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]


Digiday:Daily Interview (Repost)

The right exit?

During the past year, the number of tech companies has exploded. There are some 245 logos on the (in)famous Luma Partners slide. Some of those have been acquired, but many have not and, in the eyes of several observers, are more features of products than standalone companies. In an economic downturn, with its focus on wringing efficiency, how many will be able to argue for a small slice of ad buys?

“People are all talking about the Luma slide,” said Tom Deierlein, managing director of Tagman, an ad technologies firm. “And they all want to pat themselves on the back and say, ‘Yeah, we made the Luma slide!’ If you go back to the original presentation of the slide, the point is that the industry is too cluttered. Too many people have their hands out, and there are not enough dollars to support all of the companies, and all of the tollbooths being put up. There is not enough money to support the ad ecosystem.”

Deierlein’s sentiments are echoed by analysts within and outside of the ad technology industry. The ad technology herd will “absolutely” be thinned, according to Erin Hunter, evp of media at Comscore. The proliferation of ad technology companies, some offering little or no transparency on their operations, won’t continue in an economy where brands want results, not simply assurances, according to Hunter.

“Brands want to know that there is a human on the other side of that impression,” said Hunter. She believes that advertisers will soon start to demand a system of “checks and balances” that will make ad technologies back up their product stack with verifiable results. Those firms not able to illustrate their value with transparency will eventually implode. At the end of the day, with the dizzying array of ad technologies, from DSPs to DMPs to SSPs to AMPs, there is still the question of what value each player is bringing to the table.

“When everyone has access to the same tools, there tends to be little differentiation and, consequently, value in an industry,” said Chris O’Hara, svp of marketing for Traffiq, an ad technologies firm. “Ad tech provides a highly robust example of this. Take DSPs and agency trading desks, for example. Everyone buys the same exact inventory from Google, Right Media, Microsoft, OpenX, PubMatic, Admeld and Rubicon, for example, and uses data that spring from the same sources such as IXI, Experian, Acxiom, etc. It’s extremely simple to get access to technology that enables you to leverage those things. So, what makes the companies that do real-time bidding valuable? They don’t own the inventory or the data. Many of them use the same machine-learning algorithms licensed by IPonWeb to drive optimization, and most deploy a roomful of smart account managers to help their clients manage and optimize their campaigns. As an investor, what value do you ascribe to those companies?”

And then there’s the simple fact of M&A: that there aren’t enough chairs to go around. There’s clearly the need for consolidation — Google’s vp of display advertising Neal Mohan regularly stresses this — but it’s hard to find a home for all those logos on the Luma chart.“Is there an explosion in the number of ad tech companies? Yes. Is that going to continue? No,” said venture capitalist Mark Suster in a recent Digiday interview. “In a bull market the number of startups in a category multiplies by as much as ten, and then when the markets collapse then they consolidate or shut down, and that is normal.”

The problem isn’t simply a general me-too mentality among startups, according to Deierlein. It’s that many companies bring nothing new to the table, often because they aren’t expected to. Companies are forgetting the history of the technology markets, Deierlein believes, and so many companies are simply plunging headlong into a complicated market without assessing whether or not their business model is an improvement on what is commonly offered in the “already cluttered ecosystem.”

“The clutter has come from the amount of money to be made in the ad technologies industry,” said Josh Kraft, marketing director for data analytics firm InfiniteGraph. “Eventually we will see companies being pruned, in a sense. Companies will have to back up their claims with actual client references. It requires a significant capabilities with data to compete, survive and thrive now.”

[This post appeared in DigiDay:Daily on 8/16/2011]

TRAFFIQ Talks Private Marketplaces and Other Platform Enhancements

ADOTAS – Demand-side digital media management platform TRAFFIQ expands its offerings so much that it’s hard to keep up. Fortunately, we were able to hit Senior Vice President of Sales and Marketing  (and regular Adotas contributor) Chris O’Hara with questions regarding the platform’s latest upgrades (including customized and private publisher portfolios and enhanced financial management tools) as well as the many partnerships the company has formed since the beginning of the year.

ADOTAS: Terence Kawaja’s infamous display ecosystem landscape places TRAFFIQ in “media management systems” with companies like Centro — closer to the supply side than DSPs. Do you think this is a fair placement and why?

 

O’HARA: I don’t think we should put too much emphasis on placement in the landscape chart. Many companies belong in one or more buckets—and some of the logos should appear much larger than others, based on overall impact within the landscape itself. TRAFFIQ, for example, could appear in many of the categories (DSP and Ad Serving being two of them), but I believe there is a revenue threshold to be met before LUMA will place you in multiple buckets.

That being said, I think TRAFFIQ is in the right category. Eventually, the notion is that TRAFFIQ would appear as an overlay to multiple sections of the map, providing dashboard level access to an advertiser’s entire vendor toolset.

How does a media management system differ from a DSP? Confused agency people want to know.

Mostly, it’s nomenclature. I think the term “demand-side platform” is a great term for a technology tool that helps advertisers manage their media. The reality is that now “DSP” means “technology tool for real time managing exchange buying.” Agencies have every right to be confused, as companies within the landscape are changing from network to “platform” and from data provider to “DMP.”

The difference is simply that a “management system” should provide tools that cover inventory discovery, vendor negotiation, offer management, contracts, ad serving, analytics, and billing; DSPs handle a sliver of the overall media buy. For example, TRAFFIQ customers will be able to manage several DSPs within our platform at once.

It seems like the new Private Marketplaces tool allows advertisers to customize publisher and exchange lists — fair assessment, or is there more, so much more?

Right now, TRAFFIQ private marketplaces enables advertisers to buy outside of our curated list of 3,000 guaranteed inventory sources, which is especially important in terms of giving agencies the control they need over media. Publishers increasingly want the convenience and efficiency of exchange buying…without exposing their quality inventory to the world.

Demand side customers like the reach and price efficiency they can achieve with exchange-buying—but still struggle with brand safety and transparency. Our next-generation system will offer both sides a lot more control over who they work with, and that is sorely needed in our business right now.

Can this tool also offer hookups into the increasingly popular private exchanges, such as The Weather Channel’s Category 5 and Quadrant One?

Yes, as long as the demand-side partner has a business relationship in place with the inventory supplier, TRAFFIQ will be able to enable the connection.

Why are agencies going gaga over your new finance management tools?

