The Ad Network for Demand Creation

Extremely interesting article in MediaPost last week, including three important points I want to focus on.

The first point is the quote by President & CEO Jim Spanfeller.  He says, “Ad network spending is all about demand fulfillment while direct-to-publisher display is much aligned with the traditional advertising goals of demand creation.  It is interesting to see the shift of dollars toward demand creation as we see signs of life in the economy.  He’s right of course that the vast majority of ad networks are focused on demand fulfillment or DR or “bottom-of-the-funnel” (pick your favorite expression).  But there’s an embedded assumption in his statement that the only alternative to DR-focused networks is direct-to-publisher.  This is not true. delivers the positives of an ad network – scalability and efficiency – with a unique platform that was built by brand media experts for brand media experts. is the only ad network exclusively focused on demand creation – branding.  The second point is the fact that half of the 100 senior marketing executives surveyed by Forbes were unhappy with ad networks due to underperformance vs. expectations.  This is a particularly important point in an environment where dollars are scarce and ad networks are plentiful; both advertisers and publishers should chose their ad network partners carefully.  Finally, the article highlights some marketer concerns with BT – specifically, effectiveness and privacy.  That’s a meaty topic for another post, but suffice to say that I believe those waters will get murkier before they get more clear.  Stay tuned.

David Moore, Chairman of WPP’s 24/7 (Now B3), Says Content Quality Doesn’t Matter

I was catching up on content from last week’s Ad Age digital conference when I came across this clip.  Turner Executive Walker Jacobs begins by exploring some common themes with respect to tension between top publishers and networks, but the part that really caught my attention is the short exchange at the very end of the clip between prominent market analyst Henry Blodget and David Moore, Chairman of ad network 24/7 (now renamed B3 within WPP):

Moore: “It wouldn’t hurt us at all if every premium site out there never used us again.  We’d be fine.  We don’t need ‘em.”
Blodget: “So, to heck with quality content.”
Moore: “Quality, really, is in the eye of the beholder.”

I had to rewind the clip and watch a few times to make sure I understood what Mr. Moore was saying.  I was, frankly, a little shocked to hear that from a senior executive at  WPP, parent company of some of the premier agencies in online advertising, who represent many of the most iconic brand marketers on the planet –  AT&T, Unilever, Sprint, Macy’s, Campbell’s Soup and  Colgate Palmolive among them.   I’ve had the privilege to work with each of those brands in my past life with Greg Coleman and Wenda Millard at Yahoo!, and have worked again with many of them in my new life at   Throughout that decade of experience, these brands have consistently reinforced the critical importance of both the quality of execution and the quality of the content surrounding their ads.  In short, the eyes of these beholders have insisted on very high content quality standards.

Because of this, we only buy from top quality sites.  If every premium site out there never used us again, it would not be possible for us to meet our clients’ standards for top quality ad environments.   However, the way the web is evolving makes maintaining quality an ever more difficult challenge.  The common practice of intermingling professional edit and UGC on the same page means that even if we start with the best sites, there are some individual pages that can create problems (most often due to user comments).  This is why we assembled a top notch technical team that in partnership with IBM has delivered a market-leading page-level filtering capability we call SafeScreenSafeScreen allows us to deliver the best of the best to our clients, which is what they look to us to provide.  Starting with top quality sites and continuing to lead the market with page-level filtering capability, we take our commitment to quality seriously and we always will.  It’s who we are.  And it’s what top advertisers told us at Yahoo! and tell us at they are looking for from a partner.

So, a word to our premium site partners:  we *do* need you, we *will* need you, and we will continue to work with you on issues that matter to both of us,  including the need to constructively avoid channel conflict.  I am tired of glorified link farms supported by belly fat ads.  Let’s bring quality advertisers to quality content and watch the web thrive.

How Big is Your Ad Network?

