Predict Your Audience’s Preferences, Digging into [x+1]

[x+1]‘s VP of product development, Howard Fiderer explains in iMediaConnection how to make consumer data actionable so that you can tailor users’ experiences to their tastes on their very first visit in Predict Your Audience’s Preferences.


 


For those of you who are unfamiliar with the company, [x+1] is the former Poindexter.  Originally a primary ad serving company, Poindexter raised an eight-figure round of private financing in March of 2005 and used the funds to re-define the company from product, to target market, to brand.  Starting with adapting the mathematical formula x+1, Poindexter reset itself in the marketplace.  “We’re using this as an opportunity to mark a stake in the ground for a category we’re trying to define, marketing optimization,” the company’s CEO Toby Gabriner told ClickZ News in April 2005.  [x+1] proposed to focus on advertiser-marketing within the advertiser’s site while maintaining their advertising business, or ad serving business.  Ideally, they saw the opportunity to integrate the two products into a prospect-drawing and customer-targeting model as the ideal go-to-market.


 


First problem to overcome, Poindexter’s ad server was not viewed as a tier-one ad server in the market.  Although it had respectable market share, their reporting capabilities were commonly considered to be sub-par.  Major advertisers like American Express, who had termed contracts with Poindexter, complained about the lack of report diversity and the limitations of data availability.  Other agency users also had issues with their reporting, when their advertiser clients forced Poindexter on them.  That was the model for Poindexter, they sold to the advertiser so the agency would have to use them. 


 


Actually, it was more of a resultant model.  Poindexter sold to advertisers because they were looking to sell their ad serving and their developing predictive customer targeting back-end solution.  They promised improved reporting but it was not coming fruition on the ad serving side for customers. 


 


A Perfect example with regard to reporting shortfalls is the concept of ‘view-through.’  A view-through is when a user sees an advertisement served by an ad server but does not click on it.  Later that user visits the desired landing page which is tagged by the ad server and can be measured back by the ad server as having seen that particular ad on the associated site (placement) where it has been displayed.  This is known throughout the industry as a ‘view-through’ and [x+1] can not measure it, or at least does not report on it to its advertising customers.


 


But what [x+1] was particularly good at was/is the site-side customer analytics and applying those anaytics for targeting.  Like Howard’s article describes.  This is what secured their relationships with large advertisers who were using their ad serving as well.  The conversion from Poindexter to [x+1] was incredibly intelligent because it was a migration toward their core competency.  Following the April announcement, rumors spread that [x+1] would be abandoning their ad serving business altogether.  However they have maintained their media+1 product line, which is their ad server.  With that, however, they are hardly ever encountered as a competitive bidder in the ad serving sales arena.


 


One likeable aspect of Howard’s article was that it was not self-promoting.  Howard opens the door to site-side predictive modeling and website customer conversion and retention but he kept it very high level.  In fact, it would have been nice if he had gotten more granular for us so that we could have a better understanding as to how to apply his concepts.  I never have a problem when people mention providers – even their own companies – so long as they mention competitors and highlight the best solutions without bias. 


 


[x+1] offers up two primary products: media+1 and site+1.  Howard’s article is focused on a capability delivered by the latter, a tool that matches messages and offers with audience segments to simplify and optimize visitor acquisition, enable a site to up-sell conversions and promote customer retention.  This of course is according to the [x+1] web site.


 


My experience, and the feedback that I have received from clients is that site+1 is [x+1] true wheelhouse offering.  As I have described, this is where their ability to enable an advertiser to confidently target excels.  Ad serving is a secondary competency.  In fact, [x+1] has partnered with ad servers like DoubleClick to allow an advertiser to take advantage of site+1 while working with another ad server.  If not already, I would expect integration with more ad servers to come.  Clearly the company respects to obvious stats.  The first is that people are not going to change ad servers to utilize site+1 – they are not going to adapt media+1, known to be inferior, just to have the ability to utilize site+1.  Secondly, if someone is already using an ad server – and DoubleClick represents like 50% of the market (good first partner to choose), then better to enable integration to open up a new customer base than to compete.


 


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Is Google Selling Paid Search Ads That Violate Trademark Law

Wendy Davis talked about EFF: Trademark Search Buys Protect Free Speech in Media Post’s Just An Online Minute last week.  “A federal appellate court is getting ready to decide whether Google’s method of selling paid search ads violates trademark law.”  Can you imagine if the entire concept of buying another company’s name on Google were to become a violation of trademark?


