Category: Display Advertising

Announcing MFP On Demand!

We’re very excited today to announce the launch MFP on DemandTM, the demand-side interface to our Media Futures PlatformTM, in partnership with Digitas.  Read the coverage in Ad Age here.

Scalable forward buying is a critical gap in the digital media ecosystem and Brand.net has been focused on this huge, unaddressed opportunity since inception.  MFP On Demand represents a big step forward towards the long-term goal of a futures market for digital media.

We’re truly thrilled that Digitas shares our vision!

The Trillion-Dollar O2O Opportunity

Some interesting dialog on ad exchanger today about bringing brand dollars online.  Obviously a topic near and dear to our hearts here at Brand.net, even though I think this particular framing of the issue is less and less relevant as the distinction between online and offline blurs.

Zach’s a smart guy and I agree with some of his points.  Manually cobbling together a buy won’t allow the scale advertisers need.  Check.  We as media providers need to enable the creatives to deliver the message in a compelling way.  Check.  Where I lose the thread is his jump to how DSPs, RTB and exchanges magically solve everything for brands.

It is possible to use a DSP (as he describes) to bid only on specific top sites that have offered, transparently for RTB through an exchange, the same inventory their direct sales forces sell.  But there’s simply no scale available that way today.  And unless publishers are prepared to gut out and cannibalize their primary direct sales channel, there won’t be tomorrow either. 

So that’s a big hurdle.  But for the sake of argument, let’s assume that changes.  How much will this premium inventory via RTB cost relative to a direct buy?  Can you plan at scale and count on that cost, or even on basic delivery?  I.e., ultimately, if you use a DSP/exchange in this manner are you really better off?  Or to recognize significant efficiency in terms of cost and effort do you need to buy into the long tail and/or buy blindly by audience or contextual category rather than by site?

Also, the tech world seems to have convinced itself – with a few intelligent exceptions – that large global advertisers would unanimously and emphatically agree that transparency to a media provider’s margin structure is much more important than level of or predictability of costs.  Is a $5 CPM that includes a known margin better than a $3.50 CPM for the same thing that includes an unknown margin?  Is a CPM that could vary between $2 and $4 for delivery that could vary between 20% and 100% of target better than a fixed CPM of $3 on a guaranteed buy?  Large advertisers may well be unanimous on these questions, but not in the direction the tech community majority seems to think. 

Let’s not forget that low cost is not necessarily the same as high-value – there is an “R” in ROI.

Which brings me to my biggest issue with Zach’s post, well articulated by Jeff Rosen in the comments.   Most large brand advertisers – CPG companies are great examples – generate 95% of their sales offline.  For them to spend at scale, they need to know their investments in media are profitably driving incremental offline sales. 

Offline sales impact data comes in with several months lag (at best) and isn’t tied to individual cookies, which are the lingua franca of RTB.  Probably just as well, because when this data does come back it’s not particularly kind to some of the targeting techniques most often used for RTB.  “It doesn’t work that well”  is obviously a big (huge) disconnect, and of course that is before we even get  to the troubling privacy and data ownership issues created by the questionable provenance of much of today’s online targeting data.

Not surprisingly, growing recognition of the importance of this tie between online media and offline activity has spawned a shiny new TLA:  “O2O” (for “Online To Offline”).  O2O is still just a foal of an acronym, but this foal has legs – like the legs on which most people still walk into brick and mortar stores to do 95% of their retail spending. 

O2O is truly a trillion dollar opportunity.

Companies like Groupon have done a great job demonstrating the potential of O2O for promotional spending.  The typical Groupon offer is time-sensitive and designed to drive foot traffic and sales more or less immediately – a savvy twist on the successful online DR advertising model.  Based on the results this model has shown to date, we’re going to see a lot more in the future.

But I also think we need to think more broadly about the potential of O2O than simply the ability to motivate customers at the bottom of the funnel.  Online media is also a powerful, efficient and increasingly proven way to create the awareness, consideration and intent that translate into higher offline sales.  Offline sales increases created in this way have longer cycles than promotional lifts simply because they originate at the top of the funnel, but we, Nielsen, comScore and others prove every day that they are also measurable with accuracy and statistical rigor.