If agency CFOs could actually go “gaga,” they may be doing so over our new tool for the simple reason that most digital platforms don’t take the vagaries of agency pricing into account. At TRAFFIQ, we have to manage several different pricing scenarios at once.

What is the agency’s margin, and how do they want that margin reflected in the pricing (baked into the media cost, or shown transparently)? How about data and technology fees? Those can be added to the gross media cost, or shown separately as well. Also, handling net and gross costs with publishers has always been challenging.

Smart systems should recognize these fundamental business needs, and expose the correct pricing to everyone within the system, eliminating confusion and duplicative work.

Can you explain how the multiple user permissions work? Why is this important for your agency clients and how can they best be deployed?

For the demand side, multiple user permissions means giving access to a subset of clients for an individual account team. On the supply side, it means having the ability to put the right publisher rep with the right demand side customer.

For example, an individual agency account team may buy from Fred at ESPN for one client, and Joe at ESPN for another. It is also necessary for agencies to be able to manage which of their end-clients gets to view certain reports. Multiple user permissions adds the layer of flexibility that enables TRAFFIQ users to expose the right data to the right set of customers.

What kind of agencies are you working with these days and what kind do you hope to add to your client base? Are you working with brands directly as well?

For the past several years, our focus has been getting total product adoption from the small to mid-sized agency market. Some are the types of shops that have a thriving traditional media practice, but not necessarily the right tools to tackle digital media. Still others are strong in digital, but are struggling with multiple tools, and having a hard time putting all of the pieces together efficiently.

We partnered with some of the great agency groups like TAAN, Magnet Global, AMIN and Worldwide Partners to reach these shops, and have been quite successful. We have also done some work with the holding companies, but mostly on a campaign-by-campaign basis, rather than getting the large shops to adopt our solution fully.

The product features we are working on now will actually enable big agencies to adopt TRAFFIQ by enabling API connections to their existing systems (ad serving, billing, etc). You can’t walk into an agency and ask them to drop all of their vendor relationships at once… You have to be able to work seamlessly with what they have.

What sets apart your attribution services from your media management peers as well as other attribution providers? What kind of extra insight do you provide?

Right now, a lot of our customers are working with our embedded Aperture audience measurement reports. Unlike other platforms, we make it fairly easy to take those demographic campaign  learnings and take action against them. So, it’s not just click- or view-based data; it’s using third-party data to understand who is seeing your campaign, clicking on it, and ultimately converting against it.

We are the only platform that can help marketers react to that data through guaranteed buying—and RTB. In the near future, we will be able to show how our efforts in initial media budget allocation and optimization are driving performance. We also see a great opportunity to get some key attribution metrics out of search and display, once out customers are doing both types of media in the platform at scale.

How does TRAFFIQ integrate first-party and third-party data into audience buying efforts?

Right now we have over 15 data segmentation partners. Some of them work directly with our Trading Desk (we apply those segments to exchange buys), and some of our partners provide both targeting and media execution. We see our role as a platform as provisioning our advertising clients with the right best-of-breed partners, no matter what the targeting need.

That means Proximic and Peer39 for semantic; AlmondNet (now Datonic) for search keyword retargeting; Media6Degrees and 33Across for social targeting; Nielsen, Lotame and eXelate for demo targeting, etc. We also have the ability to match any first-party data with available audience within our real-time bidding system, and find that audience as well.

Do you foresee more mobile partnerships in TRAFFIQ’s future or is Phulant your one and only?

TRAFFIQ is an open platform, and that means we must be willing to integrate partners based on our clients’ needs. We see Phluant as a key TRAFFIQ partner for mobile ad serving, and have plans to work closely with them to define and grow our mobile capabilities. We want to see more standardization around mobile workflow, and that means making it easier for marketers to allocate budgets across different media types (social, search, mobile, video, and display) in one system.

Phluant has developed amazing technology to help marketers take rich media for display  and bring it to mobile devices. That’s a great starting point… and something that can be leveraged across multiple mobile inventory vendors.

Regarding your partnership with Bizo, what kind of opportunities lie in the realm of targeted B2B display?

Bizo is doing an amazing job of bringing the power of B2B to display advertising. Until recently, B2B marketers stayed away from display advertising (or struggled to get online reach with smaller, niche business publishers). Now, they can take the success that they are used to having with targeted direct mail in B2B, and apply that in real time display.

We believe that there are some real opportunities to make both B2B and local display digital advertising more manageable, scalable, and accountable.

Besides its “interesting” name, what about Oggifinogi (recently acquired by Collective Media) attracted TRAFFIQ to make it your video and rich media network partner?

Our customers use Pointroll, Mediamind, Spongecell, and all kinds of third-party rich media vendors, but we needed a reliable “go-to” partner that could help our registered demand-side client base tackle rich media and video more easily. We saw that “Oggi” had a strong commitment to both technology and customer service, and we felt that we could work with their team well. I think Collective media validated what a great partner choice we made there!

TRAFFIQ appears to have spread itself out pretty well across digital marketing channels, so what area is next on the agenda? Social?

The first big channel we are going to tackle after display is search. In a few months, TRAFFIQ will feature bid management tools for search engine marketing right in the platform—along with access to the Facebook self-service ad inventory. This means that, for the first time, guaranteed display, real-time display, search, and social can be managed within the same “media management system.”

It’s going to be exciting, but the real challenge will be making it seamless for marketers—and getting some great insights out of all the data that such an integrated platform will produce. That’s what we’ll be working on over the next several months.

[This interview appeared on 7/2711 in Adotas]

Epic FAIL

This is why agencies buy direct.

Much has been written about the notorious “logo vomit” map of famed internet banker Terence Kawaja. I reference his handy charts on my blog, and often his “Display LUMAscape” as a reference point for thinking about the digital display business, and what will happen to it. Many have tried to navigate through the various categories and dissect what may be “happening” in the space, which is a favorite pastime of company executives trying to raise money for many of the identified advertising technology outfits referenced within. Nobody ever really tries to explain the whole thing, though. It’s just too complicated, I guess. Allow me to try:

 “A few years ago, people started to figure out that you could use technology to target advertising to people on the Web. Ever since then, 250 companies have placed themselves in the middle of the transaction between the advertiser and the inventory, confusing everyone. Now, most of them are running out of money and will sell cheap, get acquired, or go out of business.”

