Punching the Monkey

BannerAdI recently tried to explain what I do for a living to my 14-year-old son. I found myself telling him about ad tech.

“Basically, we make technology that helps marketers buy different kinds of banner ads,” I told him.

“You mean the kind of annoying pop-up ads that everyone hates?” he asked.

His look of profound disappointment said it all. I explained that the kind of work we do wasn’t just about populating the Internet with the “Lose five pounds with one stupid trick” type of banner. But even though we are getting a lot right, my explanations eventually started sounding pretty weak.

I have been working in this business since 1995. Aside from doing some ad implementation testing, I have probably clicked on about a dozen banner ads in as many years. Today’s robust, real-time ad tech “stack” has been purpose-built to optimize the delivery of the kind of banner ads most people already hate: standardized IAB units, retargeted ads, auto-play video pre-roll units and even the dreaded pop-up and pop-under.

Publishers without robust direct sales options depend on networks and exchanges to monetize the endless streams of traffic they create, and they happily collect their $1.10 eCPM (cost per mille) payments. Advertisers looking for cheap reach and performance plumb the depths of such inventory to find the rare conversion, and hope they are getting what they pay for rather than a shady “last view” attributed banner.

Today, the highest and best use of the standardized banner has enabled marketers to leverage their first-party data to bombard site visitors with retargeted ads – an effective tactic, since they are essentially paying to accelerate a conversion that has a great chance of happening on its own.

As an industry, it seems pretty clear that we will look back on this era in digital ad technology and see how primitive it was. Have we built a trillion-dollar real-time ad serving machine for punch-the-monkey ads, or have we really innovated and created disruption?

RTB Is Dead, Long Live RTB

The recent acquisition of [X+1] by Rocket Fuel is a great sign for our industry. It basically validates the idea that, for programmatic RTB to be effective, real data science must inform targeting. [X+1] is one of the best at cross-channel targeting, and they have already started to figure out the cross-channel attribution puzzle. An everlasting always-on stream of RTB banners for branding and retargeting might prove to be a hugely important part of unlocking a broader multi-channel strategy – if the data can dictate it. If data management platform technology can be leveraged to truly optimize addressable marketing, then RTB will survive and thrive. With consumers always on the move, and every form of media starting to be addressable, real-time programmatic will be something marketers have permanently switched on, and we’ll see the true value of the pipes we have created.

Programmatic Direct

How about inventory that is relatively standard, but a bit nicer than that found within the exchange environment? Transacting on this tier of inventory works quite nicely with all kinds of one-to-one connections within RTB, and buyers and sellers are quickly leveraging the pipes to make private marketplace deals.

If I am a quality financial publisher, why wouldn’t I sell within RTB for $8 CPMs, rather than pay a $200,000 salesperson to sell at $12 CPMs? The math just makes sense. Delivering higher tiers of inventory at scale to private buyers is a great use of RTB, but not a panacea for overall inefficiency in media procurement. But, we have seen those RTB pipes service entire new classes of inventory, and start to appeal to brand marketers.

Workflow Automation

The problem with getting really good inventory has always been the difficulty understanding rates and availability. That’s why the RFP exists today, and isn’t going away anytime soon. Publishers will always want full control over the really good stuff. Because they know their inventory better than any algorithm, there will always be a need for human control and creativity. Big, custom sponsorships and custom-curated native executions will only increase over time, as more television and print budgets shift into addressable digital. You just can’t automate those deals. Marketers and agencies will demand programmatic efficiency to compress an expensive, 42-step process for securing guaranteed inventory. This is one area that programmatic RTB has not been built to handle (these deals are neither “real time” nor “bidded”), but we are seeing real innovation from a number of companies trying to bring programmatic efficiency to guaranteed deals.

It’s hard to explain everything that we are getting right to a 14-year-old who spends more time on mobile apps than in an Internet browser. His assessment, in surfing the desktop Internet, is probably right – it looks like a lot of weight loss ads and sneaker retargeting. But, it’s still early days nearly 20 years after the first banner ad was served.