I am always up for a healthy debate, but we’re not going to unlock the huge potential of O2O by debating each other.  We need to spend less time navel gazing and more time with real customers delivering enterprise-class technology that accommodates their business processes and ultimate (not just proximate) marketing objectives.

Stay tuned for more on this shortly.

Data property rights moving to front burner?

Another example this past week of the co-equal, but less prominent facet of the privacy issue – data property rights  – coming to the fore.

Wired reported that Specific Media was sued in Federal court for violating users’ privacy by a) using flash cookies to reconstruct http cookies that had been deliberately deleted by users and b) having a deliberately misleading privacy policy.  If these claims prove to be true, they are a great example of the serious issues the industry faces with privacy.

Particularly interesting, though, was the perspective in a comment on Mediapost’s coverage here from an employee of FAN – Fox Audience Network.  The commenter made the point that while this was a privacy issue, it was also a data ownership issue.  He went on to state that there is a legitimate reason for a publisher to use flash cookies, (e.g., the Pandora  buffering example cited by Wired) and that publishers have legitimate claim to user data as part of the implicit deal struck by users in consuming free content.  A network like Specific Media seems to have no such legitimate reason or claim.  Flash cookies used by a network are there for one reason only:  not as many users know how to delete them.

I recently congratulated Krux digital on their plan to help address the lack of reporting and enforcement capabilities for property rights in data.  Based on this announcement last week it looks like Krux already has a new competitor.

I have written before that this second facet of the privacy debate is widely underestimated, but it looks like that’s changing and that’s a great thing for the industry.

Data Ownership is the Krux

Just read Tom Chavez’ AdExchanger post on his new company, Krux Digital.

Tom and I go way back.  Tom ran Rapt, an innovative yield management technology company.  As part of my role at Yahoo! in early 2003, I helped Rapt make the transition from the computer hardware market to the online display media market.  This transition ended well, as Rapt’s market leading online media capabilities resulted in an acquisition by Microsoft 5 years later for a figure rumored to be nearly $200M.

Tom’s a smart guy and seems like he’s onto another smart concept here.

As we have written, there are really two separate and distinct burners under the increasingly bubbly cauldron of online media data issues:  privacy and data ownership.  Starting on the data ownership side, as it appears Krux is doing, seems like the right answer.  Strikes me that it’s tough to have a market driven mechanism for managing privacy without any scalable way of enforcing property rights in the relevant data.  Most in the BT industry seem to really want the former, but don’t seem to want to talk about the latter.

Kudos to Tom and Krux for giving publishers the tools to keep the dialog honest.  I wish them luck!

Great work from MarketShare Partners

A quick post this AM to point readers to a great piece of work from MarketShare Partners and the IAB that was released last week.

The case studies presented are interesting and present exactly the type of rigorous analysis that should go into optimizing the marketing mix.  We in online advertising spend most of our time thinking about the downstream decisions – i.e., how to get more of the budget that’s available to our channel.  It’s great to see some smart thinking from a smart company focused on the upstream decisions as well.

Some highlights:

  • A relatively small reallocation of media spend can have a significant impact on marketers’ revenue. For example, one media optimization scenario examined in this study demonstrated a 6% increase in revenue—even after a 13% decrease in total marketing spend—when dollars were shifted to interactive.
  • In all three of the scenarios presented, huge increases in online display spend were recommended (average of 107%).  These recommended increases were due to a combination of relative effectiveness, relative saturation effects and cross-media synergies.
  • The average recommended increase in online display spend was nearly twice the average recommended increase in Search spend (61%)
  • In 2 of the 3 scenarios presented, MSPs analysis explicitly recommended significant shifts in spend away from bottom of the funnel strategies (promotions/incentives) to upper funnel strategies (media)

I would recommend everyone take a few minutes to read this white paper, and stay on the lookout for more great stuff from MSP.

