The Mobile Video Ad Serving Frontier

Mobile advertising technologies are swimming in an incredibly fragmented space right now in terms of streaming content and integrating paid advertising.  Mobile is the wild-wild west of online advertising right now.  It is the final frontier of video, which is arguably out there today already.

While we scramble to figure out which cell phone we want to carry – the iphone or something that comes close to it – people with content are racing to figure out how to get it to you while making a buck doing it.  We know it comes down to either a subscription model or an advertising model, and the latter is the most likely path. Continue reading

Direct Response is upon us. Live with it and ‘Fill a Need’

So how hard has the recession hit online advertising?  The growth of the industry has grinded to a crawl in comparison to almost every consecutive year going back to 1996.  Some say 3%, some say 6% and some even say 0%.  But not all sectors match this trend.  Search is projected to push a 15% growth in 2009.  In general, affiliate and lead-gen spending is also expected to continue to grow at a similar pace.  Yes, the recession is impacting spend levels this year, but it is how advertisers are spending their dollars that is really what has changed. Continue reading

Advertiser Control Over Ad Spend and The Swinging Pendulum

There is big pendulum swinging over who controls spend in Online Media.  The economy has taken a swinging nose-dive and everyone is looking for signs of fall-out.  One thing that is for certain, Advertisers are aggressively taking back control over their spend.  There will be budget cuts of 15% of more across the board in Q4.  The place where those cuts are starting is anyplace where an ROI can’t directly be derived.  If a publisher can’t prove a return they will lose the spend.  Response-based advertising is probably the most insulated area of the industry.  This means a push from CPM towards CPC and CPA, even for display.  Advertisers will be driving the pricing models and publishers will have to buckle in order to sell inventory.  With less money to spend, more pressure to perform, hundreds of publishers and networks competing for the reduced dollars at hand…advantage advertisers.

Here is the story…

My good friend, Jonathan Ewert says that every four years there is a great big pendulum that swings in our industry.  On the end of that ball is the influence factor over who controls the dollars in Online Media.

In the late 90s it was clearly the advertisers who had the control.  As they began to test the new medium and brought dollars to the internet in increasing amounts, advertisers tested all kinds of mechanisms that the publisher could come up with.  But it was the advertiser that dictated what measured performance, what the price they would pay and what services they expected in terms of campaign management and reporting.

Then the pendulum swung in the other direct – towards the publisher – as online media shifted from “new media” to internet advertising.  “Standards and policies” were written.  Publishers started driving pricing; and ad server utilization, campaign management provisions and acceptable reporting became organized and structured according to what Publishers were willing to provide.  Advertisers had to start working with what was available, throwing more resources and time at managing the diversity that clients were demanding which made the process of managing internet advertising increasingly more expensive.

Competition for inventory rose steadily once again following the recoil of the bust and price inflation followed.  The explosion of ad networks broadened advertisers’ options and the result was a drastic overload on resource requirements to manage just a single campaign.

While all of this was going on, Search outpaced display as advertisers began to recognize the value of response-based advertising and Google’s climb to the top of Everest was off to the races.

Fast-forward to the beginning of 2008 and you had topped-off CPMs, somewhere between 200 and 400 ad networks (depending on who is counting) and Google controlling 60+ % of the addressable Query stream on the Internet – 90% collectively controlled by Google, Yahoo and MSN. 

Throughout the first-half of 2008, prices hit all time highs in search as traffic growth online slowed and competition for popular keywords rose.  CPMs for targeted quality display inventory trumped the last four years and publishers began to push to reclaim inventory from the networks that had been previously aggregating and watering down their value.

Then the big ball started to swing.  With the advertiser no longer able to increase spend in search without compromising ROI and publishers reclaiming display inventory in order to elevate CPMs, something had to change.  Additional factors at play, aggravating the situation, was the continued consolidation of search (think Google’s increasing share of the Market – the Yahoo deal, Google running on ASK, etc.), the intense-resource demand on advertisers associated with managing disparate data sources, and publishers trying to push CPMs while a massive number of networks commoditize eyeballs. All of this equates to the advertisers almost hitting a breaking point.

