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.


 


Reactionary with Insight

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Right Media Offers the Private Label Publisher Auction Tool I Am Looking For


I always promise to seek out and find solutions that make a difference and I encourage us all to demand technology to push us to improve how we manage our online advertising initiatives.  Sometimes I find them and sometimes they find me!


 


This past week I touched on Right Media and the concept of online auctions as a mediated exchange between buyer and seller.  I also presented the argument that there are too many hands in the pot with this model.  Right Media’s new “Direct” product elevates the inventory quality potential by only bringing in publishers as opposed to it’s traditional exchange which is largely comprised of networks and non-premium inventory.


 


I had the delightful opportunity to speak with Bennett Zucker from Right Media yesterday.  He called me the “mad man in the mountains.”  LOL.  We actually had a great conversation and spent a lot of time sharing ideas.  But one thing that Bennett shared with me I am bringing back to you.  Right Media will private label their exchange technology.  My challenge has been met.


 


In my Disintermediating Ad Exchanges, Publisher Ad Auctions (http://arikaufman.com/2007/02/07/disintermediating-ad-exchanges-publisher-ad-auctions.aspx) I asked you to find a technology or develop a technology that would empower publishers to cut out the middle men so that they could run their own inventory auctions.  Right Media is doing just that.  I did not ask how much penetration they have or how many clients they have, but I was really pleased to learn that this exists.


 


Let’s look at the publisher technologies. 


 


Ad servers are pretty well covered, however meekly.  None of them are that great, as we all know, since every trade show floor is full of publishers wandering around looking for “that” platform, which can actually forecast inventory with a degree of accuracy and to save them lost monthly revenue. 

Publishers have whittled together DFP and Omniture and perhaps some additional Business Intelligence tools to create some insight into what is available to sell.  That’s the closest I have seen.  But the inventory insight is never more than a week or two out.  Yahoo has a room full of people calculating forecast models and they only get about a month out before their accuracy rates drop sharply. 

Basically you just sell an approximation of what you think is safe to sell, and make-good on what you over-sell the following month.  Publishers frankly have to rely heavily on networks to backfill the inventory that develops last minute, because they have no way of predicting what will be there in advance.



So we rely on networks to take on the excess inventory and they sell it cheap.  We have no way of knowing monthly over month exactly how much inventory we will give to them, and we tend to turn the dials up towards the end of the month as our direct-sell customer’s campaign commitments are being properly met. 


Enter the auction.  The Right Media Direct auction is a legitimate alternative to a network and, it seems, may be offering higher returns for publishers than networks (in some cases). 

Direct offers publishers the opportunity to push higher value inventory into an auction than they might otherwise have done with the exchange service.  They can do this last minute, with what they haven’t sold.  The result is that less inventory will flow into the networks, which offer low returns, and whatever the network doesn’t sell will probably end up back at auction again in the traditional exchange anyway!  That’s a nice model.  But not what I was hoping for.


 


What I like is that Right Media will enable a publisher to run their own auctions in-house.  They will private label the technology.  So a publisher can sell their own advertising directly and then run excess inventory through their own auctions.  Quality inventory that doesn’t sell can go to the private auction rather than a network who returns less for it.  This is not the top-level inventory that they sell directly, but it’s better than that which should be getting farmed out to networks or to Right Media’s exchange auction. 


 


Publishers will retain a higher yield for their inventory while simultaneously moving more of their inventory directly.  This I like.


 


This self-directed publisher auction model will enable a site to increase sales without having to increase their team or the costs associated with growing the operation.  In fact, they may even find that they can move more inventory with less people!  From my publisher days, there was always that juggling act.  How much inventory can a sales person sell.  A top-performer vs. and average performer.  What is the ramp-time of a new hire.  A direct-selling auction tool offers a publisher the opportunity to have their own clearing house with a much higher return value than their current network clearing house options.  I really like this.


