An article in today’s eMarketer nicely summarizes some recent comScore / Starcom USA research showing that fewer and fewer users are clicking on ads and those clicks are concentrated in an ever smaller share of the user base. Not good news for fans of CTR as an “optimization” metric – and there are still too many of these.
The article includes a priceless quote from John Lowell, Starcom USA SVP and director, research and analytics, “A click means nothing, earns no revenue and creates no brand equity. Your online advertising has some goal—and it’s certainly not to generate clicks.” Don’t mince words John. Tell us what you really think. We’ve seen the same with our own offline sales measurements, by the way. CTR is not even remotely correlated with offline sales lift or associated campaign ROI. Here’s an example of the lack of correlation from some recent campaigns:
Reading Lowell’s quote and considering the fact that this is still even a topic for discussion reminded me of Monty Python’s famous Parrot Sketch.
Advertiser: “I know a dead metric when I see one and I am looking at one right now.”
DR Network: “No, no it’s not dead. It’s just resting.”
Another tremendously insightful article yesterday from Michael Zimbalist of NYT. This guy is sharp. His analysis of the situation is dead on and I completely agree with the rough bucketing of potential outcomes and associated implications for the various ecosystem players.
However, I want to make it clear that the key to Zimbalist’s positive outcome scenario (scenario 3) is the emergence of capabilities that aren’t widely available today. As Dan Ballister wrote in his comment to the article, “If buyers are going after audience in real-time auctions, will they make peace with having to forfeit control over ad environment and delivery predictability? What good is it to reach your audience when they don’t want to be found, or to only run 15% of your back-to-school campaign on time because you kept getting outbid?”
In order for Brand marketers to fully leverage the emerging exchange ecosystem they will need sophisticated technology for page-level quality filtering, pricing & delivery prediction, R/F & composition management, delivery smoothing, offline impact measurement, etc. In case it’s not obvious, that’s a very different toolset than the fine targeting and CPA-driven optimization engines of which the market has produced scores of copies thus far – on both the demand side and the supply side.
Stay tuned for some more in depth thoughts on this topic shortly.
Great article by Mike Shields in MediaWeek yesterday. According to the article, Tremor Media was running ad for major brands that were a) in-banner video as opposed to pre-roll, b) below the fold and c) adjacent to questionable content.
I want to highlight two separate issues in the context of this article: quality control and credibility.
Quality control is something that has been top priority for Brand.net since inception, because it was the number one concern of our branding-focused clients. I have written extensively on this topic and Brand.net’s SafeScreen platform is the premier quality assurance platform on the web, providing page-level filtering to ensure quality for every impression that runs through the Brand.net network. The monitoring capabilities Adam Kasper mentions in the article can be useful, but it’s far better to prevent quality incidents in the first place. He’s dead on when he says that quality control is the ad network’s responsibility. Unfortunately, too often that responsibility is not fulfilled.
On my second point, ad networks at large have a reputation for not always being completely honest with clients. This is another issue I’ve written on in the past. In response to this particular incident, Shane Steele, Tremor’s VP marketing, was quoted saying, “It’s a very nuanced space, which makes it complicated”. Actual pre-roll video is indeed more complicated than display, but the ads at issue here were display ads. They just happened to be running video creative. So answers like this don’t help build credibility for networks and they certainly don’t help build the trust that’s so essential for major brands to fully leverage the medium.
Tod Sacerdoti summed it up well when he said, “There is a gap between what an advertiser thinks they are buying and what they are [actually] buying.” This gap occurs far too often today and it needs to be closed before the medium can fully mature.
I just read a great piece by Michael Zimbalist of the New York Times Company on paidcontent .org. He clearly has a deep and precise understanding of the substantive issues at play in the channel conflict debate. The more other major publishers and the market at large understand the distinctions he’s helping to clarify here, the better off we’ll all be. We’ve certainly done our part to help clarify terminology and to help publishers prevent channel conflict, so it’s great to see smart publishers joining that effort.
An insightful article by Emily Steel in the WSJ this AM, picking up on recent trends and energy in the display market. Ms. Steel includes some broad coverage on Google’s recent announcement of AdX 2.0 and implications for the display ecosystem, along with more depth on industry concerns regarding channel conflict between publishers and networks. A quote from Jeff Levick of AOL ends the article: “All advertising shouldn’t be managed equally and all ads shouldn’t be treated equally”.
I agree with Mr. Levick of course, but the hard part for publishers is to set specific policy and develop supporting infrastructure to make sure tradeoffs are being made appropriately such that that the combined output of direct and indirect sales channels is maximized. This is a mouthful even to say and not at all easy to do. Brand.net takes the issue of channel conflict very seriously and we have been focused on mitigating it since inception, to the point of offering a set of experience-based principles designed to help publishers get started. The bottom line is that with well-designed policies and systems, publishers can enjoy mutually beneficial business relationships with networks in both the short-term and the long-term.
Readers finding this article interesting may also be interested in another recent post in which we attempted to clarify some terminology in hopes of helping readers more easily navigate discussion of some of these trends and issues.
All this energy in the space is fantastic! It’s a very interesting time to be in Display.
