Down and Dirty Platform Guide

What’s powering your agency’s black box?

Currently, Donovan Data Systems and MediaBank own the advertising platform space, with more than 80% market share among agencies, which use the platforms extensively for buying offline media, and use their systems to bill digital media campaigns. Neither have a very sophisticated digital offering, which may be why the two companies teamed up to create MediaOcean (a merger currently pending approval from the government). They will have the best shot at aggregating all the workflow for media planning, buying, and billing—across all media types. Ultimately, their ability to succeed will depend upon their willingness to build the type of “ecosystem-like” platform described below—and the appetite of ad agencies to work with one, dominant provider. Many agencies continue to leverage their legacy platform for offline media, and are looking at new solutions for managing digital media.

Quite a few start-ups have arisen to try and answer the digital media gap left by MediaOcean. Advertisers and agencies are currently using a mix of various resources to meet campaign needs. They can be broken down into the following categories:

Workflow Platforms: Workflow platforms aim to consolidate the process of discovering, buying, serving, and reporting on digital display campaigns in one interface. By leveraging this technology, agencies can eliminate some of the rote planning processes (collating Excel spreadsheets, faxing insertion orders, and compiling ad serving reports) and take action against data they see in the dashboard, enabling faster optimization. Platforms like TRAFFIQ also include robust planning data, appended by third party demographic data from Nielsen, as well as the ability to access audience measurement data (from PulsePoint’s Aperture tool). Centro’s Transis offering is more of a lightweight management tool, while Facilitate Digital provides a big agency approach that marries ad serving with global currency and language support, and sophisticated tools for generating insertion orders and bills. As mentioned previously, MediaOcean will try and build a next generation digital platform that enables all of that functionality—and tie it to their widely adopted offline media management tools. This is really the future of digital media planning. You should be testing multiple workflow platforms and making sure that you are letting systems perform the menial tasks in digital media management, rather than expensive account and media personnel.

—  Trading Desks: Large holding companies have all universally created teams that handle real time audience buying. In an effort to distintermediate ad networks, and thus recapture lost media margins, agency “trading desks” have popped up to handle reach and performance campaigns for their clients. Many leverage existing DSP technology, such as Turn or MediaMath (see below), and all of them are focused on leveraging their media buying volume to capture audience data at scale. WPP’s Xaxis, launched in June 2011, is an example of how holding companies are aggregating their technology assets to do this:

In forming Xaxis, WPP brings together a broad portfolio of audience buying capabilities that have been independently developed and optimized in various parts of GroupM and WPP Digital over the past three years in businesses including B3, targ.ad, GoldNetwork, GroupM DSP and the GroupM Marketplace.  In 2010 alone, the businesses that have combined to form Xaxis executed approximately 4,000 campaigns for more than 400 GroupM clients. Xaxis will be led by CEO Brian Lesser, who previously served as global general manager of the Media Innovation Group (MIG), WPP’s digital marketing technology company.

Undoubtedly, they will seek to leverage other data insights from Kantar and SEM technologies to deliver performance marketing across multiple digital channels at scale. Other holding company Trading desks include Accuen (Omnicom), VivaKi (Publicis), and Cadreon (IPG). Smaller media groups also have their own desks, including Adnetik (Grupo ISP) and Varick Media Management (MDC Partners).

Obviously, if you are part of an agency holding company with access to the technology tools and services offered by a trading desk, you have the potential to leverage these assets, but must weight them against the (often high) costs. All of the trading desks execute buys on a managed service basis, rather than exposing a user interface, which does not enable individual agency planners/buyers to get real-time buying expertise. Additionally, many of the services the holding company trading desk offers are available directly through DSPs and their managed service teams.

The inherent conflict of interest in agency trading desks must also be taken into account when deciding the best approach to audience buying for your agency. As Mike Shields recently wrote in Digiday in his article entitled, “The Trouble with Trading Desks”:

According to multiple industry sources, some prominent brands are growing increasingly uncomfortable with their digital agencies funneling money to sister company trading desks (the holding company divisions that purchase ad inventory on exchanges). They are asking questions about how these trading desks earn revenue and whether clients are being charged more than once for executing the same media plan. The shift to programmatic audience-based ad buys through exchanges is undeniably an important advance to the online ad model, but agency holding companies have also taken it as an opportunity to update their own outdated business models in ways that are likely to leave some procurement chiefs scratching their heads.