Then the economy took a swinging nose-dive and everyone started to run around asking themselves what is the fall-out result for online advertising.  Is this the next bust?  Here come the layoffs.  How many VC-backed companies are going to go under which have promised huge returns with no revenues to prove it?  One thing that is for certain, Advertisers are aggressively taking back control over their spend.

You can figure there will be 15% cuts in budgets across the board in Q4.  At least that is what some of the larger advertisers are talking about and that is what some of the networks are already hearing.  The place where those cuts are starting is anyplace where an ROI can’t directly be derived.  Lookout publishers – if you can’t prove a return you’re going to lose spend. 

Response-based advertising is probably the most insulated area of the industry over the next 2 to 4 quarters given our economic environment.  Advertisers have to advertise to keep generating business, but branding online is going to suffer.  This means a push from CPM towards CPC and CPA, even for display.  Advertisers will be driving the pricing models and publishers will have to buckle in order to sell inventory. 

Furthermore, diversification of spend across less expensive, higher-returning publishers and networks will also draw attention.  This means that advertisers who have hit the asymptote of their returns on Google or the major display ad networks – when spending a dollar no longer returns $1.50 but now returns $1.25 – will start to look elsewhere to maintain their margins.  With smaller budgets to spend, ROI pressure will become intense.  We may even begin to see performance-based commissions between advertisers and agencies as competition for control over the spend increases between agencies.  Certainly this will be a likely case in the SEM arena.

So the pendulum, which started to swing in the beginning of Q2, went full tilt when the market dove.  Advertisers now hold the cards and publishers and networks that recognize the truth will step up and work with them to maximize the value of their relationships given the pressures present in the economy. 

With less money to spend, more pressure to perform, hundreds of publishers and networks competing for the reduced dollars at hand…advantage advertisers.

DoubleClick Launches Online Marketplace

As reported in iMedia Connection on April 4th, “Buyers and sellers of online display advertising will have a new forum for making deals; at least that is the premise behind DoubleClick’s  latest proprietary product, DoubleClick Advertising Exchange.”

A mediated exchanged between buyers and sellers for the exchange of advertising inventory is not a new concept.  Right Media is the best example of a well-executed version of this concept.  I commented on Right Media several weeks back in Disintermediating Ad Exchanges, Publisher Ad Auctions.  The argument back then was that in an ad exchange environment like a Right Media, where buyer and seller are brought together anonymously under an auction based environment, there is no relationship developed or fostered in the buy process.  My proposal hypothetical question in that article was, what if you could eliminate the middle-man of the exchange and put buyer and seller together.

That article generated a response from Right Media.  Bennett Zucker contacted me for a little education conversation.  Subsequently, I wrote a follow-up comment acknowledging the value proposition of Right Media.

Some of the things that I learned my research into RM and other exchange models is that publishers are migrating away from the traditional networks because they are getting better rates through the exchanges.  Inside sources have shared with me that, Tribal, Burst and other popular networks have all seen a measured decrease in publisher inventory while that same inventory has reportedly shown up on RM.

So now DoubleClick is going to enter the exchange game.  Think back a while and recall that DC was one of the original networks.  Of course I don’t believe there is a single person remaining at DC who was involved in that operation, but the heritage is there – and maybe some of the legacy technology.  Regardless, they’ve built the exchange technology.  They have the publishers with DFP and they have the advertisers with DFA.  Put them together and link the two systems and you have a broad network of exchange.  Get out of the way and you potentially have a model that will rival Google’s cake-and-eat-it-too mode of AdSense and Adwords.

DC has some challenges ahead of them.  I don’t know the nuances of how well they are going to tie together DFP and DFA, but as hosted solutions they can upgrade and link the two and the users will see the collaborative efforts.  If publishers start pushing inventory into the system and advertisers start looking into the system to buy, you have a strong value proposition for both sides of the transaction.  Under this model, neither buyer nor seller needs to go to a different system like a Right Media to transact. 

Under the DoubleClick exchange, it is largely publisher inventory that is at stake, whereas with Right Media is mostly network inventory.  So will advertisers who use DART start to look at the exchange for publisher inventory – or will publishers first begin to test the DC exchange in addition to “offshoring” inventory to networks and auctions?  Time will tell and the testing model of DC will be a good approach so the top-success-oriented players demonstrate the desired results.  But this is one to watch closely as it could be game-changing.