Perhaps that oversimplifies things slightly, but the reality is that there are many companies in the space that are primed for one of those three scenarios. Unfortunately, most of them will sell for less than their investment, or go out of business. Here are the three big reasons we have gotten here:

It was a Bad Idea

The whole point of most of the companies on the Kawaja map is to help advertisers use data to find exactly the right audience at the right time, serve them the right ad, and maybe find something out about them that helps drive branding or sales. In the past, most advertisers used to do that contextually (putting ads for shoes in Vogue, for example) and it seemed to work pretty well. When that Internet thing came along, publishers could get something nearing their print CPMs for “site sponsorships” and premium banner advertising alongside good content. Sooner or later, however, publishers decided to put banners ads on all of their pages, creating the advertising largest inventory glut known to man. That created a big problem.

All of that banner space needed to be monetized somehow, and publishers were quickly discovering that it was hard to make money on the trillions of monthly advertising impressions they had created. But nobody wanted to buy $10 CPM banner ads on message board pages, and the “contact us” page. So, in order to “solve” this problem, exchanges popped up and allowed publishers to “monetize” this space by having various parties bid on the inventory. Things got even better when data companies came in, and were able to layer some demographic data atop those impressions, making audience buying possible for the first time. The venture money flowed, as smart young technologists created fast-moving software companies to help marketers exploit this trend as they sought a way to help reduce industry average CPMs from $20 to $2.

Mission accomplished! In the last 10 years, average CPMs have been drastically reduced, 100% of a publishers inventory is being “monetized” (often by 10 or more companies), and you can target an ad down to one’s shoe size.  So, what’s the problem? Hasn’t turning advertising from an art into a science worked?

The answer is: Yes, but not for all of the companies on that map. People visit three sites a day, and one of them is Facebook. If you want audience targeting, why not just find exactly what you want from a social network? They are the ones with the real audience data. They are also the ones with the audience scale, having about 5 times as many “profiles” as the next largest data company. The problem with all the companies trying to sell you audience targeting and ad technology is that it only works when you have audience scale (they don’t) and deep audience data (they don’t have that either).

Facebook, Google, and LinkedIn (and the next company that people are willing to share their private information with) are going to win the audience targeting game. When you are talking about audience buying at scale, social media IS digital media.

It’s Still about Art

If you believe that the average web user visits only two sites a day besides Facebook, then you better find them on those sites—and give them a really amazing experience with your banner ad. That thing should play video, games, talk to you, and almost pay you to look at it. Since only three out of every 10,000 people will click on it, you had better make sure the creative really tells a terrific story and gets your brand message across too.

That means standard sized banners that work with exchange-based buying are pretty much irrelevant, since they have a hard time doing any of the above. It also means that context has to accompany placement. It is not enough to reach a “35 year old woman in-market for shoes.” You have to reach her when she is on her favorite fashion site, or otherwise psychologically engaged in shoe consideration. The ad should be in a brand-safe environment that engenders trust—and compliments the creative in question. That sounds suspiciously like premium display advertising…the stuff that was being sold 10 years ago!

In a certain sense, we have almost come back full-circle to guaranteed, premium advertising. And that means an emphasis on the creative itself. If you look at the map, it’s clear that creative isn’t a part of the picture…but it might be the most important thing driving the future of the digital display advertising business.

It’s Confusing

Even if agencies and advertisers wanted to take advantage of a few of the of companies cluttering the “landscape,” they would need to log into and learn multiple systems. As a marketer looking to reach women, am I really going to log into Blue Kai and bid on demographic “stamps” from Nielsen, log into AppNexus and apply those to a real-time exchange buy, constantly log into my DART account to check ad pacing and performance, periodically log into my Aperture account to download audience data, and then log into my Advantage account every month to bill my clients? Maybe—but that’s exactly the reason why digital media agencies are making 3% margins lately. Most of these technologies are really great on their own, but string together too many of them and you start to get lost in the data, and are unable to react to it.

For digital marketing to be effective, a set of standards need to be created that enables systems to work together and share information. Basic B-school dogma teaches you that effectiveness starts to break down when a manager has more than 5 direct reports. If you believe that, then it’s not hard to imagine the effectiveness of a 22-year old media planner managing 5 logins on behalf of his agency.  It’s not just confusing, but impossible.

We have built an industry ripe for aggregation, and the Googles, Adobes, and IBMs of the world will not disappoint us! So, what companies will succeed in this ecosystem?

– Social Scalers: If you agree that all reach advertising targeting audiences will eventually be on social networks, then you should look to work with companies that are making social advertising scale effectively. Doing Facebook advertising is incredibly easy—but doing it right is hard. Doing it properly requires extreme multivariate creative optimization and, more importantly, knowing what to do with the mounds of truly actionable audience data that Facebook and other social networks will hand you. Companies like XA.net that are doing this are EPIC WIN.

 – Creative enablers: Since the conversation is coming back to the creative, how can technology help make great creative even better—and help advertisers understand how that creative is being engaged with?  The click is a dead metric to most seasoned advertisers, who are spending more time with branding measurement tools (Vizu) and creative ad analytics startups (Moat) that are well positioned to “science-ify” the truly important part of advertising: the creative itself. Companies doing that well are also going to be EPIC WIN.

 – Standard Bearers: With all of the logins out there, it is inevitable that one company is going to try and create the technology stack for next generation media buying that puts all the pieces together seamlessly. There are a number of companies trying to do this right now (full disclosure: I work for one of them), and I believe there will be a lot of advertisers and agencies relieved to log into a single platform, and be able to access all of their vendor relationships in one dashboard.  This will take some time, but the companies that enable standardization across technology providers will also WIN big.

[This post originally appeared 7/20/11 on eConsultancy blog]

Death of the Digital Media Agency?

Here are the three major trends making media agencies less relevant every day.

On the surface, it would seem that running a modern digital media agency would be fun. Being on the cutting edge of media and technology, being in the “social media conversation,” helping clients understand and deploy groundbreaking new technologies…that is the stuff that has turned scores of English majors into media professionals. Unfortunately, the reality of digital media is somewhat more mundane. At the end of the (long, thankless) day, the digital agency is more valued for reconciling ad serving numbers, collating performance reports, and swapping ad tags than delivering groundbreaking new marketing ideas. The true standalone independent digital agencies (MediaSmith and MediaTwo being great examples) happen to manage both, for most traditional agencies that have added a digital practice struggle to make the technology—and, more importantly, margins—work.

