Advertising Agencies · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · TRAFFIQ · Uncategorized

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]

Advertising Agencies · AppNexus · B2B Media · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · TRAFFIQ

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]

Advertising Agencies · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · Remnant Monetization

Ecosystemopoly

LUMA Partners amusing “Adtechopoly” game

DIGIDAY: Target, New York, 5 May 2011 – If you work for one of the companies within the famed Kawaja logo vomit map, the only place to be today is at DigiDay Target. The event, in which every single presentation referenced or displayed the famous slide in question, is the nexus point for ad technology executives, publishers, advertisers, and investors looking to understand—and profit from—an increasingly volatile industry.

“The Ecosystem Map is a DR game” – Terence Kawaja, LUMA Partners

From the top down, the digital display advertising ecosystem map may actually look like a Chinese menu from which large, SaaS model companies can select best-of-breed players to consume. Over the coming months and years, most of the companies within the map will either become profitable or (better yet for the acquirer) battered down in valuation, and subject to an exit scenario. The slightly profitable ones will become features of larger platforms. The fun new twist on the LUMA map is the recently unveiled “Adtechopoly,” in which companies appear as Monopoly board game properties, and the players traversing the board are Google, Yahoo, AOL, Microsoft, IBM, and Adobe.

Most properties will leverage themselves and go bankrupt (do not pass go, do not collect $200M exit). Many will be acquired, and few will exist as independent businesses. So, what is the prognosis? Here is what I heard this morning:

—  Bubble: What bubble? Just because VCs are pouring lots of risk capital into questionable businesses, doesn’t mean we have a bubble. After all, a VC has to have a fairly low success rate to return value to investors. Unfortunately, according to Kawaja, “over half of the 35 deals in the last year didn’t produce a return on capital.” Kawaja expects that number to increase over time. But bubble? Not really. According to Kawaja, based on 2007 levels, multiples are not nearly where they were, so “it doesn’t feel like a bubble” to him. Unfortunately, it may feel that way for many of the ad technology folks in the room.

—  Who’s going to Take Over: The general consensus has been that Google is going to own most of the decent technology powering the advertising ecosystem, but Kawaja admits to “spending lots of time with IBM, SAP, Adobe, and Oracle.” For big SaaS companies, advertising is just one more industry to power with technology. That being said, “there are some really cool companies trying to piece together a stack” that will aggregate and organize the disparate technologies in the space.

—  Agencies: The holding companies on the new Ad Monopoly map cleverly appear as the railroads. Big, entrenched, and monopolistic, holding companies continue to command the lion’s share of advertiser budgets, but struggle to continue to be relevant to their clients. Agency trading desks were somewhat derided for having nothing more than “pretty logos,” instead of pure play technologies. Clients are looking to their agencies to be system integrators, and evaluate and deploy new technologies on their behalf but…they are agencies. In other words, agencies are not the first thing that comes to mind when you hear “systems integration.” Companies like SAP are. When the SAPs of the world are in the game, and having “big company to big company” process discussions with advertisers, do you think Omnicom will not be in the room? Me neither. As Kawaja correctly notes, “inertia is the agencies’ friend” but things are moving pretty quickly.

—  Remarketing: As for this highly popular and effective part of the ecosystem, “these companies only work because of failure.” In other words, according to Kawaja, remarketing to consumers only has to occur because advertiser sites are so non-engaging that the marketer has to pay (again) to bring that consumer back to the site. As advertisers work with their technology and agency partners to build more compelling online experiences, this need will shrink. For me, these companies suggest more of a feature, than a business onto themselves.

—  Where’s the Beef? For Kawaja, “the meat in the sandwich is the intelligence layer.” If we believe that advertising will continue to be more science than art going forward, the companies that win will be those that build the engines that decide “if this, then that” and create performance. Right now, the technologies in the industry are focused on direct response advertising, which provides a hyper intense proving ground for the technologies that purport to inject performance into campaigns, and get data insight out of them. The future, however, will depend on how those technologies adapt to the premium brand advertiser.

