Author: Andy Atherton

Business Development Partner @ Link Ventures. Complete background on LinkedIn...

What is a DSP?

Just a quick post to go “on the record” in the context of the recent AdExchanger threads (1 and 2) defining/discussing “Demand Side Platforms” (DSPs).

I agree with those who indicated it is way too early to lock down a narrow definition of DSP.  Arguably anything that’s really a “platform” should never need a description that’s as detailed as the list offered in the first post, but regardless its definitely too soon in this particular market.

At this stage I think all are better served by a more general definition.  Fundamentally, I think any entity that meets the following criteria with sufficient breadth of capabilities is a DSP:

  • Technology that interfaces directly with demand-side entities
    • “Interface” does not necessarily mean GUI.  An API could be even more useful if it meets the customer requirements
    • Demand-side entities may include agencies and/or advertisers
  • Technology that adds significant value in the process of buying and/or management of media
    • Value could originate from data integration, forecasting, buy automation or other operational efficiency gains, supply source integration, delivery and/or pricing risk management, increased ad effectiveness through optimization, impression filtering/categorization
    • Etc., etc., etc…
  • Technology that operates as directed by the demand side entity (i.e., the customer)
    • The technology can be used flexibly and transparently by the customer in a way that benefits its business, with limited incentive conflicts

Obviously, technology is the common thread; DSPs will compete on the strength of their technology and networks with weak technology (essentially bucket shops, substituting people and excel for real technology) will find themselves increasingly squeezed between DSPs and exchanges.

One final point:  “platform” implies broad capabilities.  Many companies exist with valuable capabilities that meet the above criteria, but that couldn’t properly be called platforms.  I would suggest that Demand Side “Tools” (DSTs?) is probably more appropriate for more narrow capabilities.  These tools may be used directly by demand side entities and/or be packaged by DSPs.

What is the definition of “Online Display”?

I recently explained why the IAB’s new video ad serving standard (“VAST” for short) will have a huge impact on the online video ad market by breaking down format barriers.  Online video advertising competition is increasing rapidly as the most sophisticated display ad networks ramp up video efforts aggressively.  That article generated energetic discussion, with virtually everyone, even incumbent video ad networks, agreeing with the fundamental thesis of convergence.

As it happens, I wrote that piece on the way to CES.  Right after my co-founder, Elizabeth’s panel discussion we were approached by the CEO of a Digital Out Of Home (DOOH) network.  His question:  is Brand.net buying DOOH inventory?  Our answer to him:  it’s lack of standards, not lack of business potential, which prevents us from seriously considering it.   Our next thought:  it’s time to write about a topic we discuss frequently with our investors and industry analysts:  accelerating online media format standardization and accelerating media convergence (the ever-blurring line between what is “online” and what is “offline”) are working together to create a financial opportunity in the online display market that is even bigger and growing even faster than they think.

While online media advances rapidly, hardware, telecom and content providers are moving just as aggressively in “IP enabling” TVs and other consumer electronics devices to take advantage of new technical possibilities and to accommodate quickly evolving user habits.  This isn’t just the usual future-state pronouncements from technology titans like Microsoft.  For example, mass-market consumer retailers are changing up their offerings quickly too.  Consider Best Buy’s recent announcement that all web-connected TVs it sells will come with a subscription to a Best Buy library of content.

So when you’re sitting on your couch, looking at your 50” flat screen TV on the wall, watching a show that is streaming from Best Buy through your internet connection and you see an ad, does the “offline advertising” cash register ring somewhere or the “online advertising” one?

The (literally) 11-figure question is: will the bigger catalyst for “driving TV budgets online” be (a) online ad technology / format innovation or (b) consumer device evolution and usage blurring to the point where “online content” becomes impossible to distinguish from “offline content”.  You guessed it – we vote (b).

Of course it doesn’t stop at just TV and Online Video.  All digital media comes together.

I started this piece with a DOOH executive asking us about partnership opportunities.  Many DOOH devices are already IP-enabled and that percentage is growing rapidly. Network owners should follow the IAB’s lead, standardize DOOH ad units and serving protocols and watch the money flow!