Another interesting article from Forbes.com’s Jim Spanfeller yesterday. I wholeheartedly agree his point about the online ad industry focusing too much on demand fulfillment and too little on demand creation, as evidenced by my previous posts here and here. That’s exactly why we built Brand.net from the ground up — to help advertisers with demand creation. I also agree with his point about ad networks that offer some types of user-based targeting representing a potential “data drain” and a legitimate privacy concern for publishers. This is an important issue and just coming to the fore for the publishing community overall.
That said, I disagree with two major points Jim makes in this article.
First, he seems to be perpetuating industry confusion on the definition of “remnant”. In the context of online ad inventory, “remnant” is commonly considered to be the opposite of “premium”, which is often used interchangeably with “high-quality”. Thus if “premium” = “high-quality”, then “remnant” = “low-quality”. Unfortunately this is often untrue. When used correctly, “remnant” actually means “available to the spot market after forward commitments have been fulfilled”. So the opposite of “remnant” is not “premium”. The opposite of “remnant” is “reserved in advance”. There are really two distinct axes at work here: one describes quality of the inventory, while the other essentially describes the terms or process under which the inventory was purchased. There is some correlation between the two axes, which I believe is at the heart of the persistent confusion; it’s a fact that remnant inventory is often of lower average quality than inventory that is reserved in advance. However, due to traffic volatility, forecast errors, suboptimal pricing, supply/demand imbalances, etc., there is often significant volume of high-quality or “premium” inventory available in the “remnant” market. The airline standby example he cites is actually a good illustration of the correct definition of remnant, not (as I think he suggests) the incorrect one that has done so much mischief. The standby seat has exactly the same physical characteristics (“quality”) as the seat sold in advance, but the difference in timing and deal structure results in a difference in value to both the airline and the passenger, which manifests in a difference in price.
This brings me to my second point: Jim’s position in this article on airline yield management practices shows some pretty fundamental misunderstandings. Airlines’ lack of profitability has a lot more to do with unions, over-capacity and sub-optimal product offerings than it does customers risking their vacation plans or business objectives to save money on a last-minute ticket. So I would echo Jason Kelly’s well-informed comments on the thread and add that to suggest yield management practices are somehow to blame for the poor financial performance of airlines is like suggesting that ERP systems and supply chain optimization practices are responsible for the poor financial performance of the American auto industry. It’s simply not true.
The bottom line is that ad networks and publishers can work together for mutual benefit over the long haul, but to do so requires careful management of channel conflict, an issue we take very seriously. This discussion is a valuable and important one, but I think we need to be more careful and rigorous in our thinking – the more so, the better off we’ll be as an industry.
A blockbuster report from the OPA late last week, at least if one were to judge by how it lit up the blogosphere (as AdExchanger humorously put it, “Is the OPA the greatest link baiting organization in advertising, or what?”). I reviewed some of the coverage and the report itself over the weekend and I have to say, with all due respect to the OPA and its members, this report doesn’t measure up to their previous efforts.
Here’s my take:
1) Most networks are focused on DR metrics and not the upper-funnel branding metrics that are the focus of the OPA study. So even if we stop right there, it’s not shocking that that the study shows weaker results for networks. This difference in focus is fundamental to Brand.net’s business by the way. Unlike other networks, the Brand.net platform offers a full suite of capabilities designed from the ground up to help brand marketers leverage the web to reach their audience efficiently and effectively drive these upper-funnel metrics.
2) The OPA report didn’t include or consider cost data. If you believe the >10:1 spread between publishers’ direct and network deals cited in last year’s IAB research, this is a critical omission. OPA pubs performing 50% better than networks doesn’t look so good in the context of a >10:1 price ratio. Obviously the devil’s in the details here – the IAB research isn’t perfect either for reasons I have discussed previously on this page – but it’s clearly perilous to draw the sweeping conclusions OPA is going for without considering costs.
3) I don’t wish to cast aspersions on the study or methodology overall, but a couple of the data points just seemed counterintuitive to me. For example, slide 19 of the OPA results deck states that ad networks deliver insignificant improvements in purchase intent for the financial services category. This particular point caught my eye, because I know that well over $1B has moved through ad networks from hundreds of financial services companies over the past 5 years, the vast majority of which has been measured on a CPA – as in actual purchases, not just purchase intent. It’s extremely hard for me to believe this money would have continued to flow in such volume over such a long time period if it wasn’t actually driving purchases. If you agree, then we’re left with only 2 possible explanations: a) the data referenced to make this point is somehow not representative or b) purchase intent as measured by DL was not correlated with actual purchases. Neither is particularly comforting.
4) In addition to the metrics OPA focuses on in this report, I would have liked to see an analysis of actual sales lift – i.e., the ultimate result that improvement in the attitudinal metrics discussed in the report is intended to drive over the long term. This certainly isn’t easy for every client on every campaign, but it’s a powerful capability that proves real business results for many. For the next study I would be interested in seeing similar data from OPA.
Some of these thoughts have already been expressed by others, including some who commented directly on WSJ’s coverage of the report, but I thought there was enough new here that it was worth joining the discussion.