—  Creative: There’s been a lot of talk about the need to transfer the rich experience of magazine reading (beautiful photos and design) to cluttered online pages, filled with flashing, annoying, interruptive ads. Project Devil is leading the way in bringing an “engaging, beautiful” experience online, so look for more entrants who can migrate truly interactive (rich media and video) experiences online at scale.

I will have more to come on a very exciting and high quality seminar…including what seems like some virulent industry backlash on 3rd party data and RTB players.  For now, industry players should spruce their properties up as the players warm the dice in their hands, and get ready to traverse the board. The moves your ad technology company makes in the next few months may make the difference between being located at Boardwalk…or Baltic Avenue.

[This post was referenced on the 5/10/11 edition of AdExchanger and published in  Business Insider]

PS: Does anyone else find it hilarious that AOL is the dog?

Advertising Agencies · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · Remnant Monetization · TRAFFIQ

Dawn of the Dead

Is Your Ad Technology Company Disruptive, or Just Another Zombie?

AdTech 2011, San Francisco CA – Every year, San Francisco is abuzz with hope and opportunity as thousands of ad technology executives pour into a  few square blocks around the Moscone Center to try and turn technology dreams into riches. On the inside of the convention center, an odd assortment of e-mail and affiliate marketing tools vie for the jaded eyes of direct marketers. On the outside, more seasoned media technology executives find themselves in and out of luncheons and panel discussions, mostly trying to figure out the real time landscape, and the data surrounding it.

There is a lot of high risk venture capital fueling the ad technology business, as a very crowded LUMA map can attest. The Kawaja logo vomit slide never seems to shrink, although the dotted red lines indicating acquisitions appear from time to time. Burst Media is probably getting updated on the map as we speak.  Its recent acquisition by Blinkx at a 1-time gross revenue valuation is a stinging reminder that not all dreams (even those with scale) turn to gold. Despite reaching some 61% of the US Population, Burst lost $3M in its last year as an independent operation.

At the recent AdWeb 3.0 conference, venture investors Josh Stein of Draper Fisher Jurvetson (Glam, Skype, Targetcast, Cafe Mom) and Jon Soberg of Blumberg Capital (Legolas, HootSuite, DoubleVerify) talked about what is getting VCs excited in the space…and those companies that are not. Obviously, mobile is seeing an influx of early stage capital as next generation media technology application development progesses. For Stein, “the engagement in mobile is extreme—you may only be getting 3 minutes [of a consumer’s attention], but it is full engagement.” Video is also an area that will see significant investment capital as more and more video content finds its way onto computer, mobile, and tablet screens. YouTube’s recent moves with “Next” around original content creation were cited as positive developments in the space. Also mentioned was the growing area of social curation of video content (using social media technology to make sense of the potentially thousands of “channels” in the ether).

On the other side, Stein questioned the “long term economics” of Groupon and its many clones and also threw cold water on Foursquare by wondering aloud whether  “checking in” is a “long-term, sustainable” business model.  An audience member inquired whether we are currently “in a bubble” in terms of media technology, but the question was quickly dismissed. Unlike real financial bubbles that sweep up pension funds and real estate, “this bubble will likely pop on VCs…not consumers.” I suppose that is refreshing enough for the average consumer, but it is likely that many of the technology executives at AdTech have the fear of being popped along with their overinflated companies.

Lumascape
The recently updated "Display Lumascape" (as of 6.7.2011)

That leads me to the heart of the conversation: what our venture capital friends think of the crowded ad technology landscape, and their assessment of the companies within it. Jon Soberg seems to think that there are a lot of “walking dead” companies on the LUMA map: those companies that “can get quickly acquired by Google for $10 or $20 million, but don’t move the needle for venture investors.” Looking at the LUMA map, I think it is hard to argue with Jon. There are a lot of hands in the middle of the transaction between advertiser and publisher, and many of the companies therein aren’t adding as much value as they are taking out. The difference between truly valuable and exciting companies can easily be summed up by one word: disruption.  In other words, is your company’s technology doing something completely different and revolutionary, or is your company merely adding another incremental improvement or technology layer on an existing process?

