Floors are not Fraud

Hi all.  I have been thinking about cracking my knuckles and getting back to the literary salt mine for a while now and I saw an article yesterday that just I couldn’t resist.

Right off the bat, the headline “Are Artificial Price Floors The Next Iteration Of Ad Fraud?” almost audibly screamed Betteridge’s Law. (OK, I had to Google the name, but I swear I remembered there was such a thing).  So, in honor of Mr. Betteridge and his predecessors, let me state clearly that with respect to this headline, “The answer is no.

I can certainly understand why the buy side might not like price floors, but a buyer calling floors fraud is like King George III calling George Washington a terrorist.

Would it be fraud if one bought for 25¢ CPM an impression that’s worth $25 CPM from an ROI perspective? That’s a much bigger disparity between “true” value and transacted price than the example in the AdExchanger byline. Yet this sort of transaction happens all the time because, leveraging technologies like re-targeting, a buyer often knows much more about user value in the context of a particular campaign than a seller does. If they were being candid, many (if not most) buyers would tell you this is kind of the point of sophisticated, RTB-based buying strategies.

So, then, Is Precise, Data-Driven Targeting The Next (Next) Iteration Of Ad Fraud? Of course not.

What would a “true” or “real” floor price for an impression even be, as opposed to the “false” or “artificial” floor to which the author objects? Would it be the small fraction of a cent that it costs the seller to serve the impression? Would it be the seller’s operating expenses divided by its impression volume? Maybe add some margin? What’s a fair margin? Would it be opportunity cost, which the author implies would be his choice? (Second price approximates opportunity cost if one makes some reasonable assumptions.) Something else?

It’s not like I have written a book on this stuff or anything, but I have to tell you that I don’t see any reason why one of these options is more “fair” or “true” than the others. On the contrary, I see all kinds of reasons why all of them are less fair than the outcome of a voluntary transaction between two independent and accountable market participants.

To be clear, the seller has an obligation not to misrepresent what she is selling; misrepresenting what one is selling is bad (just ask Volkswagen). But where else in commerce do we even expect, much less require, a seller to disclose their reservation price transparently?

Do we get mad at the person who sold us our house because they didn’t tell us their brokers’ open was poorly attended and they really need to move immediately? Do we get mad at the car salesman who bargains harder because we forgot to take off our nice watch? Do we get mad at the movie theater because there were empty seats and so their opportunity cost on our ticket was $0? For that matter, do we even get mad at the movie theater for the $10 bag of stale popcorn? No. We expect that behavior and we do our best to counter it, but at the end of the day we decide whether the price offered is worth it to us in context and we buy or don’t buy.

The bottom line is that sellers should be free to use any and all (legal) tools available to them to manage their businesses in any way they think will meet their business objectives. Buyers are free to change bidding strategy, negotiate special terms or look elsewhere if economics on a transaction don’t work for them. Reasonable people could debate whether or not price floors are good for the efficiency of the market overall, but thankfully nobody is setting policy for the market overall – this isn’t 1950s Stalingrad.

Floors, “artificial” or otherwise, are a valuable and perfectly legitimate yield management tool for sellers.

Kiccup: The Birth of a Baby…Product

site backdrop 2 - no arrows - footer croppedAs any new dad will tell you, that first year is a tough one.  Lots of changes, lots of compromises, not a lot of payback and even less sleep.  But then the walking starts, you get those first few words, a little personality and things get better….until you have another one and you’re right back in the soup.

So that’s where I was in February of 2012.  My oldest was about 2 ½ and my youngest was about 7 months.  It had been a long time since I was conscious of having much “fun”.  I was at a birthday party for the son of some good friends.  Their son was 2 and there were a bunch of other kids around the same age for my oldest to play with.  He was off entertaining himself with the other kids.  1 down.

The 7-month-old was strapped to my chest in a BabyBjörn®1.

(A quick aside:  Both of our boys loved the ‘Björn…once they could face outward.  Facing inward not so much, but as soon as they were old enough to turn around and see what was going on they were happy.   I loved the ‘Björn also; it kept me mobile, my hands free, the baby happy and I am big enough that the weight of the little one wasn’t uncomfortable even for long stretches.  There was just one little problem…)

I was talking with a few friends I hadn’t seen in a while, hearing some great stories.  I had a beer in my hand.  Both kids were taken care of so I could actually focus on the conversation.  For the first time in as long as I could remember, I was actually having fun!  My little one was having a great time also.  Each time someone laughed, he giggled, waved his arms and kicked his legs vigorously…pounding me in the balls with his feet.  Aaaaah, fatherhood.