The questions are murkier when it comes to the issue of “mandates.” There has long been talk that orders have come from the highest levels of agency holding companies for its agencies to redirect spot ad buys through the in-house trading desk rather than ad networks. Holding company and agency reps rebuff questions on this, but their words don’t always match up with reality. In some cases, holding companies are incentivizing their individual agencies’ media planning teams through revenue goals and even bonuses, according to several sources.

For example, Digiday was shown an email from a planner at a top Publicis agency stating that her team was not allowed to work with any networks and exchanges. “We are not authorized to buy networks and exchanges,” read the email from a buyer at a major media agency. “We are required to use [Publicis trading desk] Audience on Demand.” One prominent agency executive explained that over the past year her planning team was given quarterly goals to allocate more client budgets to exchanges, which she ignored. Other agencies compensate their teams for shifting more spending to trading desks; it’s actually in some planners’ contacts, she said. This is causing major friction in some cases between planning agencies and their trading desk partners, said a source.              

 —  Demand Side Platforms: An increasingly common part of the modern digital marketer’s toolset is the DSP, or demand side platform. Obviously, if you are working within one of the holding companies, you would be encouraged to deploy your audience-targeted media through the preferred Trading Desk, all of which leverage one or more independent DSPs. The top DSPs in the space at this time are Invite Media (acquired by Google), Turn, MediaMath, DataXu, X+1, and Triggit. Invite recently raised their minimum pricing to reportedly $50,000 per brand, per month, putting their services out of reach for the typical mid-sized agency. Among the rest, MediaMath has a reputation for having the most proprietary trading strategy, and unique optimization algorithms, with Turn not far behind. Most DSPs provide a blended service approach to trading, offering a mix of self-service tools and managed service support. Almost all of them utilize similar algorithms—and all of them have access to a wide variety of data providers for audience targeting. In considering your business’ approach to leveraging currently available DSP technology, the best strategy is to test as many as possible alongside each other. Most offer trial periods with discounted monthly minimums.

Choosing the right DSP partner has a lot to do with the amount of display volume you anticipate running on an annual basis. Larger providers can charge anywhere between $2,500 and $10,000 per month in minimum fees. Triggit and XA.net offer more competitive pricing for small and mid-sized agencies. For those agencies and advertisers that plan on having trading expertise in-house, and just want to leverage DSP technology, AppNexus is a great choice. Appnexus has built a fully-featured self-service platform (called the “AppNexus” Console, formerly called “DisplayWords”) on top of a broad ecosystem of exchange inventory and data, to create a veritable Sam’s Club for real time buyers. With over 800+ inventory sources available (Google, MSN, OpenX, Admeld, PubMatic, Rubicon) and a good amount of embedded data providers (eXelate, TargusInfo, Datonics, Bizo, Proximic, Peer39, etc.), AppNexus aims to be a one-stop shop for demand side customers looking for their own DSP solution. In addition, they make APIs available to prospective partners interested in building their own media UI on top of their bidding and ad serving technologies. AppNexus has great product support, but is designed for the customer that wants to have total control. For those who want AppNexus capabilities with a managed service layer, Accordant Media would be a great place to start.

Many agencies and advertisers are still struggling with whether or not they should deploy DSP technology to drive display media buying—and with their choice of provider. I think that Nat Turner, Invite Media’s CEO probably summed it up best in his 2010 AdExchanger article, which offered a list of key characteristics that define a “true DSP:”