And how long will mobile remain a hodgepodge of complex and proprietary advertising standards?  Not long.  Apple (true to form) blazes the trail to the future here:   when you’re browsing the web on your iPhone, where do you think the display ads you see are being served from?  Answer:  in most cases, the exact same systems that serve them when you’re browsing on your PC.   Sure there are some issues with Flash compatibility, but the direction is clear; format barriers are falling.

Surprised?  You shouldn’t be.  Mobile offers powerful capabilities for hyper-local, hyper-timely offers, but geographic and temporal targeting are not new concepts in online advertising (or in “offline” advertising for that matter).  Why should we need a whole separate “stack” just to deliver an ad to a different device?    The new iPad makes the distinction between “mobile device” and “computer” melt away even further.   The Apple example will evolve rapidly from exception to rule, particularly as more encouraging performance data emerges.

So as with video serving standards, the question of the digital marketplace coming together isn’t “if” but “when”.    More and more devices will become IP-enabled with increasing degrees of standardization to take advantage of the financial opportunity.  Online advertising will grow bigger and faster as advertisers can more seamlessly trade off serving offers against the right consumer on the right device, managing cross-channel campaigns in an ever more integrated way.    The definition of “Online Display” will broaden dramatically, essentially encompassing all graphical advertising regardless of format, size or screen/device.

We’d love to hear your thoughts on which capabilities will be most valuable in this fast-approaching merged media world, and who in the current crop of advertising players possesses them.  I look forward to sharing your thoughts, and my own, in an upcoming piece.

As I have mentioned previously, the next 12-36 months will be exciting indeed.

Microsoft gets it

More great stuff from Microsoft’s Young-Bean Song at the OMMA performance show Monday in San Francisco.  Microsoft has made no secret of the fact that they are focused on the brand advertising market and clearly the push continues.

I would encourage you to watch the embedded video of Young-Bean’s talk.  The content is fantastic and well-delivered, particularly the planning example at the end.  Building from earlier Atlas Institute research, Young makes the argument for the utility of offline metrics for online Brand campaigns.  I couldn’t agree more.  Reach, composition and pricing guarantees that back into guaranteed GRPs, TRPs and CPPs are exactly what online Brand advertisers need for cross channel planning.  As he points out, ROI tradeoffs happen throughout the funnel, but that shouldn’t always mean just “CPA”.

The discussion about the importance of complete attribution models vs. the too common last click / last view approach, while also not new, is very much worth hearing again (and again).  Working – and measuring – the full funnel is just as important online as offline.

Microsoft understands this market extremely well.  Don’t underestimate them.

Rethinking Retargeting

Just a quick post to make sure folks saw Richard Frankel’s article today on AdExchanger.

A couple solid, related tidbits in there.

The first point is about attribution.  Richard cautions that retargeting often “steals” attribution from other tactics unless careful steps are taken to prevent it from happening.  DR tactics stealing attribution from upper-funnel tactics is an important topic on which we have written before.  As we mention in that article, it’s also the subject of an entire body of work by Microsoft’s Atlas Institute.

The second point is about the importance of finding new prospects and customers, not just retargeting old ones.  This difference between “demand creation” and “demand fulfillment” (as Forbes.com’s Jim Spanfeller has somewhat famously put it) is something that needs to be understood and carefully considered when developing a comprehensive marketing and media strategy.

As online media marches past a 30% share of total media consumption, new technologies are eroding offline media like TV and print.  Both demand fulfillment and demand creation budgets alike must follow consumers online.

Online Video: Our Opportunity is VAST

In my guest article today in Ad Age, I state that the IAB’s new video ad serving standard (“VAST” for short) has serious implications for video-only ad networks (e.g., Tremor, Brightroll, etc.) for two reasons:

1. A significant portion of the engineering work in which the incumbents have invested enormous time and money will effectively be marked to zero by the market

2. Existing, technically sophisticated display ad networks will enter the video market quickly and effectively.

To be clear, when i say “video”, I’m not talking about in-banner video or overlays, “bugs” etc.  I am talking about :15 and :30 second pre-, mid- and post-roll video.  This is the video advertising format where the environment is most similar to TV and the creative is directly transferrable from TV.  As such, it represents >90% of advertiser demand for online video and will continue to be the lynchpin in moving TV budgets online.  VAST effectively hits the “reset” button on this market in 2010 and while many current players will face serious trouble, for some companies this is an enormous opportunity.