If it wasn’t enough having to make a living on the slim margins digital media offers, the industry’s tendency to constantly and rapidly shift means there are major, fundamental challenges that require the digital operator to adjust their approach to the market. Here are the three latest ones, and how they are impacting digital media shops:

Platform Technology

For digital marketers, it’s all about the tools. Ad campaigns need to be researched, negotiated, served, tracked, analyzed, optimized, billed and reconciled. Just five years ago, each of those tasks would require a separate, and often expensive, software tool. There were relatively few agencies willing to build and maintain the expertise to deliver digital media effectively, and fewer that had the scale to do it at a profit. Companies like Operative were born out of the complicated nature of tools like DFA and Atlas, which were so frustrating to use that agencies were willing to pay others to manage it for them.

The sea change in the industry has been about SaaS model “platform” technology that is giving anyone willing to login the tools to effectively manage many different aspects of digital media, from guaranteed display advertising, to real-time bidded display, to search and even social. This not only levels the playing field for smaller agencies, who now have nearly the same level of access as more deeply pocketed rivals, but once obscure DSP type technology is blowing the lid of the supply side’s hold on inventory, giving the local corner agency the ability to arbitrage media like a pro. Not only that, but many of the platform technologies available are venture funded startups out for any revenue they can get, and more than eager to sacrifice some margin to win sales by offering service behind the product. Most trading desks are pushing the buttons for agencies, and many platform technologies do the same. Ask yourself if your technology partner is looking to help you—or eventually displace you completely.

The challenge for digital media practices these days is not how many digital tools they have access to, but how they are utilizing them to extract the best advertising performance, whether it is for branding or performance or even the nauseatingly titled, “branded response.”   There are only so many tools an agency can realistically use, and fewer that they can use effectively. Getting the mix correct, and choosing your partners wisely is the difference between being a digital media tools provider, and your client’s digital media expert.

Shift back to Premium

Back at the Digital Publishing Summit, I heard Greg Rogers of Pictela say this: “Nielsen says people visit 2.9 sites a day, and one of them is Facebook.” I don’t care how many industry conferences you go to this year; you will not hear anything more significant than that statement. Why does it matter? It matters because everything this industry is trying to do with audience targeting depends entirely on reaching consumers across a wide variety of sites. The Holy Grail of advertising we have been chasing (well, venture capital has been chasing) is based on the notion that you can find me with a targeted ad, wherever I am on the web, and not have to pay some huge publisher gatekeeper a premium to get to me. If those people are all on Facebook, that’s kind of a big problem.

It also means that all of the standardization we have done with ad units and ad operations procedures that have been designed to make deploying 3 ad sizes all over the web was a terrible mistake. If a consumer is visiting 2 sites a day that aren’t Facebook, and nobody is clicking on an ad (well, 0.03% of people are clicking on an ad, but it turns out they have no money anyway), then what? It means that marketers have to engage consumers with ads that do things on the page, such as expand, or play video, or tell a story. The exact types of things you cannot do with a standard 300×250, 728×90, and 160×600 commoditized ad unit.

Sorry, but we made a big mistake. Flooding the web with cheap banner ads doesn’t work for performance (unless the media cost is so low that ROI is almost  guaranteed), and it doesn’t work for branding either, thanks to “banner blindness” and a the general reluctance of consumers to drop everything they are doing online, only to be transported to someone’s really big ad (their website). Coincidentally, nobody really wants to “like” your client’s brand, or be their “friend” either. That’s the modern version of the .03% click rate: the sub segment of consumers that will “like” a washing machine company are the same people that have been punching the monkey for the last ten years.

The future of digital display advertising is about using highly premium ad units to engage consumers on the page, and provide them with a rich branded experience. That is why concepts like Project Devil are coming back to the forefront. Your agency has to be an expert at understanding how to deliver customized ad experiences at scale, but also leverage the existing, commoditized tools for display to achieve reach. That means that creative agencies, who increasingly have access to platform technology advertising tools, can put themselves in the driver’s seat by making  the creative—and deploying it too.

Social Media

Now every Tom, Dick, and Harry has access to platform technology, and creative is once again coming back into the forefront. What’s the next challenge for the digital media agency? The coming threat from social media.  If you thought the increasing dependence on social media for marketers would be a boon to the digital media agency, you may want to think again. Much of the social media focus for big brands is within their PR firms, who are challenged to build and maintain a brand’s “social media presence” on Facebook, Twitter, and LinkedIn. I recently met with a few PR firms who were charged with attracting “friends,” getting tweets, and “likes.”

They are going to do that with media money—and some of them want to keep that money in house, rather than partnering with media agencies to do it for them. A few years ago, this would have been unthinkable, as the cost of hiring a media team would erode much of the margins. Now, with ubiquitous access to platform technology, PR agencies are looking at building small in-house media teams to leverage social budgets, and make deploying social marketing campaigns a core expertise.

The successful digital media agency’s greatest expertise has always been adaptability. The best ones are already building the tools and expertise to help marketers navigate through these times, and partnering with technology companies that can evolve alongside them.

[This post was originally published in eConsultancy on 7/12/11]

Beyond Bidding

Why Real Time Bidding is More Important than you Think

Last week, I wrote that companies that depend on what we think of as “RTB” are in danger of missing larger opportunities. I argued that RTB technology is important, but that advertisers still need inventory quality, contextual relevance, and scale—something that today’s real time platforms are struggling with. If the game is truly about utilizing data to target audiences, companies are also burdened by an uncertain legislative environment—and the fact that big players like Facebook have an impossible data advantage. My point was not to dismiss the technology itself, only that RTB is only a single piece of the larger digital media puzzle. Getting RTB right is also the key to success for many of the companies in the digital media ecosystem. Here are the trends to look for over the next 18 months:

Moving Upscale

Let’s face it: agencies want to buy what they want, when they want. It doesn’t matter how cheap the prices are. The problem isn’t that agencies don’t understand that some inventory is better delivered through RTB. The problem is that their clients want their ads seen in certain places, and they want to know exactly where those ads will appear, and when they will appear. Clients also tend to want their ads to appear on sites that they have heard of, not necessarily “OpenX  Longtail” or “PubMatic Default” no matter how great the performance is. Human nature is all about exerting control over those things we can control, and it’s no different with advertising. The desire for control in real time bidding leads naturally to demand side domain grouping, in which advertisers carve out limited tranches of pre-approved inventory into which to bid, and forego many of the pure remnant options.