  • The DSP must provide a fully self-service interface.  Clients should be able to have complete control via the interface and build an expertise around its use.
  • If the DSP provides managed services help to the agency, the DSP should be using the same interface that the agency would be using.  The technology should not require any manual work behind the scenes to activate or “set live” a change or a campaign.
  • The DSP must remain neutral and have zero allegiances to any publishers, exchanges, data providers or other vendors.  A true DSP should embody the word “platform” and not just be conduit or pretty interface to a pre-existing business.
  • The DSP must be fully transparent, starting with pricing and fees.  All fees that the DSP earns should be exposed in the interface, and every penny that the DSP makes should be known and visible to the agency.
  • The DSP should not mark-up media cost without the agency knowing.
  • The DSP should not mark-up data cost without the agency knowing.
  • If the DSP works with a publisher directly, it should be in an effort to make that publisher’s inventory “biddable.”  The DSP should not earn any additional margin from revenue sharing with the publisher or arbitraging the inventory.
  • The DSP must allow the agency to use its own exchange seats.  This allows the agency to always have visibility into the exact cost of media to ensure the DSP is not taking any additional margin.
  • Just like media, the DSP must allow the agency to buy or negotiate data cost directly, but flow through a common integration.  Data should be treated like media, it’s another part of the “supply side” that is purchased by the agency and thus should be transparent in cost.
  • The DSP should not, under any circumstances, own or operate an ad network.  This is in direct conflict with the neutrality aspect.
  • The DSP’s goal should be to expose any feature or tool that a supply source provides (either ad exchange or data provider) and not to try and obfuscate/hide or re-brand certain components (ex. “DSP Auto Segment #1”, with no transparency into what that means).  If a supply source provides it, the DSP should expose it for the agency self-service and let the agency decide whether to use it or not.
  • The DSP should not “bulk buy” media in order to re-sell to its clients.  This could either be a function of another way to make margin, a lacking of technology, or a combination of the two.
  • Related to the above, the DSP should not take on media risk.  Every impression should be purchased on behalf of a platform user at that time based on an active campaign that that platform user has created targeting that impression.

These DSP “principles” have not changed since 2010, and continue to be a great set of guidelines for choosing your real-time bidding technology provider. Ultimately, you want to be able to have total control over your bids, insights into the type of traffic available in the platform, and expect complete transparency with regard to your vendor’s pricing model. The right DSP relationship should reduce your dependence upon ad networks, lowering your overall media costs, and increasing campaign performance.

[This is an excerpt from the upcoming “Best Practices in Digital Display” whitepaper, available soon from eConsultancy]

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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]


Traffiq integrates Nielsen site audience data (Interview)

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

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

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

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

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

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

Ad Tech’s Walking Dead Startups (DigiDay Interview)

Chris O’Hara is svp of marketing and sales for Traffiq, a digital media optimization company. He has referred to the clutch of ad tech companies with sizable bank accounts from VC investment, not profits, as the walking dead. O’Hara believes that it’s only a matter of time before a massive fire sale begins in the industry.

Explain the idea of a walking-dead company?

Walking dead companies are venture-funded companies that are sort of stumbling along revenue wise, making enough money to stay afloat or surviving on their financing by having a relatively low burn rate. They’re not going to have a super successful exit anytime in the future. They may be very exciting, innovative companies, but they have a hard time getting VCs pumped up. Venture funds tend to place a lot of bets and hope that they get big wins from a small percentage of them. Like any investment vehicle, a VC’s portfolio has its mix of winners and losers, although the typical VC portfolio tends to be less diversified in terms of its industry focus. When I heard Jon Soberg of Blumberg Capital — it is a backer of Legolas, HootSuite, and DoubleVerify, among others — use the phrase “the walking dead,” it felt extremely appropriate. A lot of companies in the digital display landscape are running out of capital after 3 or 4 years and several rounds of financing—and most of them will exit at low or zero multiple of valuation. Then again, smart investors like Grotech Ventures find a Living Social to invest in every now and again, and that is the kind of deal that can propel the value of an entire portfolio.

 

Are VCs beginning to cool in regards to investing in ad tech and social, in light of the economy?

On the contrary. I think the valuations of LinkedIn, Facebook, and Living Social have the VC community excited, maybe even overexcited, to be honest. The recent Buddy Media announcement is just one example, raising $54 million to plump its valuation to $500 million, and there are sure to more such valuations coming soon. I think what VCs aren’t too excited amount is the amount of companies within the display landscape that are going to flame out, or exit at fire sale prices. Unfortunately, according to Luma Partners banker Terence Kawaja, over half of the 35 deals in the last year didn’t produce a return on capital, and he expects that number to increase over time.

 

What are VCs doing right, or wrong, in ad tech?

If their funds make a decent return on investment, then they aren’t doing anything wrong! It may seem like that to company insiders working for some of the less fortunate companies, but VCs are not in business to keep ad-tech executives in panel discussions at cocktail-soaked industry conferences. They are in business to build companies to sell them, or put them into a public offering. I think certain well-heeled VCs may be making the venture capital business a lot harder by over-inflating the valuations of some of the larger companies in our business, but I think that’s due to the flight of money from increasingly unstable capital markets to other investment vehicles. There is a lot of cash on the sidelines right now, and venture funds are starting to look like a surprisingly safe haven. While that should scare the average investor, it makes for a very fun, frothy environment for ad technology!