Brand.net is one of those companies.  Melissa, Elizabeth and I have been astonished how often and emphatically during the past year the top agencies, as well as Top 100 advertisers directly, have asked us to extend our market leading brand display platform capabilities (SafeScreen, SmartScale, etc.) to video.  So our sales force is out taking orders for a platform extension that does just that.

Top 100 advertisers want online video to explode as an advertising medium.  It’s the obvious, and (to stay in front of their target audiences) necessary, successor to the $60B they spend on sight, sound and motion brand-focused TV buys each year.   But today’s video ad networks simply don’t provide the brand-focused capabilities Top 100 advertisers require.   What have they told us for the past year they want from online video?  The ability to guarantee Quality, Scale and Value.

Music to our ears.  Stay tuned.

Why is DoubleVerify burying its big news with a December 23rd press release?

PR experts use a trick when they need to release news they really don’t want covered broadly, peer reviewed or scrutinized.  The trick: drop the announcement when everyone is focused on other things.  The Friday afternoon before a long weekend and the last business day before a major national holiday are prime dump days.  The Bush White House used this tactic to announce Koran abuse at Gitmo and the indictment of Scooter Libby.  Celebrities routinely use it to announce divorces or rehab stints.

And on December 23rd, just as the media world shut down for Christmas, Double Verify (DV) used it to announce its new “BrandShield” solution.  Of particular note in DV’s release is that it seems to imply (the wording is quite cagey) that DV can perform page-level quality filtering on “nearly 100% of impressions”, even when ads are served within iframes, by effectively “seeing through” the iframes to determine “which…page the ad is actually delivered on”.
Taken at face value, this sounds like a huge advance in page-level quality filtering technology, which obviously requires page-level visibility to work.  However, regular readers of this page will remember our recent post on the problems posed by iframes for 3rd party page-level filtering.  Specifically, that “seeing through” iframes is impossible for an ad buy – like the vast majority of ad network buys – the composition of which is not known in advance.

So why would a (to date) publicity-hungry startup like DV announce seemingly ground-breaking technology in a way that recalls the indictment of a senior White House staffer?  The only reason I can think of is that this announcement amounts to either a) an admission that DV is using the methods of hackers to exploit holes in browser security and enable collection of data that all commercial browsers prevent for important privacy reasons or b) a clumsy and misleading attempt to confuse the market about what is technically possible.

The former would raise extremely troubling privacy concerns, particularly against the backdrop of increased scrutiny on collection of user data for BT.  The latter is obviously not particularly comforting either, but at least it doesn’t open unsuspecting agencies and brands up to PR backlash, consumer lawsuits and/or government sanctions.  Either way, prospective DV clients considering this solution should ask tough, direct questions about how this apparent iframe miracle is performed before touching it with the proverbial ten foot pole.  Specifically, buyers’ technical staffs should seek to understand clearly and precisely how each page in an ad buy would be conclusively identified and filtered, including each page where the ad is displayed within an iframe.  As I mentioned above, be sure to consider the case where the composition of the buy is not known in advance, like most ad network buys.

Rest assured that we will be working with our agency partners to fully explore these claims and will share whatever facts we uncover on this page.  Please feel free also to share with me anything you know or find out.  As we set about that work (or at least until DV is good enough to clarify their release), I would renew my call for a New Year’s resolution:  let’s elevate the dialog from misleading marketing claims to honest discussion and execution of the cutting edge solutions that sophisticated clients demand and deserve.

Is BT Just a Sales Tool? (Redux)

This post is a continuation of my article in last Monday’s AdExchanger about some serious challenges with BT for Brand marketers.  Interested readers should start there and then continue reading below, as I make some of my points here in the context of the example presented in that original article.

As I mentioned, BT does not outperform other approaches in driving offline sales.  Specifically, Brand.net’s studies with Nielsen have proven that our campaigns deliver impressive offline sales impact.  These results were achieved without BT;  instead Brand.net uses high-quality media with contextual, demographic and geographic targeting managed to high composition, with controlled frequency and cost.