It seems like most companies in the middle of the map are the type of companies that are walking dead. “Nice to have” technology rather than “must have” technology that will drive our business forward. So, what advice does the investment company have for the current companies in the space—and those that are looking to raise capital and jump into the crowded ad technology pool?

  • Disruption: As Soberg points out, “it’s not about shaving at the margins, it’s about disruption.” For Soberg, the value of facilitating real time media trading is interesting, but is being “squished out,” making it entirely possible for companies to “arbitrage themselves out of existence.” For me, this simply means that being a bolt-on technology for media trading is not the path to riches, only the path to a low-value exit. Your technology must create value with your data, rather than simply creating more of it.
  • Publishing: How can technology add value to the media transaction to publishers? This is an area ripe for investment and plenty of high value exit potential. In a world of highly commoditized inventory, where publishers have (foolishly) undervalued and overexposed their inventory, technology has a chance to fix things. How can the recent “app” revolution (where people actually pay for content) “reset” online publishing, and start to create higher value inventory? Glam and Tremor were cited as two companies that “add value in the middle of the transaction.”  Technology that enables publishers to “figure out” mobile and video (rather than just helping them sell more remnant inventory) are going to win.
  • Creative: One quote that struck me was Josh Steins’ excellent observation that “the Madmen [advertising] model wasn’t efficient…but it was profitable.” In other words, much of the magic and creativity in advertising has been replaced by technology, but technology isn’t what makes advertising effective. It’s ideas. Absolut bottles represented in every way possible…subservient chickens…the things which get and keep our attention. Maybe technology will standardize a good part of the transactional process of advertising, but the real winners in the ad tech space will be those technologies that help agencies put their focus back on creativity, rather than figuring out month-end billing and reconciliation.

It’s a crowded landscape out there, and there are many more red dotted lines to be added to the LUMA map. The ones that offer disruptive technology ideas that start returning value back to the advertisers and publishers, and away from the murky middle, will be the ones that avoid death…or “walking death.”\

[This article appeared on 4/28/11 in Business Insider]

Advertising Agencies · AppNexus · B2B Media · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Publishing · Real Time Bidding (RTB) · TRAFFIQ · Uncategorized

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]

Advertising Agencies · Big Media · demand side platform · Demand Side Platform (DSP) · Digital Display · Digital Media Ecosystem · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB) · Remnant Monetization · Sales Management · Sales Rants · Sales Tactics · TRAFFIQ · Uncategorized

Notes from DPS 2011

Going Beyond Content and Delivering Value in a Multi-Platform World

Deer Valley, UT – If there is one thing I learned after spending several days at Digital Publishing Summit 2011, is that the people in this industry really love what they do. It’s not easy walking past world class spring skiing in what is arguably the United States’ best ski area, and enter a dim conference room to listen to a speech on “Auto-nomous Data Management,” but every session played to an SRO crowd of media and technology executives. The crowd was a veritable who’s-who of the “Digital Display Advertising Landscape” (LUMA) map, so I suppose you could argue that these guys got where they are today by skipping lots of fun, and building advertising and media technology instead.

Among the highly informative (albeit sometimes sales-y) content at the conference, there were some gems to be had. So, here is DPS 2011, organized by quote:

“Value is shifting from those that produce the content, to those that deliver the experience of consuming it.” – Saul Berman, IBM

Saul Berman’s keynote address touched upon the disruption happening in our space, but even the overhyped keyword “disruption” doesn’t touch upon the true chaos happening as publishers learn how to navigate the through all the new social media, exchange-based sales, and various technology partnering opportunities out there. Do you make Facebook Connect your friend (as Kristine Shine from PopSugar Media does), to drive new unique visits, and build your audience? According to Shine, for her organization, the call was to “go all in” with Facebook. For others, like Todd Sawicki, CRO of Cheezburger, Facebook can kill publications by migrating all of their native traffic (like message board comments) to their environment, without returning the favor.