 

So how should an investor, in this market, value a Demand Side Platform (DSP) company?

I would give them a 1x-3x valuation, similar to a successful digital media agency — and only if they were showing strong profitability and something unique about their process which was repeatable. The problem with the current landscape is that the excitement has been driven in large part by many of the companies that I have just described — companies with more hype than real technology with a unique IP.

 

What should ad tech Investors look out for?

I think investors have to watch out for a rapidly collapsing landscape, due to the social factor. You have an entire ecosystem built around audience targeting using 3rd party data. The problem? The companies with better and deeper first-party data have a lot more audience — like 750 million profiles for Facebook alone — than all of the companies in our landscape put together. And Facebook, LinkedIn, and Google have just started to define their display advertising strategy. If audience targeting is as easy as it seems to be now, via Facebook, then what is the real value of many of those little logos in the Kawaja map?

 

[This interview was originally published in Digiday on 8/25/11]

The RFP is Dead: New Concepts in Audience Discovery

The Programmatic Approach to Media Allocation is Coming Soon to a Platform near You.

Since its inception, advertising has always been about putting the right message in front of the right audience. Back when televisions were really expensive, and people used to gather around them in bars to watch baseball, beer companies started to do a lot of television advertising. While it’s still pretty easy for marketers to find the right beer demographic on sports programming in broadcast, the new world of multiple screens makes finding that audience at scale tougher every day.

The guy who was likely in the pub watching the game back in the 1940s and 1950s is now watching the game at home, but maybe on his iPad. Or perhaps he’s sneaking it in at work on his computer via Slingbox, or following along on his Android phone on the MLB Mobile app. The point is, there’s no easy way to find him, it’s almost impossible to find him at cheaply at scale, and we may have the wrong way of discovering him online.

The traditional method of finding your audience in the digital space is to put together a campaign request for proposal (RFP) that details the nature of your ad campaign, the audience you are looking for, where you want to find them, and the most you expect to pay to reach them. An agency’s trusted inventory suppliers receive and evaluate the RFP, and put together (hopefully) creative strategies that deliver a way to find that audience, and put the agency’s message in front of the user at the right time, in the right place. This approach makes complete sense. Except when it doesn’t.

Here are some ways in which the traditional, single RFP fails:

Multiple Pricing Methodologies: One of the problems in the traditional RFP process is that the agency is often limited to suggesting a single price range they are willing to pay for the media. For example, a typical RFP for a branding campaign looking for contextually relevant, above-the-fold inventory may suggest a price range to publishers of between $8-$12 CPM. This is fine if the proposal is only going to premium publishers with guaranteed inventory. But what if the advertiser is also interested in finding his audience on a cost-per-click basis? Knowing the historical performance of similar past campaigns, he might suggest a range of $1.50 -$3.50 per click. While the agency is comfortable buying using both methodologies (and certainly prefers the latter), the publisher is left wondering how to respond in a way that gives him the best overall price, and best revenue predictability. After evaluating the campaign, he may well decide that he will fare better on the CPC model, but in the absence of the granular past performance data of the demand side client, he will probably opt for the revenue visibility afforded by a CPM campaign.

Markets tend to work most best when both sides of the transaction have access to similar information. That leads to pricing efficiency, which in turn creates long-term sustainable performance results. Unfortunately, the traditional RFP process tends to strongly favor the demand side customer rather than the inventory purveyor. Add in the possibilities of buying on cost-per-lead (CPL) and cost-per-action (CPA), and you have a situation in which the demand side customer has the benefit of greater data visibility, and the supply side opportunity becomes purely speculative, leading to even more pronounced market inequities. These dynamics have largely occurred due to the seemingly unlimited supply of banner inventory (a supply side problem that will be debated in another article), but the fact remains that today’s standard agency RFP process falls far short of accounting for the multiple ways in which digital media can be bought and sold today.

Multiple Buying Methodologies: Along with a new multitude of pricing choices available to both sides, the emergence of real-time-bidding (RTB) makes the traditional RFP process even less relevant in for today’s progressive digital marketer. Say a marketer wants to reach “Upper income men in Connecticut that are in-market for a BMW 5-Series sedan.” That’s a pretty specific target, and I’ll bet that if a marketer could actually identify and find the several dozen guys in Darien, Stamford, and Greenwich that are looking for that specific make and model of car within the time period of the campaign, they might be willing to bid upwards of $500 CPM to reach him. Unfortunately, if you were to restrict the RFP variable to that exact target, you would end up serving a few hundred impressions, and probably fail to even spend $500 altogether. Naturally, the marketer is willing to bid a lot less find all men and women in Connecticut that are in market for a BMW; or just men in Connecticut in market for a car in general; or even just men in Connecticut, whether they need a car or not. Naturally, bids for each segment will vary widely, and can span from single to triple digits. Without a CPM-based pricing cap, it is not uncommon to see bids above $1,000 for certain impressions, although very few of them are won.

