand marketers. Meeting those KPIs is easier to manage in a programmatic world, and that means pressure to buy through DSPs, rather than emphasizing guaranteed buys. That means lower prices for publishers, and probably necessitates plugging higher and higher tiers of inventory into RTB systems.

We Got Both Kinds

Like the honkytonk saloon in the Blues Brothers that offers “both kinds of music—country and western,” we have to accept two types of “programmatic premium” right now. The first is the notion of buying real premium inventory inside of today’s RTB systems through private exchanges. The second is the notion of buying reserved inventory in a more systematic way. Both approaches are valid ways in which to create more efficiency, transparency, and pricing control in a market that needs it. We just have to figure out what it’s eventually going to be called.

[This article originally appeared in ClickZ on 3/6/2013]

Pubs that Want Reach Extension Need to Own the Programmatic Channel

CaptureShould publishers go beyond the boundaries of their own inventory to sell “reach extension” packages to their clients? Publishers have long struggled with the problem of how to deliver a $100,000 campaign when they only have $90,000 of inventory. Without a strong partner network, the natural answer to that question used to be click arbitrage, an expensive and risky method of campaign fulfillment that often came with less than desirable site visitors.

These days there are several major factors that make reach extension a great opportunity for publishers, rather than a sales mechanism that strays outside their sore realm of expertise.

Publishers with premium inventory sell in three principle ways: Their best inventory is sold in large, customized “tent pole” sales; their standardized premium IAB units are sold through the transactional RFP process; and the rest is sold programmatically, through their remnant daisy chain. They do the first thing really well, especially for big branded advertisers, where they act like a mini creative/media agency to build custom programs. Publishers are also getting much better at the transactional business by leveraging great tools to bring efficiency to RFP response and enabling better demand-side access to their premium inventory (AdSlot, iSocket). The third thing (“remnant”) is the ball publishers continue to fumble, even though enabling an “owned” programmatic channel is getting easier for publishers every day.

Data management is the obvious solution. With the right tools, publishers no longer have to rely on third parties to understand the composition of their audience. The combination of a publisher’s CRM data and site tag data, ingested into one of a dozen amazing DMPs can enable them to segment and target their audience on the fly. Want “auto enthusiasts” on my site? Not only can I sell you a highly creative, customized program and back it up with a large share-of-voice in standard IAB banners within the site section—but now I can find your own customers right on my site…and on Facebook as well.

The last part of that equation (leveraging the client’s first-party CRM data) is where today’s reach extension differs from sending your excess buy to ContextWeb or AudienceScience, as you would in the old days. Now, publishers can find advertisers’ customers within their own site or publisher network and retarget them.  Better yet, pubs can help advertisers put that same first-party data to work on exchanges, including FBX, where match rates (and performance) are high. Really advanced publishers will leverage their DMP to model the audience advertisers are trying to reach, and build a custom lookalike model which can find “alike” audiences within the publisher network itself, or across the exchanges.

Publishers are acting more and more like agencies when it comes to the big premium sales that take multidisciplinary talent to pull off (sales, media, creative, development). Why shouldn’t they act like an agency (or, more specifically, an agency trading desk) when it comes to helping their clients with reach extension goals? If I am a publisher, and my client comes to me looking for the audience I specialize in, I should be able to tell the advertiser how to reach that audience—starting on my own site, but also across the Web in general. The right data management strategy and tools enable publishers to cover all three legs of the buy: sponsorship, transactional, and programmatic.

[This appeared as part of AdMonsters invaluable Audience Extension Playbook, available here.]

How you Pay your Agency Matters

Paintbrush digging up a one hundred dollar billI have been working for a company that makes software solutions for buying digital media, and I have worked for a number of ad technology companies in the past. In a world where digital banner ads are still purchased through e-mail and fax, and media plans are mostly created using Microsoft Excel—technology dating from 1985—the ad technology industry sees an opportunity to create efficiencies in the way media is bought and sold. As an industry, one of the odd dynamics we have encountered in bringing our product to market is how independent agencies are more apt to embrace new efficiencies than the “big four” owned agencies who lead the space in terms of media spend.

Logically, you would think that gigantic media agencies, managing hundreds of media planners and buying on thousands on digital media channels, would grasp at the chance to do more planning with fewer personnel, migrating towards web-based tools that offer efficiency and centralization. The evidence has shown otherwise. On the surface, it may seem as though the biggest difference between independent agencies and the majors is size. The majors have Ford, and the independents have the Ford dealers. They both work very hard to identify digital audiences, perform against marketers’ aggressive KPI goals, while trying to understand how they got there through detailed analytics. At the core, the difference between what media teams within holding company shops and a smaller agency does is minimal. So what accounts for the reluctance of bigger shops to innovate with technology tools?

One reason may be the way they get paid.

The biggest shops consistently rely upon cost-plus pricing, which pays them based on hours worked, plus an additional, negotiated margin. The typical $500,000 digital media plan takes an alarming 42 steps and nearly 500 man hours to complete, which can cost up to $50,000—and that doesn’t even include developing the creative. If you are paying your agency on a cost-plus basis, your agency doesn’t have a lot of incentive to create your plan faster, or with less labor. In fact, this type of pricing scheme creates an incentive for inefficiency, or what economists call a “perverse incentive.” Unfortunately, every cent you pay towards the labor of creating a media plan subtracts from the amount that can be dedicated to the media itself.

So, what to do? The most obvious choice for those working with a large agency under such a scheme is to try and change the payment terms. Pay-for-performance is optimal, but a careful analysis may show that paying on a percentage-of-spend model yields more reach, when you are not paying for the labor of building a media plan. Some marketers are choosing instead to build small, efficient in-house teams to leverage the demand side technologies that their agency won’t to discover and buy digital media. Other marketers choose to work with multiple smaller, independent agencies that have specific expertise in different digital verticals. Those shops usually offer flexible fee structures, and you are far more likely to work with the team that pitched you after you hire them.

As they say in finance, “it isn’t what you make, it’s what you keep.” In digital media, moving away from cost-plus pricing relationships and towards new technologies for media buying means keeping more of your money for reach, and spending less on labor that doesn’t help you move the sales needle.

[Thi spost originally on 3/5/12 in The CMO Site, a United Business Media publication]