Reactionary with Insight

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How to Conquer an Inventory Crisis Lacks Advice

Eric Porres is a partner with Underscore Marketing and he wrote a 6-page In-Focus piece in iMediaConnection today about behavioral targeting entitled: “ How to Conquer an Inventory Crisis.”  Eric is a media guy and he knows the space pretty well, moreover he is a BT guy and has made some contributions to the industry on the topic in the past.  But this time around where you would hope for some meaty substance and take-away advice, Eric comes up a bit short.

He does a sharp job at getting a reader to agree that the point of any online campaign (direct response anyway) is capturing new customers and recapturing existing customers.  I guess not everyone wants to write the proverbial 10-step to … article, and thank god for that, but you still want the In-Focus pieces to give some practical steps about what you should do when you find yourself in the related conundrum.

Inventory is getting more competitive.  Finding the niche sites is harder to do.  Eric illustrates how to use MediaMetrics to your advantage but what about his mentioning of Alexa and Quantcast?  How are leading media buyers and planners using those as well?  How do you integrate to become more effective in an increasingly competitive marketplace?  With over 20M sites, Quantcast is one of the fastest growing media planning tools out there – especially for the smaller agency who can’t afford Comscore.  The cutting edge sites recognize that, and so they are flocking to Alexa and Quantcast for that reason.  They want the new, new media dollars.

Re-targeting is hot.  Ouch!  Eric glosses over this with a simple explanation.  He knows this topic better and to assume that the audience just get’s it, is part of the problem in this space.  People are not spending time going deep with the details.  I blog about this topic too frequently to go off on it now, but I do think that when we get into an In-Focus article we should see more practical insight into how to use these technologies so that there is a take-away that we can apply ourselves. 

When you advertise on the same sites, month after month, the composition of your advertising audience is increasingly becoming more and more comprised of both your customers and your previous leads.  People frequent the same sites.  If you advertise in the same places – presumably because they continue to perform – you will be exposing yourself to more and more of the same people.  You still perform well because the audience is large enough to generate new opportunities.  But there are existing customers and former leads there too.  Re-targeting is very important to advertisers who spend money on the same sites.  Having the opportunity to communicate to your existing customers and your former leads is vital.  Why re-prospect your customers when you can cross-sell, up-sell and regenerate more revenue from them?  Why re-pitch a lost lead the same way again?  Acknowledge their disinterest the first time around and play on it, maybe it will work.

Everyone likes to use buzz words, I’m guilty of it too.  Long tail and Web 2.0 are two of my favorite.  People don’t even necessarily know what they mean any longer.  Or they never did.

“To be fair, the dilution of context when weighed in the balance of media efficiency may not justify the exercise, but in the end, we’re really interested in the behavior of our prospects.”  Huh?  Okay, actually this statement by Eric makes more sense in this blog than it did in his article.  I am pretty sure he was trying to explain that undervalued inventory, when bought in larger volume, can have as great of an impact as that premium space.  So look into that.  RightMedia Exchange is a great source of decent inventory at a great price.  And of course there are a ton of networks out there.  Eric did point out that buying behavioral targeting services will boost your response rates and if you buy that inventory at auction, you could be doing even better with your ROI.

Of course, there are always the non CPM models.  If you are buying direct response, you don’t have to buy CPMs.  Can you still deploy BT if you are not buying CPMs?  Actually you can.  You can’t count impressions, but you can cookie your visitors and your customers and use an ad server to serve your ads.  Obviously you will be serving a huge number of impressions, so find an ad server willing to negotiate a great rate for you – use a low file size and agree to a high volume commitment and some ad servers will play ball.  But if you use a first party ad server (TruEffect) or a BT-providing ad server (DoubleClick’s Boomerang) then you can still do it.

What about Search?  Can you do BT?  You can’t on the serve, but you can once the click takes place.  You can cookie the user or read the cookie on the user’s browser and then drive them to unique landing pages using something like CoreMetrics. 

This is the kind of information that Eric could have provided to us in his article.  The deep-dive In-Focus articles are meant to give us some meat where the daily 800-word essays don’t have room to provide.  Of course, Eric only used 1,000 words.

Reactionary with Insight

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