 


I know that “…the case is nearly identical to a lawsuit brought by insurance company Geico. In that case, a trial judge in December 2004 decided the key issue in Google’s favor,” but just imagine the possibilities.


 


First of all, every B2B player is guilty of buying their competitor’s name when buying search on Google, MSN, AOL and the other engines.  If that becomes a trademark violation it would be HUGE.  The number of keywords, and the combination of keywords would be drastically reduced that one could buy.  Furthermore, the keywords that remained available for one to buy would go WAY up in demand.  Words like ad server would shoot from $1-$10 to $50-$150! 


 


When my company buys all the other ad server’s names (which c’mon, we all do it) we buy it at reasonable auction rates.  But if we could no longer do it, we would be relegated to only buying descriptors.  Buying competitor names simply would no longer have a justifiable ROI.  And all of the competitors in the space would be competing for those descriptor terms too.  Search advertising as a whole would become terribly more expensive and far less justifiable.


 


My wife said to me last week, “did you know that the average person using the internet has no idea that the listings on the side of a search engine are paid listings?”  Of course I could not believe what she was saying, being so close to the industry myself.  My wife works in Healthcare Insurance and has no data to support her statement.  How could she possibly know what she was talking about I thought?  But I also thought about it for a minute and something else that my wife does came to mind.  She ‘surfs’ the Internet.  She literally sits in front of the computer and clicks on things late at night.  She follows links and goes places.  And I know this is a popular past-time.  I don’t do it.  I am very focused online, in-and-out, on-and-off.  I do what I am there to do and I get off.  Granted, I spend hours doing it.  But I never really surf.  So maybe she is right.  Maybe the average individual really doesn’t know those are paid listings.


 


If advertisers buy their competitors names, then there is a benefit to it all.  When a user types in a company name, competitors show up – giving the user other options to consider.  This is not good for the primary company that was entered, but it’s good for the other advertisers and it’s good for the user.  Take away the right to buy your competitor’s names and you lose all of those listings.


 


My wife also told me that she clicks on those side listings.  I do too sometimes.  The paid listings can get you to the products you want more quickly sometimes – especially the obscure ones.  If you know they are paid listings, nobody is getting hurt.  If you don’t know, you’re still benefiting.


 


Back to the negatives.  If you can’t buy your competitors names, all of those listings will no longer be there when you type in a company name, like Nike.  If I were type in Nike today, Adidas and Starter and some shoe companies would all pop up.  If you could no longer buy Nike, then only Nike would come up and the user would lose out.


 


Wendy says: “people use search engines to discover information not just about companies, but also about their competitors and critics. It’s easy to understand why some companies might not be happy with this state of affairs, but their recourse is to offer better or cheaper goods or services, or to counter critics with arguments, as opposed to filing trademark infringement lawsuits.”


 


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Why Does Google Analytics Report Values That Are So Different Than Ad Servers and Site Analytics Counts?

I had a client call me today and ask, “Why do we need to use an ad server when we have Google Analytics?”  Actually, he was redirecting a client’s question and asking for ammunition, but the question was legitimate.  He wasn’t talking about ad serving per se, but reporting.


 


Google analytics enables an advertiser to measure counts like an ad server and site analytics software and yet the measurements yield very different results.  In fact, the results are always lower, enabling the client to conclude that they must be more accurate.


 


Hold the phones!  Wasn’t it just like up to four months ago that Google was guilty of 20-30% click fraud rates with its Adwords program?  Advertisers started complaining and dollars started shifting away from Google and towards MSN and Yahoo!.  When Marketing Pilgram broke the story in December 2006 the word “Click Fraud” was changed to “Invalid Clicks” and Google demonstrated that they had miraculously instituted a change that resulted in the double-digit error rates dropping to less than 2%.


 


So why are we trusting Google’s counts?  It would seem that Google has simply put some major filtering in place to cover their asses so that Advertisers aren’t getting overcharged any longer.  And now they are the more accurate source of counts? 


 


In the end, however, what Google counts and what the rest of the industry counts when it comes to banner advertising and site-side traffic has to be inherently different.  Just as it is with click-traffic.


 


According to Google: “Different web analytics products may use a variety of methods to track visits to your web site. Therefore, it is normal to see discrepancies between reports created by various products. However, we generally believe that the best way to think of metrics across different web analytics programs is to think in terms of trends, as opposed to numbers by themselves.”


 


Google presents that their tracking methods can introduce a difference in reporting values: Cookie-based tracking vs. IP + User Agent tracking.