Let me know what you think.
I am putting the blogger hat back on after a hiatus for the birth of my first son on 7/29. Baby and Mom are healthy – thanks for asking!
This article on MediaPost – erstwhile Internet Analyst Jordan Rohan sharing some observations about ad networks – was the first in my archive. In the context of Mr. Rohan’s comments on network margins, I would assert that networks with truly differentiated capabilities earn whatever margins they capture. However, I do agree that there is too little differentiation in the network space in general. In particular, network reach tends to receive more focus than it should (as I have previously mentioned), while differences in specific capabilities tend to receive less focus than they should. On the other hand, I strenuously disagree with Mr. Rohan’s assertion that networks cannot be blind. I have written in detail on how seriously we take the channel conflict issue and how we help our publishers partners manage it. Blindness is fundamental to our approach. Mr. Rohan suggests posing as media buyer to test network claims of blindness. I can tell you some of our publisher partners have done just that with Brand.net and come away satisfied that we are as concerned about channel conflict as they are and that our SafeScreen page-level filtering technology gives content-sensitive Brand advertisers an assurance of page-level content quality that even transparency would not.
The truth, but not the whole truth and some things that aren’t the truth.
Solid article on ClickZ last week with some insightful commentary from Nielsen Online CEO John Burbank. Mr. Burbank correctly identifies lack of brand dollars online as the source of current downward pressure on rates and publisher revenue. He’s 100% right that without these dollars following audiences online, the online publishing ecosystem will degrade and that users will not like the results. This second theme was echoed by Omar Tawakol, CEO of BlueKai, in another insightful piece for AdAge. So without a robust online ad market online, online publishing will suffer. And if that ad market doesn’t include the large brands that funded quality content in other media, online content quality will degrade to the detriment of users, advertisers and publishers alike. A tragedy of the commons of sorts.
Mr. Burbank went on to make the important point if publishers want to attract brand spend, they need to help brand advertisers measure results using metrics that are appropriate to the objectives of brand campaigns. He suggests that rather than focusing on clicks, brands should be focused on “whether their ads reach the desired targets, change the way consumers think about their brands, or help sell products.” Couldn’t have said it better myself. This is something we discuss with our clients every day. We actually partner with Nielsen to help our clients in CPG measure the extent to which their online campaigns sell product offline. The results speak for themselves. Online advertising works.
I do disagree with Mr. Burbank on one important point, however. He seems to suggest that ad networks are responsible for the current challenges online publishers face. It’s true that ad networks can put downward pressure on CPMs for a publisher, but that is primarily driven not by the fact that a network is doing the selling, but that the vast majority of networks sell almost exclusively to DR buyers. Those buyers are extremely price sensitive and thus the downward pressure. If there was a healthy level of demand by brand advertisers for online content, this downward pressure would be balanced and the online publishing ecosystem would be much more stable. Unfortunately, online branding today remains too inefficient for brand dollars to follow audiences online easily and balance this equation. So an ad network focused on branding, such as Brand.net, actually helps matters, increasing efficiency for brand buyers to help move budgets from other media, while not undermining the economics of the premium publishing model. This is another topic near and dear to my heart, which I addressed at some length in an iMedia post earlier this year.
Another anti-ad network screed from Ari Rosenberg yesterday on mediapost. I sincerely appreciate his passion on this issue, but I respectfully disagree.
He’s absolutely right that lots of ad networks lie. Way too many for my taste frankly, but certainly not all of them. For example, Brand.net takes our commitment to preventing channel conflict with our publisher partners very seriously. We have to or we would not continue to be able access the best inventory on the web for our clients. Every conversation we have, we conduct as if there were 3 parties in the room: Advertiser, Publisher and Us. No wink, no nudge, no lying. We sometimes lose sales to other networks because of our principled approach to this critical issue, but our SafeScreen page-level filtering technology provides a level of content safety not available from other networks – blind or otherwise – and most clients understand that.
I think we all need to recognize that agencies are looking for efficiency for some portion of their overall buying activity. I am not just talking about pricing. Buying 50 (or even 5) sites through a network is dramatically more efficient from an operational perspective than buying those sites individually. There’s no way around it. Think of TV buying without national networks. The media market has changed since 2003 when Ari left IGN. There’s a reason why networks exist and that reason isn’t going away; some portion of ad budgets will continue to seek efficiency. Publishers can successfully mitigate channel conflict while still accessing these budgets by requiring networks to be blind and implementing a few other simple policies which I laid out in a byline earlier this year.
The typical publisher CEO is pushing her VP sales to use networks because she intuitively understands all of this. Not every VP Sales is going to cheer about adding a sales channel that puts pressure on his team. Just like not every print division GM for a newspaper is going to be excited that he can’t buy a new printing press because the company is investing in the web publishing effort. Lack of excitement within one constituency doesn’t mean a particular decision is bad for the company. It’s the CEO’s job to maximize long-term profitability for shareholders, not to maximize near-term revenue generated by one sales channel or business line. That said, I think Ari might be surprised by the number of sales leaders I meet that think like CEOs.