So, for publishers, the challenge is not just continuing to produce quality content, but to make it for a multi platform world, where consumers are just as likely to value the way they are consuming it. That means having a multi-platform approach—and a multi-revenue approach as well. Why does a full song from iTunes cost $0.99, but a 10-second sliver of that song, sold as a ringtone, cost $3.00? In that case, it is the application of content in a clever way that adds value, a nice use case for anyone monetizing content in an experiential way.

“Media will be sold like pork bellies” – Frank Addante, Rubicon Project

There was quite a bit of discussion around pricing at the conference, and the founder and CEO of the Rubicon Project was not wrong in insisting that, without significant changes, media would indeed be as commoditized as the humble pork belly. Unfortunately, this trend has already happened. Addante was right to highlight the unfortunate fact that the same article in the NY Times commands a $20CPM in print as opposed to $2CPM online. That value gap, Addante argues, can be closed by “realizing the true value of digital experiences.” Rubicon would like to see one big gigantic “open market” that enables the industry to expand the digital advertising pie from $40b to $400b with full participation, but the details were cloudy. If that market concept involves having publishers suddenly not to sell their entire remnant inventory into an exchange, then maybe we can avoid the pork bellies fate.  Addante may be on to something, however. What the industry needs is one trusted third party aggregate high quality inventory, and create value around it, but that battle is in its very nascent stages.

That being said, a good bit of the conversation was around pricing. Both Saul Berman and Tim Cadogan of OpenX deployed the airline pricing scenario, to argue for dynamic pricing models. For Cadogan, three levels of inventory equate to three levels of seating: Exclusive (first class), Premium Guaranteed (business class), and Non-Guaranteed (coach). Just as airlines frequently change the configuration of their seating to account for their routes, seasonality, and passenger mix, so must the industry dynamically price inventory, based on its placement and value. The OpenX Enterprise server hopes to achieve that by putting guaranteed and real time exchange inventory into the same platform, and use smart decisioning  technology to maximize yields. A very smart idea.

For Berman, it was not only about “having 5 different passengers, paying five different prices,” but also about exploring entirely new revenue models, like Apple did in “switching the razor blade model” with the iPhone (expensive “razor,” cheap “blades”). Publishers must go beyond monetizing their content through advertising, and start looking at generating revenue from the larger  “marketing” bucket. Right now, that is called “selling apps.”

“Premium brands need to be associated with premium content” — Eric Klotz, Pubmatic

Truer words have never been spoken. Klotz explored some recent survey data which asked publishers and advertisers how the way they are buying media is shifting. The results were fairly predictable: more and more budget is finding it’s way into real-time bidding environments, as brand and direct marketers seek new ways to target their desired audiences. That’s nothing new. What is changing rapidly, however, is that all marketers are demanding more placement control, increased transparency, and brand safety. Brands want the same direct connections with publishers they have enjoyed with guaranteed buying, with the ease and cost efficiency of exchange-based buying. The takeaway? If you are a publisher, and not looking at building private exchange connections with your demand side partners, you are in trouble.

That sentiment was hinted at in a panel called “Selling in a Cluttered Market.” For Jonas Abney of Hachette Filipacchi, “general content gets beaten by specific content every time.” Marketers are looking for laser-focused, topical content that captures user intent, rather than more generalized content. Moreoever, today’s advertising sale is more educational than ever. For panelists like AdMeld CEO Michael Barrett and PubMatic’s Andrew Rutledge, a sales force cannot simply have media experience–they have to know the ecosystem, and be prepared to add value by educating clients. For Whitepages VP of Sales Craig Paris, it is simple math: Agencies get 100+ unique sales calls a month, from an increasing amount of new technology and media companies. Unless you differentiate yourself, you are not going to win business. “Thirty percent of your day should be spent reading the industry trades so you can have credibility, and provide insights to your customers.”