Now that publishers have spent some time exposing their inventory to DSPs, they now have more experience working the systems, and a better sense of what floor prices to set for certain inventory types. I recently had lunch with a large vertical publisher who told me that he recently discovered that a small amount of his inventory was consistently being won at a $1,700 CPM (it appears as though some DSPs do not offer a pricing cap for automatic bids)! At one time, technology companies understood how to monetize inventory better than publishers, but that dynamic is rapidly evolving—and for the better. After a few years of premium and remnant monetization, most publishers have a sense for where their inventory sells and performs best, and they are quickly realizing the benefit of putting more premium inventory up for bid to a trusted pool of advertisers. Watch over the next several months as more publishers take the lessons of exchange-based inventory selling, and start turning $5.00 CPM inventory into $10.00 CPM inventory by leveraging RTB technology to create small, private exchanges for their best inventory.

Private Exchanges

Will building private exchanges be the way ad tech companies score big with their demand and supply side customers?

These private exchanges are more than just a way for publishers to create increased competition for their premium impressions for an installed demand base. Private exchanges are an important piece of the entire monetization puzzle for publishers. Salespeople are motivated by commission plans, not necessarily corporate strategy, and they are also expensive. Reducing the cost of sales—while insuring that every premium impression is monetized properly, and at full value—is top of mind for all publishers right now. They got beat on remnant inventory technology, and you better believe that they won’t get fooled twice with their premium supply. They are going to figure out a way to let technology help them control and monetize it, and they are going to keep the lion’s share of the revenue for themselves. Innovative companies like aiMatch are helping to revolutionize this effort.

Private exchanges are going to enable publishers to place their entire premium inventory into biddable buckets, and let their advertisers have “seats” that enable them to get access. Ultimately, certain publishers will have upfront markets, in which the most premium inventory is sold for holiday times—and an active “spot market” in which the remainder of their premium inventory is sold at prices that exceed variable floor prices. Publishers will employ trading desk operatives that control the inventory they place in all exchanges (remnant and private), and employ fewer salespeople to hold the biggest clients’ hands. RTB is simply not about making cheap inventory better anymore. It’s about creating new market dynamics that raise the cost of the valuable inventory—and lessen the cost of sales.

Beyond Display

So much energy in the Kawaja logo vomit map has been created by companies in the real time display space that I believe we, as an industry, are somewhat blind to the opportunities happening in real time elsewhere. Digital media marketing is about marrying best practices in display, search, affiliate marketing, mobile, and video to get results. As branding becomes more measurable (thanks to Vizu, Aperture, and other technologies), more and more brand money is going to the digital pie. It’s quite simple: brand money goes to where the eyeballs congregate, and they happen to be cast upon computer screens, mobile phones, and tablets as much as television and newspapers these days. However, putting all of that together is not easy for the modern digital marketer. Real time can help.

Real time buying systems are slowly migrating from pure display into multi-channel media management systems that can find cost efficiencies across display, search, and mobile. AppNexus recently released Windows Mobile inventory into its exchange, and Android browser inventory is sure to follow. Now, you can bid for eyeballs seamlessly in the same platform, without regard to where they may be focused on. Enter programmatic buying technologies that can allocate spend across differing mediums (search display), buying methodologies (guaranteed, real-time), and pricing methodologies (CPM, CPC, CPA)—and suddenly you have real time systems that aren’t about “RTB” if you follow me. They are about getting all of the combinatorial values of an effective media plan correct, using campaign attribute data—and historical performance and pricing data. The bottom line is that the machines are going to be making the allocation calls in the future, and we are going from real time bidding, to real-time media decisioning. That’s a big change.

Immediacy

Another interesting aspect (and perhaps the most important) of RTB is immediacy. Real time bidding systems are collapsing the time window between having a great marketing message, and your ability to distribute it quickly. Twitter’s sponsored posts are one great example, Facebook’s self-serve ad interface gives instant satisfaction, and companies like DashBid are helping advertisers put their ads directly into the “hottest” video content, using bidding systems. Now that content is being curated by end users even more than by publishers, marketers need the ability to access audiences quickly, as they follow the latest meme, news trend, or fashion. Systems that offer the ability to go from idea to execution quickly, and are easily adaptable will win in this new RTB-driven ecosystem.

[This post originally appeared in eConsultancy on 6/30/11]

Fish Don’t Know He’s Wet

If Your Company Depends on RTB, Put Your Helmet On.

The 5 Reasons RTB is less important than you think

All the hype in the display advertising industry has been around real time bidding for the last several years, and rightly so. Finding audiences with precision (cheaply) is marketing nirvana and, with all of the startup companies willing to work their tails off to make their “platforms” work for advertisers, the promise of media, layered with great technology, and tons of free service was hard to resist. Conference after conference, our industry leadership (well, actually I think it’s just the 30-odd people that speak at every conference) prognosticates on the latest data-driven success story, and ponders the meaning of the famed Kawaja logo vomit map, hoping that their flavor of audience technology gets acquired. But, like the old George Clinton lyric goes, the fish don’t know they are wet. After drinking the RTB Kool-Aid for so long, the real time practitioners may not realize that this fundamental driver of the display advertising ecosystem may not be as important as we all think. Here are five reasons to hedge your bets with RTB:

Quality Matters: Sorry, exchanges, but inventory quality still matters—a lot. The notion that you can splash a little bit of data on top of $0.25 CPM banner inventory and turn it into $5.00 gold was never really real in the first place. The great thing about RTB isn’t the enormous amounts of data you can apply to a media buy—it’s the enormous scale and price advantage that exchange buying brings. In a CPA-driven world, the most important metric is the cost of media. Today’s bidders give advertisers the ability to scour 800+ exchange inventory sources and buy cheaply and deeply into remnant inventory like never before. But, when you look at the reporting coming back, the clicks and conversions tend to happen where quality content appears. I’ve seen it time and time again: An RTB advertiser lucks into a bit of Tier I or Tier II inventory and finds performance. Unless publishers start changing their habits and stop putting banner code on every single web page they publish, there will continue to be a dearth of quality placements available in real time, and average real-time CTRs will not eclipse their .03% average.