The average ROI of 141% on these Brand.net campaigns is roughly comparable to the average ROI generated by Nielsen’s largest offline measurement partners over hundreds of studies using the purchase-based / look-alike targeting approach I described in my original article, refined over nearly a decade.  The Nielsen-powered BT those others use is state of the art; BT doesn’t get any better for branding.  If it fails to deliver substantial ROI upside to other approaches in driving offline sales – we as brand marketers really need to question the utility of BT in general.

In addition to this fundamental problem, BT poses a variety of other important problems that brand marketers should consider carefully.

First, there are no standard definitions within the industry for behavioral categories so there’s a huge degree of subjectivity in defining which users are a close-enough match to the core users to qualify as “look-alikes.”  This is a big deal because, as I outlined, 99.9% of the users in a typical BT campaign are based on look-alike modeling.   In the context of the specific example I used, how similar does a user need to be to an actual CPB Baker to qualify for inclusion the behavioral category?  What’s to keep the network doing the modeling from stretching that definition to create more inventory, particularly if there’s no direct measurement on the campaign?

Another related issue is lack of portability.  Since there’s no consistent definition for any behavioral target, if an advertiser does find something that works with a particular vendor, the advertiser is stuck with that vendor.  They can’t say, “CPB Bakers work great.  Let’s figure out the best way to buy them.” because the CPB Bakers from one source could be completely different from the CPB Bakers from another source due to different look-alike definitions.  Furthermore, if the vendor whose CPB Bakers “worked” changes look-alike definitions, loses access to data or goes out of business, the advertiser must start from scratch.  BT can’t be used as a basis for a scalable, repeatable, progressively improved strategy driven by the advertiser/agency unless the advertiser is the one building the profiles from scratch – something that is far beyond what most advertisers today are willing to do.

Due to cookie churn and simple inventory volatility, impression delivery is extremely hard to predict for any reasonably focused BT target (and forget about reach or pricing).  This makes forward delivery guarantees almost impossible – another barrier for scalable use by large brands that typically plan a significant portion of their spend in advance.

BT can also be used by networks or publishers as a way to mask inventory quality issues.  Would an advertiser/agency want the media included in a BT buy if they actually knew what they were purchasing?  Would they be willing to pay the same rate?  I doubt it, but the glossy BT story effectively launders this sketchy inventory into a desirable commodity.

Finally, there are obviously high-profile privacy issues swirling around BT, and it’s anyone’s guess where those will settle out.  I would hate to have a platform or media strategy built around BT if (when?) our friends in Washington decide that “opt-in” will become the law of the land.

Marketers considering significant or sustained investments in BT would be advised to think carefully about all of these issues and ask tough questions of their partners before proceeding.

For Brand.net, Quality is more than an Undertone.

Catching up on my inbox, I noticed an interesting article from Undertone’s Alan Schanzer last week on AdExchanger.  Credit to Mr. Schanzer for trying to help media buyers differentiate between networks; it’s a crowded market with lots of overlapping claims and capabilities.  Unintentionally, however, his article does more to clarify how little first generation ad networks can do to maintain media quality and protect clients’ brands than it does to provide useful advice for the media buying community.

Mr. Schanzer claims that, “when selecting a network, business practice transparency is far more important than site transparency” and focuses the reader on two bad business practices that site transparency does not prevent:  URL padding and daisy chaining.   He’s correct of course that site transparency doesn’t address either issue.  But it’s not exactly news that lying about site breadth or buying in a completely uncontrolled manner are bad business practices.  If avoiding them is even enough to be table stakes then it’s a low limit game.  Sophisticated buyers demand (and get) a lot more from their most important partners, and have for years.

Mr. Schanzer is 100% correct that, “a site list alone will not protect your brand”.  But he doesn’t get down to the real threat to your brand:  objectionable content.  Nor does he discuss the fact that objectionable content is not just a site-level (publisher) problem, it is a page-level problem (i.e., there are pages on the very best publisher sites that have objectionable content, which can arise in an instant by way of user generated comments) and because it is a page-level problem it takes serious technology to solve.  That’s why Brand.net has invested millions of dollars over the last 18 months in our pioneering page-level filtering platform, SafeScreen, which launched in Q109.  That’s also why I wrote a detailed article for iMedia in September on the criticality of ensuring quality at the page-level and posted a more recent follow-up that discusses some major problems with emerging 3rd party technologies that claim to address this issue.