“Nielsen says people visit 2.9 sites a day, and one of them is Facebook” — Greg Rogers, Pictela

Last minute speaker Greg Rogers of Pictela provided some insights on how premium advertising units (specifically the new IAB 300×1050 “Project Devil” unit from AOL) can drive user engagement. If the above quote is true, it means that brands have to find a way to engage the user more deeply on the the sites they visit every day, and that way is through interactive units. Rogers has data that points to “dramatic” CPM increases from premium RM units, and makes a case for replacing three 300×250 units with the single 300×1050 “devil” slot. Patch and Huffpo have seen great results, and advertisers are getting good engagement, and plenty of reporting. Highly premium, brand-safe, engaging advertising…sounds like something from the past called “premium guaranteed.” I bet PopSugar’s Shine would agree. She has built a virtual in-house agency to build premium campaigns for her customers, and demands “150% control over every ad unit on the page.”

“Cookie Targeting Doesn’t Scale” — Michael Hannon, Aperture

Sort of a dark horse moment for me was Michael Hannon’s first slide, which threw down the gauntlet on cookie targeting. All the energy in the space for the last several years has been about  targeting using 3rd party data . But what if it doesn’t work? This is the 900 lb. elephant in the Ecosystem. Not only have many marketers had difficulties achieving significant scale when overlaying data on top of exchange buys, but the legislative tsunami of “Do Not Track” threatens to reduce that scale even further. Hannon makes an elegant argument for real audience measurement, and doing so in a cookie-less way.

That leads me to a great conversation led by Alan Chapell, a lawyer specializing in just these types of issues. In a room full of ad publishing and ad technology executives that depend on using data to identify target audiences, there was a great deal of confusion regarding how our industry is getting on top of what may be a very severe problem. More direction from the IAB in the form of specific self-regulatory principles and mandates is needed, and needed fast. For Chapell, inaction may cause the “privacy disaster, which enables Google, AT&T, and Facebook to own all the data,”  leaving the rest of the industry on the side.

[This article originally appeared in Adotas on 4/4/11]

Advertising Agencies · AppNexus · Demand Side Platform (DSP) · Digital Display · Marketing · Media Buying · Media Planning · Online Media · Real Time Bidding (RTB)

Choosing between Performance and Branding in Digital Display?

Depending on how you are measuring success, maybe you don’t have to.

The New Data Ecosystem

According to Blue Kai, I am a tech savvy, social-media using bookworm in the New York DMA, currently in the market for “entertainment.” At least that’s what my cookie says about me. Simply by going to the Blue Kai data exchange’s registry page, you can find out what data companies and resellers know about you, and your online behavior and intent.

In this brave new world of data-supported audience buying, every individual with an addressable electronic device has been stripped down to an anonymous cookie, and is for sale. My cookie, when bounced off various data providers, also reveals that I am male (Axciom), have a competitive income (IXI), 3 children in my family (V12), a propensity for buying online (TARGUSinfo), and am in senior management of a small business (Bizo). I am also in-market for a car (Exelate), and considered to be a “Country Squire,” according to Nieslen’s PRIZM, which is essentially a boring white guy from the suburbs who “enjoys country sports like golf and tennis.” Well, I am horrible at tennis, but everything else seems to be accurate.

As a marketer, you now have an interesting choice. Instead of finding “Country Squires” or “Suburban Pioneers” on content-specific sites they are known to occupy (golfdigest.com, perhaps), now I can simply buy several million of these people, and find them wherever they may be lurking on the interconnected web. This explains why you suddenly see ads for Volkswagens above your Hotmail messages right after you looked at that nice Passat wagon on the VW website. Today’s real-time marketing ecosystem works fast, and works smart. But, what are the advantages of buying users versus the place where they are found?