Cookies Don’t Scale: This is the dirty little secret of the display media industry, and something that Datran’s Aperture team is out actively pushing. Anyone who has used a DSP can tell you that even a little bit of segmentation data applied to a media buy drops impression availability by a large factor. Cookie-based targeting is enormously complicated, and getting all the gears to turn in the same direction is not easy. How many people are in the market for a BMW are there in any given 30 day period, anyway? Well, according to AppNexus, I can find about 81,689 unique users that fit that description, and access up to 1.3M impressions if I win every single bid I place. Let’s go crazy and say that I am prepared to pay $30 CPM for every single one of them (I can probably win them at $8, though). That means, this month there is the potential of $40,000 of inventory to be sold for “BMW intenders.” Add in “Connecticut” and “Men” as additional segments, and you might as well call each potential buyer on the phone, or rent a plane and drop pamphlets on their house. But wait—you could probably mail them something really nice and reach them that way. Now that sounds like a business!

Legislative Tsunami: Many fish don’t understand what “Do Not Track” and other legislation is going to do to real-time bidding. Even if you take the most conservative reckoning, you would have to admit that some sort of consumer protections need to be built into our industry. I can’t tell you how many people are fascinated—and sort of bummed out—when I introduce them to www.bluekai.com/registry Personally, I have no problem being targeted (except for the relentless onslaught of industry-specific ads I seem to be targeted with). No matter how our industry tries to spin it, the fact that I just looked at flights for North Carolina, and am being targeted by travel ads two seconds later as an “in market travel intender” makes almost everyone uncomfortable, and it’s not a winning long term strategy. We need to turn over choice to consumers, rather than convince them that we are “protecting” their data. Watch out for companies that don’t run without the fuel of 3rd party data. Conversely, bet big on companies that collect tons of 1st party (volunteered) data like Facebook…at least until the government has a problem with that too.

Premium on the Rise: Call me a Project Devil fan. With people visiting an average of 3 sites a day (one of them being Facebook), it’s kind of hard to argue with the

It's Time to Break out of Pure RTB Business Models

fact that advertising needs to be engaging on the page. Whether it’s video, over-sized RM banners, in-app ads, or sponsored apps, advertisers are looking to engage users directly, rather than drive them to a site. These opportunities are the opposite of commodity-based exchange buying. You can’t standardize them…and you can’t buy these engaging units cheaply. Advertisers are starting to rebel against the low quality of exchange-based media, and publishers are really starting to rebel against the returns they are seeing on exchanges. They want technology that helps them understand and sell their own audiences, rather than technology that disintermediates them and sells their valuable audiences for them. Maybe we finally jumped the shark with the Admeld acquisition. Wouldn’t it be nice if technology helped advertisers find the right audiences where they wanted to be found, and publishers sell their audiences for more than $0.50? Was there ever an industry that sustained itself by crushing their main suppliers down on price?

Big Guys Have More Data than You: I don’t care how many cookies you have out there on the Web. Is it 150 million? 200 million? It doesn’t really matter. How many Facebook subscribers are there? How many Google Gmail users? We have given the biggest publishers absolutely every single piece of information about ourselves (including, for some Congressmen, too much information), and shared it with our friends, and shared our friends’ data with everyone too. Where cookie-based targeting doesn’t scale, first party data targeting on sites like Facebook scales plenty. You would think the ability to reach users with such specificity would be expensive, but no. Facebook ads are the best deal in town. I have never paid more than $0.50 CPM for my audience, no matter how many “segments” I want to apply. I can’t remember winning many display media bids in for that price. If you consider that Google is just starting to get into display—and Facebook is just starting to look at display, doesn’t that make you want to change your data strategy a little bit? If your business depends on the sheer amount of your data, you may need to get a longer ruler and think about just how much scale you really have.

There are a lot of ad technology fish swimming in the RTB sea right now, and every single one of them is wet. My advice to them is to break the surface of the water for a second, and see what else is around. RTB will be a part of advertising for a long time, but it will not displace premium, guaranteed advertising. It will also look nothing like today’s RTB in a few years. The advent of private marketplaces, higher value audiences exposed in real time environments, and the emergence of smarter branding metrics (via Vizu and others) is going to turn the conversation back to premium quickly. Jump in…the water is going to be fine.

[This post appeared on 6/23/11 in AdMonsters]

There’s No App for That

Building the Technology Stack for Next Generation Digital Media Buying and Selling

Last week’s IAB Network and Exchanges conference was full of the usual self-congratulatory “use cases” of byzantine, data-based strategies for squeezing conversions from web-based display banners for direct response campaigns—or, alternatively, helping to drive “branded performance,” based on the listener’s preference. I was sitting next to an attorney from a large media company, tasked with making sense of the ad technology business. “I have to be honest,” she said, “I have been looking at this business for 18 months, and I still don’t understand what you people are talking about half the time…and I’m a smart person.”*

Unfortunately, that is the exact sentiment of many media planners, account managers, and marketing managers confronting the vast array of choices in display advertising. Once they figure out the alphabet soup of DSPs, RTB, and (now) DMPs, they start to wonder if they actually want—or need—the technology in question. Agencies are trying to figure out how to be the gatekeepers, and advise their clients on the best technologies and practices to drive branding and performance, but the work required to string together all of the various options makes earning money difficult. Digital media margins are in the toilet right now, and will remain there until agencies can manage all of these disparate systems with efficiency.

In the ad technology business, there’s an “app” for almost any way one wants to find and buy an audience—and many more applications for getting and understanding performance. Unfortunately, there is no operating system that can host all of these and make them work together seamlessly. The ideal scenario would be a world in which marketers could bring the different media applications they want to use into a single, unified system. Call it a “media dashboard” that would enable an agency to create a campaign, plug in their 3rd party research data, ad server of record, segmentation data licenses, audience measurement/verification providers, and billing system and enjoy access and control from a single interface. Down the road, as more mature APIs become available, the OS would enable marketers to “plug in” their mobile ad providers, video DSPs, and bid management tools for search marketing.

Almost everyone agrees that this is the future of the business. A famous media investment banker recently remarked that “there are some very smart companies out there

Are you developing your ad technology for the wrong system?

building a technology stack” to address these very issues, but wondered whether SAP or Oracle will be first to the party. My opinion is that the IBMs and SAPs of the world will let a smaller company fight through the growing pains, and let the preferred standardization technology come to light, before swooping in. The big boys can afford to be patient—and nobody wants to be the guy who backed Betamax. The question now isn’t Betamax or VHS—or even PC vs. Mac. The question is, what will be the operating system of next generation digital media, who will support it, and can an active “ecosystem” be maintained that enables technology companies to develop smart applications for it?