This happened often, unfortunately, and I am far from the only one so afflicted.  It’s a major problem with the ‘Björn; the forward-facing body position keeps the little one entertained for long periods, but for too many dads it’s really rough on the old “family jewels”.  I did a quick straw poll at the party and about half the dads there had shared the same painful experience.  I knew a bunch of other dads who had as well.  Many had actually stopped using the ‘Björn because of it.

After I left the party, I Googled for a solution and came up empty.  I was pretty surprised.  With a problem this acute and widely experienced, I expected that someone would have solved it already.  Not so.  As it happened, I had left my job a couple weeks before the birthday party so had some free time.   Opportunity was knocking and I had the bandwidth to answer.

I got connected with David Gonzalez and Bruce Eng at Sozo Design and within a few months we had a design that was simple, effective and unobtrusive.  After a focused project with Master-McNeil, the new product had a name and The Kiccup was born!   It took a while to iron out sourcing and distribution logistics, but now we’re ready to go.  We couldn’t be more excited to officially launch the product and our new online store!

The Kiccup is the perfect solution to a painful problem – and the perfect gift for a new dad.  We hope you enjoy the product and that it works as well for you as it did for me.

Here’s to more hands-free, pain-free, happy baby time for dad!

1 BabyBjörn is a registered trademark of BabyBjörn AB, which is unaffiliated with Kiccup, Inc.


Don’t be cute

Wholeheartedly agree with Jonathan Mendez in yesterday’s Digiday.

Kirk McDonald’s WSJ op-ed reminded me of my abortive attempt to land a finance job in my early 20s. Someone told me I should read the Wall Street Journal and pick up the lingo. I read the C section dutifully for a couple months, but still had no idea what was going on. So in my interview to become a bond trader, when I was asked what most interested me about the bond market, I said “I’m really interested in LIBOR”.  Which I am sure to the interviewer sounded as cute as when I asked my 3-year-old son Alex what he dreamed about last night and he said “a cheese sandwich”.

Cute doesn’t get you the job.  Nor should it.

If This Process Is So Broken, Why Hasn’t Anyone Fixed It?

For those of you who found Part 1 in my AdExchanger series on Programmatic Reserve interesting, here’s Part 2.


Programmatic Reserve: Let’s Solve The Right Problem

Just a quick post today, to steer readers of this page to AdExchanger for some thoughts on programmatic reserve.


Google: “Programmatic” is all about the buy-side

Did anyone else think yesterday’s virtual “hang out” with Google’s Scott Spencer was fascinating?

First of all, where was he?  Was that a jungle or a conference room?

More importantly though (much more importantly), did anyone else find Google’s definition of programmatic a little lopsided?  According to Scott:

  • “We define [programmatic buying] based on the fact that the buyer gets to define the targeting”
  • “The ability to not buy is a critical attribute to programmatic buying”

This is a fair characterization of RTB as it exists today, but defining the entire Programmatic market this way isn’t exactly seller-friendly.  The real eye-opener for me though was the response to a question from the audience on delivery guarantees (good question, Tom!).  Scott made it clear that in the context of Programmatic Reserve, any delivery guarantees should only go one way.  So for Google, a programmatic delivery guarantee means that the seller guarantees they will provide the inventory, but the buyer doesn’t guarantee they will buy it.

Huh?  You have to admire the frankness, but if I was a publisher I’d be very concerned about that perspective.  I think for programmatic reserve to “really happen” it’s going to take a much more balanced approach that addresses both buy-side and sell-side needs.

What do you think?

Great Creative from Merrill

I just saw this campm2aign on Y! Finance and it caught my eye, half as a consumer and half as an ad guy.  Clicks through to microsite here.

As I have mentioned before, the creative really matters and this is a great example of what’s possible when creative is designed around an online, 2-way experience.  Fantastic way to ingrain the brand impact and the social sharing feature at the end of the process is a great earned media idea (although I personally am too vain to broadcast my 80-year old face).  Great campaign, and I bet they will see great response.

Banners don’t work?  BS.

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