Over the weekend, I read an interesting iMedia post from last Thursday.  The author directly and convincingly challenges the importance that many seem to place on the comScore unique reach numbers as a basis of comparison for ad networks.  I have been thinking about this for a while and I agree that raw reach on comScore is a very narrow gauge at best and extremely flawed at worst.  Of all of his ideas, I think the most interesting is rating networks by renewal rate.  I think the important high-level point there is to include a notion of quality, which has been sorely lacking in all of these measurements.  In evaluating and comparing networks, is 1M uniques reached in below the fold placements on second tier social network sites the same as 1M uniques reached in branded, contextually relevant women’s lifestyle content?  Is 1M uniques reached for P&G on the first of many campaigns the same as 1M uniques reached for a predatory debt consolidation company who cancelled halfway through the campaign and never came back?  For some perhaps, but for most of the Ad Age 100 the answer to both questions is “no”.  I would also echo the author’s point about the overlap among networks.  Overlap affects the aggregate reach & frequency of a campaign, so unless a marketer is running a  CPA campaign they need to push their media partners for reach commitments on a campaign by campaign basis.  As the author points out, the overall reach of a network should be much less important to a marketer than the network’s reach on that marketer’s campaign.  Smooth, complete delivery with tightly managed frequency should be the expectation on every campaign.  High quality campaigns running in high quality inventory with high quality execution – now that’s a good basis for comparison.

Forrester Report: Ad Networks for Brand Advertisers

I was happy to see was recommended in a recent recent research report from Forrester Research entitled “Ad Networks for Brand Advertisers”.  Forrester’s research suggests that as brand marketers focus on doing more with less, Brand-focused ad networks are a good solution driving increased efficiency and decreased cost without sacrificing quality or control.  The note is fairly brief, but includes some valuable advice for online brand marketers evaluating networks.  In particular,  Forrester recommends careful vetting of potential network partners.  In a crowded ad network market it’s important to separate the networks that can deliver against complex brand requirements from those with more DR-focused capabilities.  Good advice.

The summary of the report is available here.

A Brief Analysis of the Ad Supply/Demand Imbalance

It’s true that there’s an imbalance between supply and demand, which is putting downward pressure on rates as highlighted in this morning’s WSJ article “Future Shock for Internet Ads?”.  However, I think there are some important details missing that would add richness and perspective to this article and other similar ones.

First off, the writer cites PubMatic data at the beginning of the article. I have every confidence that the PubMatic data is accurate for what it is, but articles quoting the data rarely mention that it reflects a very specific sub-segment of the overall online ad market. That is direct response campaigns running on primarily small publishers with poor average content quality (with many exceptions I am sure) and weak/non-existent direct sales channels (likely not many exceptions here). This market sub-segment is the most volatile and most sensitive to changing market conditions so in that sense the trend numbers (48% Y/Y decline in Q4) really represent a “worst case”. The absolute numbers ($0.26 average CPM in Q4) are similarly non-representative; the significant majority of money that was spent in the display market during Q4 was spent at CPMs an order of magnitude higher than that. PubMatic actually makes some attempt to clarify in the text of the report itself, but in general these numbers are too often represented to be a broad barometer of display advertising, which they simply are not.

Two other important points: In general much of the online ad supply that’s being created is not being created in areas that advertisers have figured out how to use yet. Social networking sites and long tail content sites are good examples. The consumer applications are evolving so rapidly that effective ad models are lagging behind, so spend stays concentrated in areas that advertisers understand better.

Finally, in any analysis of supply/demand balance and particularly when CPMs are involved, it’s important to note that there are two distinct high-level market segments in online ads – Direct response and Brand. Across all measured media, Brand spend is 2x DR spend but this dynamic is very different online. Nearly 30% of DR spend is now online, but only 5% of Brand spend is. This imbalance is a big reason why the overall supply/demand balance is out of whack. The author mentions this at the end of the WSJ article I reference above but I think these more specific details help clarify why this is happening.

Ad Standards Didn’t Kill the Online Ad Business

Standards are an extremely important issue, but I think Tillinghast really has it wrong in this article which ran in the New York Times this week.

First of all, his quote: “We made it possible for any Web site to run ads through the ad networks.  That’s created an oversupply of space.”, doesn’t make sense.  How does enabling different distribution channels create oversupply of product?  It’s all the same inventory after all – the only difference is whether or not the sale is through an intermediary.  Regardless, deliberately creating “complicated”, “unusual” formats is exactly the wrong answer.  The reason for the “soft middle” as he puts it is an inefficient, manual buying process for anything but DR-focused advertising.  Since DR only accounts for ~1/3 of measured media spend, these operational barriers have created the imbalance of supply and demand that is responsible for declining yields and accompanying publisher hand-wringing.  Tillinghast’s prescription – every publisher should make their own unique ad units to deliberately make the buying process less efficient – will make all of this worse, not better.  Picture TV with only product placements (no 30-spots) and no networks (national buy takes 100 phone calls and associated logistics).  That’s an obvious disaster for advertisers and content providers alike.

The answer is more standardization, not less.   The author is correct to be skeptical.

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