I think the answer is yes—and that the next 12 months will be critical in determining what companies will fit into the increasingly complex landscape and those that fail to meet the task. Not long ago, it was extremely difficult to buy from a variety of networks and exchanges efficiently. In comes AppNexus, and suddenly every Tom, Dick, and Harry has access to over 800 inventory sources, and a great bid management tools to boot. Their OS for real time bidding creates real efficiency for marketers—especially when they go through the pain of integration on your behalf. I know quite a few AppNexus users—but very few who will work with data segments that are not natively available in the platform.  The next great media technologies are going to be built for integration into specific systems, offer APIs that enable “easy” data export and ingestion, and flexible so that others can customize them for specific needs.

Evolution is natural to the technology business. Networks become “platforms”…data providers become “DMPs.” Technology companies will forever try and stick their hand in the middle of the transaction between the demand and the supply side, and shave off a sliver of the pie. But, eventually, evolution becomes “revolution” and the game changes for everyone. We are about to find out who has the capital, talent, and vision to devise the next generation operating system for digital media. That system is going to be the one that every company has to develop an “app” for and support, and that system is going to shape the way digital media is bought and sold for a very long time.

As an ad technology company, it’s time to start figuring out how your technology will fit into the larger puzzle if such an OS becomes standard. Is your technology built for an open system, or does your technology (and, more importantly, business model) only thrive in a closed environment? There are a lot of “platforms” out there, but eventually there will only be one operating system. I think there are a lot of really awesome “apps” out there waiting to be plugged into this new operating system, which would benefit from standardization and an installed base of users.

There’s definitely an “app for that.” We are just waiting for the OS.

*That sentiment was also expressed wonderfully in Doug Weaver’s amazing keynote presentation which he was kind enough to make available this morning on iMedia.

[This post appearred on 5/23/11 in Business Insider]


The Problem of Ubiquity

Is Your Technology Offering Differentiated Enough to Win in the Digital Media Advertising Landscape?

Media buying desks are so 2009. I mean, who doesn’t have access to 800+ exchange inventory sources and 30 different 3rd party data providers?  In a world where well-heeled demand side customers have all of the tools to buy audience efficiently, how do internet marketers effectively communicate?

At this moment in time, digital display advertisers love the idea of audience buying because it seems unique. The concept of buying an audience, rather than the site it is on, is truly revolutionary and will be a continuing part of the digital media conversation for a long time to come. However, many technology companies are being funded, started, and run on the foolish misconception that audience buying vs. site-specific buying is a binary choice. It is not. Large holding company shops are trying to migrate client budgets over to their media buying desks, demand side platforms are trying to displace ad networks, and ad “platforms” are attempting to skim the media cream on all real time transactions by promising better performance through centralization. All of these tactics are doomed to fail.

Context

Unless you are going cheap and deep by buying remnant inventory at under $0.50 CPMs—or going data-heavy and spending upwards of $5.00 CPMs using segmentation to find highly specific premium audience—you are going to need context. In the former case (running wild with sub-$0.50 bids across exchanges) you face the issue of low CTR and the accompanying issue of low brand safety. Your ad is getting out there, but God knows where it’s serving. Then again, at $0.50, why not “spray and pray?” With machine learning, you can easily optimize against a conversion pixel, and let your bidding technology find all the performance that a cheap CPM can yield.

On the other end of the spectrum (using expensive V12 or Bizo segments, for example), you have a highly targeted audience—but a problem achieving scale against such specific targeting goals. Also, while you may be hitting your desired segment, you may be hitting them at the wrong time. As a frequent traveler, I have been frequently targeted with exactly the right ad (Cheap JetBlue flight to SFO) at exactly the wrong time (during my Yahoo! fantasy baseball draft).  Context does matter. Reaching premium surfers when they are engaged in consuming premium content is still relevant. That’s why people pay what they do for full page ads on the Wall Street Journal and that’s why WebMD will never accept “3rd party” advertising. Context matters, intent matters, and a user’s mindframe matters. When I am reading an article about Carmelo Anthony on ESPN.com, and I am in the market for basketball sneakers, I am simply more likely to buy them…because I am in a basketball mindset. Catch me with the same sneaker ad when I am replying to my friend on Hotmail, and it’s highly unlikely that I will break task and respond.

Engagement Methodology

Almost as important as context, is the way that an ad is served.  The majority of online audiences visit about three sites a day—and one of them is Facebook. It’s kind of tough to get into the media mix for the average site. There are two approaches the modern digital publisher can take can deal with this reality. The first is to SEO the hell out of their site, and drop enough tags to ensure an automatic, steady flow of exchange and network advertising. Another method is to firewall their exclusive content and only serve guaranteed advertising. Hybrid models are the norm, but publishers must manage the inevitable channel conflict and data leakage that come from opening up premium ad slots to networks and exchanges. Getting this blend right for websites is step one.

Modern publishers also have to go beyond the website. Today’s publishers are not only offering a blended approach to solving these marketing needs in modern RFPs—they are going beyond the typical RFP response to craft unique digital offerings that reach users that are engaged with digital content on multiple screens. You can’t effectively target pure audience yet on iPads, iPhones, or Android devices. Buy that’s where a lot of content consumption is rapidly shifting, Companies like Phluant (adapting online rich media ads of mobile browsing) are on the forefront of adapting display advertising to the new, mobile environment where they will be seen.

If your development plans do not include interoperability with the multiscreen media world we live in currently, then you are already becoming irrelevant. In the near future, there will be no such thing as “mobile networks” and “in-app” advertising. There will be platform solutions which enable cross-platform messaging (and accompanying analytics) in real time.

Price

A lot of the biggest mistakes modern media buyers make can be attributed to pricing. Todays’ digital media options do not lend themselves to a single RFP, with a static pricing range. The typical marketer looking to find high-income middle-age men who are “auto-intenders” may top out at $12 CPM. This is ridiculous. Marketers (especially old school direct mail marketers), know the value of finding their exact audience may be in the $100 CPM range (if they know they are reaching that exact, qualified customer), or it may be in the $1.00 CPM range (if they simply want to blanket my message to “men” in certain geotargeted area). Audiences are variable—but buying methodologies are not. In the near future, media buying will become programmatic, enabling marketers to populate a more robust RFP template with data—and receive systematic buying templates that span both buying methodologies (guaranteed and real-time) and pricing methodologies as well (CPM, CPC, CPA).