Interview: On Writing “The New Mobile Display Ecosystem”

MobileDisplayThe New Mobile Display Ecosystem, an Econsultancy report published in association with OpenX, surveyed over 20 leaders in mobile marketing, publishing, and technology to find out the latest trends in mobile advertising, and what the future might hold. Chris O’Hara, the report’s author, answers some of our questions about the research.

So, is 2014 finally the “year of mobile?”

Well, this “year of mobile” has been coming for some time, but our survey panelists are starting to feel that mobile has finally emerged as a player on the overall advertising scene. There are still huge discrepancies between time spent on mobile devices (a lot) and ad spending in the sector (relatively small). According to some research, people spend more than 20% of their time on mobile devices, but ad spending is at 4%. That’s a multiple-billion dollar opportunity.

What is keeping mobile ad spend from growing?

Our research showed that a large issue for advertisers was mobile creative—specifically, the lack thereof. The units are mostly small and prone to “fat thumb” clicks in browsers, and most of the in-app ads were fairly plain “install ads.” Not great for brand building or telling a story. Also, it is still somewhat difficult to get to scale without a “mobile cookie,” or persistent ID. That’s changing now, but without having statistical identification available at scale across many systems, only the large players like Google and Apple can effectively identify users across devices. That’s a challenge.

Who is most impacted by the growth in smartphones in the ad ecosystem?

For me, the retailers and product folks have it the worst. Soon enough, smartphones will reach 50% penetration. That means every other person will have the combined knowledge of the entire world right at their fingertips. What that means for retailers is what Google is starting to call the “Zero Moment of Truth,” an adaptation of an old P&G saying. What it means is that, when a consumer is standing in front of a product with their smartphone, they can find out every single thing—good and bad—about a product that’s ever been written with the click of a button. And, of course, the right price to pay. That’s an incredible dynamic.

What’s the most shocking thing you learned while researching the report?

44% of Fortune 100 companies don’t have a mobile-enabled website. That’s pretty scary, considering the “Zero Moment” dynamic, but it’s also a huge opportunity.

You asked panelists what “Mobile First” really means. What did they say?

Everyone agreed that both marketers and publishers have to start with mobile, because that is where people are spending their time. You can’t ignore mobile, or just make an HTML5 site and call it a day. If you are building a new website, launching a new product, you must do that with a “mobile first” approach, and try to leverage the unique touchpoints the channel offers to consumers. That’s the obvious part. I was pretty surprised to see how passionate people were about the idea of “mobile first.” Many think mobile is the biggest single opportunity out there for business. Suffice it to say, it is ignored at your peril.

What about the creative problem? How are marketers taking advantage of the unique data and form factors at play in mobile?

Native is certainly a big focus. The IAB has identified about 6 different categories of native advertising, many of which apply to mobile devices. OpenX has recently launched a new mobile exchange for accessing native mobile units programmatically. Native units tend to leverage more of the mobile form factor, which is great. Marketers are still struggling to take advantage of all the great data that can be used (altitude, motion, facial recognition, biological data, activity, etc), but some really cool executions are starting to be deployed. We are essentially ready for our Tom Cruise “Minority Report” moment from 2002, with ads that can follow us around and talk to us personally based on our situation.

What are the biggest threats?

Although everyone I talked to loves their “triple play” deal, and Apple or Android phone, nobody wants telecoms or big technology companies to be the only ones with cross-device targeting capability. All thr panelists were interested in a more diverse ecosystem, more akin to display advertising, where the “cookie” (albeit controversial) has enabled real audience targeting at scale. Marketers need to tell a sequential story, as the consumer moves from device to device. That’s only possible when you can link users to all of their devices, and that’s hard to do now unless you are Verizon.

Any final thoughts?

I think video is the way we are going to see mobile eat into established marketing budgets. The ads play amazingly well on new larger-screen phones and HD tablets. There are great creatives already established (the 10, 55, and 30 second spot ad), and you can actually tell stories with video, which is what marketers want to do. Videos are also the ultimate “native” ad. Video is where the action is right now, but other native formats suited to mobile form factors will follow.

This originally appeared on the Econsultancy blog on 8/5/14]