 


Cookie-based tracking relies on a browser setting the cookie. If cookies are disabled, cookie-based analytics programs (such as Google Analytics) will not count the visit.


 


IP + User Agent tracking typically uses log file analysis for its data. Ad servers rely on this methodology. 


 


Another discrepancy that Google talks about is a resultant of first party vs. third party cookies.  “Because 3rd party cookies are set by a source other than the website being visited, they’re often blocked by browsers and security software. Google Analytics uses 1st party cookies.” 


 


Ad servers use third party cookies and therefore these may be getting blocked by Google Analytics.  That would represent a huge discrepancy between the ad server counts and the Google counts.


 


So Google and ad server and site analytics do it differently.  That makes sense.  Now back to my client’s question.  Why would you use an ad server when you have Google Analytics? 


 


For one thing, Google limits a site visit per user to one time every 30 minutes.  Ad servers, by comparison, would not filter such behavior, but would recognize the fact it is a unique visitor (using a cookie) coming to the page more than once.  So impressions would be counted separately from unique impressions.  Google would simply filter the multiple impressions out and give the unique impression.


 


My suggestion to my client was to convince their client to deploy a site analytics toolset so that there would be two third-party validations in place to offset Google.  People don’t seem to get the idea that even Google is proposing that “…the best way to think of metrics across different web analytics programs is to think in terms of trends.”  Especially when it comes to Google.  You get what you pay for … and you don’t pay for Google analytics.


 


Here is something else that we discussed.  If you synchronize your ad server and your site analytics you will get accurate – or actually identical counts.  For example, deploy a DirectServe™ Technology using First Party ad serving with a WebSideStory first party cookie and you will have a seamless pass through of data.  Impressions and clicks will go through to the site and the site will read the ad serving data – actually WWS will receive the data using the first party cookie – and the reporting will match up perfectly. 


 


Remember, DirectServe™ is a patent-pending capability of TruEffect and we are partnered with WebSideStory to implement this kind of solution so that was a plug.  But seriously if you want to put together the pieces this is how to do it.


 


The client also asked about bid optimization.  Hmm, another variable.  Love it.  Well WSS has Bid Opp and so that can easily be brought into the picture as well.  Using a first party cookie, the ad server can lay the cookie down on the user when they click on the keyword and associate the keyword and search engine with that user.  If that user is already carrying the cookie from the client, the ad server can add to the cookie the search variables that regenerated the visit.  Then the site analytics software can receive the data using the first party cookie.  Done.


 


Re-targeting is a wonderfully versatile capability.  My favorite part of the conversation was when he said, “oh…we’re already testing targeting with TACODA.”  Love it.  Obviously we discussed the event-based targeting aspects of TACODA and how it is based on anonymous occurrences.  He agreed that while the solution works well it is limited to their network and does not have the ability to leverage client data like what DirectServe™ has to offer – site agnostic, web-wide capacity that leverages client knowledge about customers for re-targeting.  He got it and agreed that we were talking about complimentary solutions … for now.


 


Anyway, back to Google.  I think it is key to understand that ad serving has all of its benefits from the perspective of campaign management.  And site analytics has all of its benefits from web site trafficking, modeling and analysis.  But what was at conflict here was ignorance of a client’s client.  If a client is going to use Google, they need to be educated as to why they are using and what they are using it for.  It’s kind of like using fuzzy glasses to read a book.  Or a better example is using your hand to feel your kid’s forehead to see if they have a fever.  It is a trending tool that gives you a relative indication, not an exact measurement. 


 


Google Analytics is great for the advertiser who wants to log in at 3am and see what’s happening.  I do that sometimes with my blog when I write a particularly contentious article – just to see if it’s triggered some reactions.  But my server logs are far more accurate than Google Analytics.  The counts are always 30%+ off.  Same with ad server reports and site analytics. 


 


Educate your client with the tools that are going to demonstrate real accuracy.  Use sales reports and revenue reports – post-click analysis – to demonstrate further discrepancies that translate into real value to the client.  It is possible to show the client where the diversion points in the direction of the ad server and site analytics favor.  Go the extra step and you will prevail.  If you have more than one client that will bring this up, prepare a document that you can use over and over again.  This problem is not going away soon.


 


Reactionary with Insight.