Having said all of that, I am surprised that late in 2009 Mr. Schanzer would want to draw attention to the weakness of a site-based approach to managing quality.  Particularly when Undertone’s quality “guarantee” is framed 100% in terms of site selection.  Read it carefully.  Undertone does not guarantee that it will keep clients’ ads away from objectionable content.  It merely guarantees that clients’ ads won’t run on a site that is not certified as an Undertone Quality Publisher (UQP).  This commitment is almost meaningless because (at least on this page) UQP is undefined outside of a few vague criteria.  As written, Undertone could call a “professionally produced and aesthetically desirable” porn site an UQP and not payout under the “guarantee”.

Of course Undertone would not act in such bad faith, but by framing its quality “guarantee” in terms of site selection and saying nothing about page-level quality, it reveals either a fundamental misunderstanding of the key quality issue that sophisticated media buyers are focusing on today, or the lack of technology required to deliver a best in class solution. It’s pretty clear it’s the latter, because at the bottom of the same page the fine print specifically and explicitly carves out a safe harbor for ads that end up next to objectionable content on pages of UQPs.  In other words, Undertone is saying that if they place your high end beauty, food product or premium diaper ad next to the F-word (or worse) in a user comment that appears on a top women’s site, they’ve successfully completed their job as your media partner.  At Brand.net we certainly wouldn’t want to try to explain that to one of our customers and SafeScreen means we won’t have to.

I propose a New Year’s Resolution for the industry:  let’s elevate the dialog from trading marketing claims of little or no practical utility to active discussion and execution of the cutting edge solutions that sophisticated clients demand and deserve.

CBS’ Decision

Some quick comments on this morning’s Ad Age article on CBS stepping away from networks. The “publishers vs. networks” issue has ebbed and flowed pretty consistently since I started in this business at Yahoo! in 2002.  It seems to ebb when revenue is scarce and flow when demand picks back up, with clear evidence of both trend and seasonality.  There is obviously some rationality to this pattern, but I have always thought that the “turn ‘em on, turn ‘em off” approach is a blunt instrument that doesn’t serve publishers, particularly in the long term.

For example, in this article, CBS draws a distinction between the third party networks they are turning off and agency-owned networks (e.g., Vivaki) with whom they will continue to do business. As Michael Zimbalist of NY Times points out in another recent article, from a publisher perspective these agency-owned entities have a lot in common with third party networks.  So it’s unclear how leaving them “on” makes sense if the best solution for third party networks is “off”.

Apart from this inconsistency, two other big issues with the on/off approach are lack of resolution and poor responsiveness to dynamic market conditions.  While networks overall may monetize at a lower rate than direct sales efforts, certain networks will be more or less competitive for certain inventory (resolution) and at different times (dynamics).  RTB was designed to address these two “hard coding” issues (amongst others), but neither AdX 2.0 nor Right Media are close to ready to be relied upon as sole indirect demand channels.  Internal agency network efforts are still nascent as well.  The bottom line is that vastly more demand still flows through third party networks than through of any of these channels.

So rather than bowing out of a significant majority of the quickly evolving ad ecosystem, I think the right publisher solution is a framework that coordinates direct and indirect sales efforts to create the competition for inventory that drives maximum revenue for the publisher. Based on my long experience at Yahoo!, I laid out the broad strokes of such a framework in an article for MediaPost earlier this year. Publishers that learn fastest and best how to apply such a framework in their particular circumstances will achieve levels of monetization that increasingly distinguish them from their more isolationist peers.

None of us is as smart as all of us; the key to staying on the cutting edge of monetization is coordinating the best efforts of both direct and indirect channels on a dynamic basis.  Today and for the foreseeable future, third party ad networks are an important part of that picture.

Is BT Just a Sales Tool?

Just a quick post this morning to point followers of this blog to my article in today’s AdExchanger, which was prompted by one of our customers’ observation that, “BT is a better sales tool than a success tool”.

In addition to the fundamental look-alike modeling issue that I examine in detail in the article, BT poses a variety of other important problems that brand marketers should consider carefully before allocating budget to this tactic.

More about those on this page later this week.