Putting aside the somewhat “spooky” aspect of web targeting (such as using insurance claim data to target web visitors based on their medical conditions), I think every marketer agrees that these capabilities are where online media is going, and they present a powerful opportunity to both find and measure the audiences we buy. But, how do you decide whether to buy the cookie, or the site?

A Different Way to Measure Performance

Most marketers will insist that audience buying is meant for performance campaigns. This is largely a pricing consideration. Obviously, if I want to sell sneakers to young men that are well down the purchase funnel, it makes sense to buy data, and find 18-35 year old males who are “sneaker intenders” based on their online behavior and profile, and reach them at scale across the ad exchanges. Combined data and media will likely be under $4CPM, and probably less since both the data and media can be bid upon in real time. For most campaigns with a CPA south of $20, you need to buy “cheap and deep” to optimize into that type of performance.  It sounds pretty good on paper. There are a few problems with this, however:

What are they doing when you find them? Okay, so you found one of your carefully selected audience members, and you know he’s been shopping for shoes. Maybe you even retargeted him after he abandoned his shopping cart at footlocker.com, and dynamically presented him with an ad featuring the very sneakers he wanted to buy, and you did it all for a fraction of a cent.   The problem is that you reached him on Hotmail, and he’s engaged in composing an e-mail. What are the chances that he is going to break task, and get back into the mindset of purchasing a pair of sneakers? Also, what kind of e-mail is he composing? A work-related missive? A consolation note to a friend who has lost a loved one? Obviously, you don’t know.  Maybe you reached that user on a less than savory site, or perhaps on a social media site, where he is engaged in a live chat session with a friend. In any case, you have targeted that user perfectly…and at just the wrong time. This type of “interruption” marketing is exactly what digital advertising purports not to be. Perhaps a better conversion rate can be found on ESPN.com, or a content page about basketball, where that user is engaged in content more appropriate to your brand.

How do you know where the conversion came from? Depending on your level of sophistication and your digital analytics toolset, you may not be in the best position to understand exactly where your online sales are coming from. If you are depending on click-based metrics, that is even more true. As Comscore’s recent article points out, the click is somewhat of misleading metric. There are a lot of data that contribute to that notion but, put simply, clicks on display ads don’t take branding or other web behavior into account when measuring success. Personally, I haven’t clicked on a display ad in years, but seeing them still drives me to act. Comparing offline sales sales life over a four week period, Comscore reports that pure display advertising provides average lift of 16%, pure SEM provides lift of 82%–but search and display combined provide sales lift of 119%. That means you simply can’t look at display alone when judging performance—and you really have to question whether you are seeing  performance lift because you are targeting—or whether you are achieving it because your buyer has been exposed to a display ad multiple times. If it is the latter, you may be inclined to save the cost of data and go even more “cheap and deep” to get reach and frequency.

How do you value an impression? Obviously, the metric we all use is cost-per-thousand (CPM), but sometimes the $30 CPM impression on ESPN.com is less expensive than the $2 RTB impression from AdX. Naturally, your analytics tools will tell you which ad and publisher produced the most conversions. Additionally, deep conversion path analysis can also tell you that “last impression” conversion made at Hotmail, might have started on ESPN.com, so you know where to assign value. But, in the absence of meaningful data, how do we really know how effective our campaign has been? I really believe that display creates performance by driving brand value higher, and some good ways to measure that can now be found using rich media. When consumers engage within a creative unit, or spend time watching video content about your brand, they are making a personal choice to spend time with your message. There is nothing more powerful than that, and that activity not only drives sales, but helps create lifetime customers.

For today’s digital marketer, great campaigns happen when you understand your customer, find them both across the web and on the sites for which they have an affinity—and find them when they are engaged in content that is complimentary to your brand message. Hmmm…that kind of sounds like what we used to do with print advertising, and direct mail. And maybe it really is that simple after all.

[This article appeared 1/12/11 in AdWeek]