Well executed RTB campaigns have multiple segments that bid at different levels, and impressions are won at widely differing prices. While the marketer expects some visibility around what the effective CPM may be for such a campaign, RTB systems work best when agnostic to media cost, and should depend purely on the advertiser’s CPC or CPA goals. While a marketer can be very specific about his ultimate CPA, CPC, or CPL pricing cap, the traditional RFP does not address his tolerance for certain types of risk, his willingness to deploy a large percentage of media budget for data costs, and his willingness to forgo placement and context in exchange for reaching his ultimate demographic targets. This is just one of the reasons that agencies are having difficulty transitioning to the new world of demand side platforms in general.

New Discovery Mechanisms: Finding your audience by creating a well-crafted RFP and working with inventory suppliers to cobble together an effective buying program is still a great way to reach your ultimate goal, mostly because publishers know their audiences really well and have been able to offer new and creative ways to engage them on webpages (and, now, multiple screens). But what if the publisher isn’t really in control of his audience? What if the content an advertiser wants to be associated with migrates and changes constantly, based on user behavior and activity? I am talking, of course, about user generated content. Companies like Buzz Logic measure the “conversational density” around a topic and find where people are talking about, say, “organic food.” You can’t find that audience with a traditional RFP. The prevalence (or downright dominance) of social media outlets has created an explosion of UGC that is creating content almost faster than marketers can discover it. And that those new content areas are highly desirable to advertisers looking to engage consumers in contextually relevant activities. Those audiences are found via technology. How about finding people through the products they own (OwnerIQ) or even based on their occupation (Bizo)?

RTB and data make finding very granular audiences an intriguing option for marketers, but the traditional RFP process makes it hard to describe a marketers willingness to mix traditional, contextual audience buying (finding fantasy football fans on ESPN, for example) from some of the new audience discovery options (finding college students online based on their ownership of mini refrigerators, for example). Both are possible, and probably great to deploy over the course of a single campaign, but the traditional RFP process doesn’t really address this well.

Allocation: In my mind, the most important aspect missing from the traditional RFP process is that it doesn’t bring the demand and supply sides together effectively to suggest proper budget allocation for a campaign. If you have a $100,000 budget, and suggest $10,000 per publisher, every publisher is going to suggest $10,000 in media—regardless of whether or not they have it available. Moreover, you are going to alienate some publishers that may have larger minimums. The real problem is that the traditional RFP process doesn’t easily allow budget allocation across multiple media types (guaranteed display, real-time bidded display, mobile, video, search, and social) or take into account historical performance data. Essentially, the RFP makes a crude guess at budget allocation, with the marketer using his gut and some past performance data (“well, the $40,000 I spent with Pandora last time performed pretty well, so I’ll do that again”). Although the amount of choices today’s digital marketer has have expanded greatly, his form of communicating specific campaign needs is still an essay-length Word document or form-based technology with limited fields that do not capture the breadth of choices available.

So, what is the answer? New platform technologies are helping marketers expand the way they describe their campaign needs-and their willingness to deploy differing pricing and buying methodologies to reach their intended audience. Real time bidding systems are also giving end users hundreds of different levers to control the types of bids they are willing to make, based on the granularity of the audience, and performance of the inventory they purchased. In coming months, technology will not only expand a digital marketer’s ability to better describe his goals, but also use past performance data to suggest more effective media allocations in the beginning—and during—a campaign. Based on granular campaign attributes, knowledge of price points where certain real-time bids are won, and historical campaign performance, systems will be able to tell the marketer: “Allocate this percentage to SEM, this percentage to guaranteed display, and this much to real-time display” while suggesting the most effective bids to place. This three-dimensional discovery technique is where we are headed. While we are getting ready for its arrival, marketers should start thinking outside the traditional RFP box, and begin configuring new ways to ask inventory partners to find their desired audiences.

[This post originally appeared in eConsultancy on 8/19/11]

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]