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Behavioral Targeting and Reducing Ad Spend? Nah

Robert Moskowitz introduces a piece on iMediaConnection reflecting industry insiders weighing in on whether behavioral targeting enables advertisers to spend less while getting better results.  It’s a light a fluffy piece, citing insight from Bill Gross at Revenue Science, Emily Reilly at Jupiter Research and Dave Hallerman at eMarketer.  The gist of it all is that Behavioral targeting allows an advertiser to ‘get more for their money,’ insinuating that they could reach goals with less dollars. 


 


Of course that assumption is off.  When budgets are set, advertisers will spend those dollars whether performance is better or worse.  Subsequent budget planning will be based on those results.  Therefore if an advertiser can get more accomplished with fewer dollars, they will just get even more accomplished with the budgets that were planned.  Kudos! 


 


Online spend is on the rise.  If it is becoming more efficient to generate better quality results through BT, then spend will likely increase to generate even more results. 


 


Of course, the flip side is that publishers are on to this as well and the cost of BT is on the rise as well!  Publishers are not making the money on BT that they had hoped.  It requires a lot of $0.30 CPM impressions to get that $30 CPM BT impression served so the net is not great.  Therefore there are additional fees being slapped on the advertiser and there are net fees being included as well to raise the cost and justify the capability for the publishers.

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Get More with No-Cost Ad Serving, Maybe for Publishers

Well you knew I would be coming at this one.  Bennett Zucker’s February 16th, 2007 Get More with No-Cost Ad Serving article in iMediaConnection throws out the notion that the value of ad servers is fading out of existence.  While Bennett fails to be explicit about whether he is specifically looking at publisher ad servers or advertiser ad servers, let’s examine both from the perspective he presents.


 


Bennett says: “no-fee ad serving can bring about technological innovation, and better, cheaper, faster ways of getting things done online.”  True, ad serving has become an increasingly commoditized service.  Zedo and Mediaplex are the two biggest drives of this trend.  Zedo’s approach to giving away three-months of free ad serving and then converting customers to paying clients results in very cheap ad serving.  And Mediaplex is ‘buying’ business aggressively in an attempt to capture market share from DoubleClick and Atlas.  It is not uncommon to see $0.05 or $0.04 CPM rates from either provider for tiered impression volumes in excess of 100M/mos.  I’ve seen Mediaplex go as low at $0.035.  Hard to compete with.


 


Zedo is easier to compete with.  They are not certified to serve on as many sites, their customer service is not rated that high and their tool is buggy.  Mediaplex has its issues too.  I’ve gone into the competitive features of different ad servers in the past in my “How to pick an ad server series:”


 


1.      The Ad Server’s Point of View – Selling to the Advertiser and Cost


2.      How to Pick an Ad Server – Part II Interface Evaluation


3.      How to Pick an Ad Server – Part III Rich Media, Targeting & Optimization


4.      How to Pick an Ad Server – Part IV Price


5.      How to Pick an Ad Server – Part V Training


6.      How to Pick an Ad Server – Part VI Customer Support & Implementation


 


“Today we assume, for example, that it costs nothing in bandwidth or storage or processing power to add new subscribers and web pages. But this notion hasn’t been widely applied yet in the realm of ad serving.”  Actually Bennett, this is false.  With ever-increasing files sizes, rich media and video this is the one thing that is keeping CPMs from falling lower and, in fact, this is what is starting to drive CPMs back up.  Bandwidth is a fixed cost for an ad server.  Granted the more bandwidth you require the better your rate, but a pipe is a pipe and you pay for the bandwidth in chunks no matter what you push through it.  The operating model of an ad server is based on what sells and most ad servers have a minimum CPM that they need to cover to break-even.  This number increases as the files sizes creep up.  Video, especially, introduces a whole new level of bandwidth requirements like rich media.  I know people paying $4 CPMs with Eyeblaster if you can believe that!  Granted, they’re getting hosed.


 


Publisher ad servers have an interesting situation to consider, and the Google proposition is one that is knocking at their door.  If Google is going to offer free ad serving in exchange for joining the AdSense network, then you do have a problem for the ad servers.  This may be a very enticing offer to a publisher.  Eliminate the $0.08 DFP charge and that could be worth $100K/mos or more to the publisher’s operation.  It could be worth a lot more if they’re a large web site.


 


So how do advertiser ad servers stay in the game?  For one thing, what are ad servers really all about?  Is it posting ads, rotating, optimization and selection logic?  Really?  Come-on.  There is a reason why there are out-of-the-box ad servers like Ad Juggler and freeware php-Ads-new.  Okay, I think of them on the same level, you may not.  Because it’s not hard to upload ads to a server and select creative and post them.  Adteractive runs over 1 billion ads a month on a home-grown system.  All you need is scalability.  Servers.  Co-location helps so that you have the security of not worrying about going down regionally and you have the load-balancing geographically and potentially internationally.  Those are only subtle differences between the major ad servers and the tier-three players. 