Choice

Today’s world is about choice. The modern digital marketer doesn’t have to face the straw man argument between choosing guaranteed vs. real-time audience buying; neither should he make the false choice of deciding between rich media and standard banners, when both can be deployed seamlessly across a single campaign. Moreover, it is now simple to leverage broadcast creative digitally, and run video advertising units on television, on the web, and on mobile devices simultaneously. As technology rapidly enables interplatform operability, marketers will be able to focus more upon the (all important) creative, than the delivery methodology itself.

As digital delivery systems evolve, marketers will live or die by the power of their creative to captivate. When technology companies finally enable marketers to broadcast their advertising across multiple digital channels at once (online display, video, mobile, DOOH, and cable set-top), the challenge will once again turn to creativity. In a technology-driven media world that enables marketers to produce and stream an advertising message seamlessly into the ether—it’s all about the ad, rather than where it is seen.

Up until now, the conversation in the space has been about delivering ads (by “DSPs” and RTB systems). As digital advertising delivery systems evolve, and every marketer has near ubiquitous access to platforms that enable scale and cross-platform delivery, the conversation is going to shift back to who is producing the best creative.

That’s a conversation I am looking forward to.

[This post originally appeared on 5/12/11 in eMarketing & Commerce]

Rise of the Machines

Where do People Fit into a World that Promises Endless Media Automation?

Ever since man tied a rope to an ox, there has been a relentless drive to automate work processes. Like primitive farming, digital media buying is a thankless, low-value task where results (and profits) do not often match the effort involved. Many companies are seeking to alleviate much of the process-heavy, detail-oriented tasks involved in finding, placing, serving, optimizing, tracking, and (most importantly) billing digital media campaigns with various degrees of success.

Let’s take the bleeding edge world of real-time audience buying. Trading desk managers are often working in multiple environments, on multiple screens. On a typical day, he may be logging into his AppNexus account, bidding on AdBrite for inventory, bidding for BlueKai stamps in that UI, looking for segmentation data in AdAdvisor, buying guaranteed audience on Legolas, trafficking ads in Atlas, and probably looking at some deep analytics data as well. If he is smart, he is probably managing that through a master platform, where he can look at performance of guaranteed display and even other media types. How efficient does that sound?

To me, it sounds like six logins too many. Putting aside the obvious fact that an abundance of technology doesn’t lead to efficiency (how’s “multitasking” working out for your 12 year old, by the way?), I wonder we aren’t asking too much of digital as a whole. How many ads have you clicked on lately? If the answer is zero, then you are in a large club. Broken down to its most basic level, we are working in a business that believes a 0.1% “success” rate is reason to celebrate. But the “click is a dead metric” some say. Really? Isn’t the whole point of a banner ad to drive someone to your website? When did that change?

All of this is simply to illustrate the larger point that the display advertising industry, for all of its supposed efficiencies, is really still in its very nascent stages. Navigating the commoditized world of banner advertising is still very much a human task, and the many machines we have created to wrestle the immense Internet into delivering an advertiser the perfect user are still primitive. For a short while longer, digital media is still the game of the agency media buyer…but not for long.

Let’s look at the areas in which smart media people add value to digital campaigns: site discovery, pricing, analytics and optimization, and billing.

Site Discovery

In the past, half the battle was knowing where to go. Which travel sites sold the most airline tickets? Which sites indexed most highly against men of a certain age, looking for their next automobile? What publisher did you call to get to IT professionals who made purchasing decisions on corporate laptops? Agencies had (and still have) plenty of institutional knowledge to help their clients partner with the right media to reach audiences efficiently and—even with the abundance of measurement tools out there—a lot of human guidance was needed. Now, given the ability to purchase that audience exactly using widely available data segments, the trick is simply knowing where to log in. I just found the latter IT professional segment in Bizo in less than 2 minutes. So the question becomes: how are you leveraging data and placement to achieve the desired result, and how efficiently are you doing it?

Pricing

It used to be that the big agencies could gain a huge pricing advantage through buying media in bulk. Holding company shops leveraged their power and muscled down publisher rate card by (sometimes) 80% or more with promised volume commitments, leaving smaller media agencies behind. Then, a funny thing happened: ad exchanges. All of the sudden, nearly all of the inventory in the world was available, and ready to be had in a second-price auction environment. Now, any Tom , Dick, and Harry with a network relationship could access relatively high quality impressions at prices that were guaranteed never to be too high (in a second-price auction, the winning bid is placed at the second highest price, meaning runaway “ceiling” bids are collapsed). Whoops. With their pricing advantage eliminated, large agencies did the next best thing: eliminated the middleman by building their own exchanges, which we have been calling “DSPs.” So, you don’t need human intervention to ensure pricing advantages.

Analytics and Optimization

What about figuring out what all the data means? After all, spreadsheets don’t optimize media campaigns. Don’t you need really smart, analytical media people to draw down click- and view-based data, sift through conversion metrics, and build attribution models? Maybe not. Not only are incredible algorithms taking that data and using machine learning to automatically optimize against clicks or conversions—but programmatic buying is slowly coming to all digital media as well.  In the future, smart technology will enable planners to create dynamic media mixes that span guaranteed and real-time, and apply pricing across multiple methodologies (CPM, CPC, CPA). Much of that work is being done manually right now, but not for long.

Billing

Sadly, much of the digital media business comes down to billing at the end of the day. Media companies struggle tremendously with reconciling numbers across multiple systems, and agency ad servers don’t seem to speak the same language as publisher ones. The bulk of a media company’s time seems to be spend just trying to get paid, and an incredible amount of good salary gets burnt in the details of reconciliation and reporting. This is slowly changing, but the advent of good API development is starting to make the machines talk to each other more clearly. The platforms that can “plug in” ad serving and data APIs most easily have a lot to gain, and the industry as a whole will benefit from interoperability.

So, are people doomed in digital media? Not at all. There are going to be a lot less digital media buyers and planners needed—but what agencies are really going to need are smart media people. Right now, you need 4 people to manage 10 machines. In the near future, you will need 1 smart person to manage 1 platform—and the other three people can focus on something else. Maybe like talking to their clients.

[This article originally appeared in ClickZ on 4/14/11]