 


Right Media has a solid set of models here.  They are a destination for remnant inventory that a network can’t sell or for publishers that would prefer to work with the auctions directly as a clearing house for non premium inventory.  Advertiser’s like it because it is an easy way to buy advertising and is increasingly familiar due to the commonality of search advertising auction-style buy models.  With regard to publishers who participate directly, advertisers know exactly where their ads will run, which they prefer to networks.  And the private label model offers publishers the opportunity to auction-off more premium inventory to advertisers directly.  This will help them retain a greater share of their own advertising revenue and will offer advertisers the opportunity to get access to more premium inventory at a lower rate because the auction model will offer access to better rates.


 


So in the end, I really appreciate the call Bennett.  We found something that we were looking for.  Now I know that there are solutions for publishers to manage auctions both for Search and Banner advertising directly.  Superb.  Great talking to you.

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Search Advertising with Publishers, Time to Oust Google?


What is it about Google?  Why do so many Publishers look at the contextual search space and throw up their hands and say, “here, you do it.”  Why is that market so entirely dominated by the Goliath?  Okay, so maybe there are about 10, 11 maybe 12 players in the space – networks if you will like Kanoodle or Go.com – who provide contextual advertising for publishers.  But why haven’t the publishers bothered to sell the search advertising on their own?  How much money is thrown over the fence to the networks?  How much money is lining Google’s pockets. 


 


Google has dis-intermediated the space.  They control the advertiser and the publisher.  Unique position.  The publishers are dependent upon them for both the traffic and the ad revenue.  But now Google is developing content and channels which means it will start to compete with its AdSense partners.  Will the publishers be prepared?  Will they step up and start to examine the concept of selling their own search advertising?  Can they even do that?  Technically? 


 


If they have the internal sales staff selling display advertising they have the capability to sell the search advertising, but what about the infrastructure to deliver the contextual search advertising?  What about Advertisers?  Would they be willing to buy from a decentralized market?


 


Let’s look at the display advertising space for a minute.  In 1996 I worked with a small group of people to kick off Zacks.com.  It was one of the first advertising-supported web sites and the fastest growing financial web site on the Web.  We quickly grew our network for co-branded web inventory and sold advertising like mad.  We had a model and scaled it.  But that was just it.  We were leveraging content with other publishers (BIG Publishers like Dow Jones and CNN and AOL) to create co-branded pages that we owned and sold advertising on.  We were creating more and more inventory and continued to sell out.  But our partners were not creating scalable models.  They had content but had not figured out the advertising model yet.  They were turning to networks instead.  Networks – we’re talking the early days like DoubleClick and 24/7 (actually it was Petry and Katz back then and ClickNow! and they were still all separate).  There were some more but who remembers anymore which were the first ones (that will generate some comments!). 


 


Anyway big publishers were throwing their inventory over to these early networks while they got their acts together.  Zacks became the reseller for some of these sites back then as well.  And even today they continue to act as a reseller with their ad network of financial sites.


 


So the progression is clear.  Display advertising was born.  Early adopters began to sell advertising and for those who were slower to get on board, there were the networks.  So what about search?  Now of course, publishers sell their own premium inventory and give the remnant space to the networks.  And of course some networks even get some not-so-remnant space.


 


For search there are only networks.  In fact, for a long time there was just Google.  Now there are more players but Google still has the massive piece of the pie.  And what is their share of the revenue when you participate in AdSense?  More than the other networks –  sometimes a lot more.  But still, they also push more ads through at higher rates so it can net out. 


 


Contextual search revenue has been like free money for publishers.  But there is money being left on the table.  And the amounts may be significant.  Technology exists for these publishers to be selling and managing their own search advertising.  As promised, I try to find technologies that offer compelling opportunities in the space.  LookSmart is one of them.  Their AdCenter is a private-label search advertising manager for publishers.  It is tied to the LookSmart network so you don’t have to completely sell your own inventory, they will backfill what you don’t sell. 


 


AdCenter is a search ad server for publishers.  It enables a web site to sell its own contextual search and retain a much higher margin while still allowing for the use of networks for unsold inventory portions.  Quigo also claims to private label its solution as well but I haven’t verified that.


 


So this might just well be the next generation.  If publishers can direct-sell search to advertisers and retain a greater share of revenue, they can also under-cut the rates of a Google and make it more compelling to advertisers.  Large publishers can really make a go at this while the niche sites could still make a solid run at it.  Let me know your thoughts.


 


Reactionary with Insight.

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