 


Self-managed out-of-the-box ad servers can’t get certified on the Yahoo!, AOL and MSN’s of the world because of reasons like that.  So if you are using those solutions, you’re out of luck there.  But that is not necessarily an issue for all advertisers.


 


Ad servers for advertisers are in the game for log processing and reporting.  That is the meat of the game.  The ability to process 70-100 million logs per ad served and return impressions, clicks, post-click events per site, site-section and placement is the heart of what ad servers do.  Taken further, the better ad servers offer robust reporting and analytics that enable advertisers to cross-dissect the data to make empowering decisions.  This is where some of the real differentiation comes into play.


 


A second place is integration.  Ad servers are starting to step up and recognize that 2007 is about consolidated reporting.  Drawing together disparate data sources into the dashboard.  Blackfoot has been touting this for 2 years.  David Smith has been challenging the industry for over a year to bring this to light.  Ad servers are slowly coming to recognize that this is where they need to be. 


 


TruEffect began a project with mOne a year ago to build a consolidated report that brought together the search, email, rich media and ad serving data under one roof, within Microsoft Excel.  Nothing entirely different from what some of the other ad servers are capable of doing accept for the fact that it is active, live data that is manipulatable within a Microsoft Excel environment, instead of within a Web-based application and downloadable as .csv files.


 


Now I know first-hand that publishers are dissatisfied with their publisher ad serving solutions.  See my post: Banner Ads on Google.  And I know that there really is not a comprehensive solution out there that combines inventory management, sales management, forecasting (the wholly grail) and campaign management.  So maybe Bennett can shed some light on that in a follow-up article or perhaps Brad Beren’s can find someone to write a non-self-promoting article on the state of affairs of the publisher ad serving space.  But for now, the largest pubs out there are using a combination of home grown systems or a combination of DPF plus site-side analytics plus proprietary tools plus a room full of analysts; and all of them are blind more than just a couple of weeks out in terms of available inventory.  Crack that code and you get an award.  And a job … probably from Google.


 


Differentiation is key in every space, no doubt Bennett.  And the key is to make those differentiations known in the industry.  DoubleClick is asleep at the wheel.  Atlas is focused on their purchase of Accipiter and has let their client services slip so badly that their clients are just crying for someone to come and take them away (oh Calgon!).  Mediaplex is aggressive out there, no doubt.  But all they have to offer is a shelf full of the features that you should already expect from an ad server and a price that is intended to undercut DC and Atlas.


 


And now, the plug J … TruEffect has all the features, and yes, we’re competing on the price points too.  But we built the ad server within Microsoft Excel, TruAdvertiser.xls.  See Maximize your Ad Traffickers’ Value, Re-Evaluate Their Time for a deep-dive into the product with screen shots and all that good stuff.  I know, I named the post poorly, but there is a lot of meat in that one.


 


Anyway, TruAdvertiser.xls was built around the workflow of an agency or advertiser.  It integrates with other aspects of the business operation, leveraging all of Microsoft Office.  All aspects of the media planning, ad serving and reporting is conducted in Microsoft Excel and other disparate sources of data can easily be pulled in to create dashboard-like reports.  Data can be pushed out to accounting systems or other tools like internal business intelligence reporting tools.  There is not a whole lot that can’t be done with some specialize work.  And we do it everyday with our clients.  Okay, enough … that wasn’t bad (166 words).


 


So Bennett Zucker wrote us another good article.  And from the publisher ad serving perspective I think he is spot-on.  Commoditized pricing is an indication that there is little differentiation in the space.  If it is just about price, the players are driving head-first into the ground.  If someone does not crack the forecasting code it will remain a one-way ticket.  Google’s attempt to throw their hat into the game with their free publisher ad server for AdSense doesn’t even bother to take a swing at it.  My conversations with them last year yielded that they too didn’t have that problem solved.  So if you want to win, and maybe I can help you here, launch a publisher ad server with forecasting that can look out past 2-3 weeks with a degree of accuracy that can be leveraged for selling.  That is the golden egg.  In terms of advertiser ad servers, it’s not about features, everyone has them and that is why the prices have fallen.  Rich media, video and larger file sizes will drive the CPMs back up.  Integration and consolidated reporting will keep the leaders alive if they don’t stay asleep at the wheel.


 


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