Weaver chimes in

Just a quick note to direct any reader who hasn’t seen it to a great post by Doug Weaver of Upstream Group.  Doug’s a sharp guy with a wealth of experience and  consistently insightful commentary on the industry, this post being no exception.

Worth a read.

Privacy Flaring. Next up: Data Ownership.

I’m sure by now most readers of this page have already read WSJ’s comprehensive coverage of the ever-increasing privacy concerns with behavioral tracking and targeting earlier this week.  Just in case, for those that haven’t, the series is interesting and worth the read.   Seems like I was right about those embers still being hot.

I predict it won’t be long before data ownership issues flare as well.  A central issue in the privacy discussion is of course a internet user’s ownership rights in data about her usage, so data ownership issues intersect with privacy issues.  However, data ownership issues also have much broader ecosystem implications.  I introduced this topic on an AdExchanger thread a couple months back and will certainly elaborate as this distinct set of issues moves to the foreground.  Watch for fireworks if not outright conflagration here as well over the next couple years.

With all these challenges for behavioral targeting, it’s a good thing there’s another approach that drives fantastic results where it matters:  offline sales.

Simplifying the Narrative

Josh Chasin of comScore can definitely count me among his fans.  He wrote a great article late last year on the limitations of CTR as a metric.  A couple weeks back he wrote another great one that I have been looking for a moment to comment on.  Between the upcoming product launch and the 1 year old I finally found a little time, somewhat belatedly.

As I read it, the main theme of Josh’s most recent article was that as an industry we have inhibited the migration of brand-focused budgets online with complex and conflicting narratives, which cause advertisers essentially to throw up their hands and look for reasons not to spend.  I couldn’t agree more.  In fact, I don’t think Josh would object to framing this as a different angle on the same idea I discussed in a post last year (Josh – feel free to comment if I am taking your name in vain).  Regardless of the angle we each take on the story, we’re clearly in violent agreement that the narrative needs to be simpler.

Josh is also quite correct that the 30-spot is an extremely compelling creative format, next to which a hastily-assembled static banner can look, well, flat.  However, as I have previously noted, within 5 years about 80% of households will have the capability to fast forward through that compelling creative.  Online creative formats get more compelling every year – it’s not hard to imagine a well-made pre-roll, rich media or even animated flash creative execution comparing favorably to a TV ad that is watched at 10X normal speed with no sound.

Even before DVRs reach their inevitable tipping point, the research shows that online advertising drives sales at least as well as TV.

One area where I might diverge with Josh just a bit is on the “scale” element of the narrative.  As he correctly points out, a single highly-rated TV show generates gobs of inventory.  Let’s use his Two and a Half Men example.  The 6 rating means 18M unique viewers, which when multiplied by the 15 spots per episode yields the 270M impressions per episode he mentions.  Breaking that number down in the context of a particular campaign, however, makes it more manageable.  Even if a marketer was comfortable with a frequency of 3 during the half-hour sitcom, that would translate to about 50M impressions.  If it was truly necessary to deliver those impressions in a half-hour period, that’s a pretty big buy for online – possible, but big.  If, however, we allow those impressions to be delivered over a week (i.e. between the beginning of this episode of Two and a Half Men and the beginning of the next one), it starts to look a lot more manageable.  So I would argue that the scale is there, it’s just not as “instantaneous” because web content consumption is less “event-based” that TV consumption.

This all assumes, however, that we’re talking about the type of objective targeting that is possible to do buying a prime-time TV spot – i.e., context, demo, geo.  The myriad other online targeting techniques that continue to proliferate, creating “monstrous” complexity as they do, just can’t deliver anything like that type of scale; we’re not delivering 50M impressions in a week to 18M “competitive peanut butter bakers” any time soon.

For me, it all points back to Josh’s bottom line.  Online has the audience, the content, the creative and yes, the metrics.  A decade of burgeoning complexity has moved lots of DR money online, but brands are still waiting for the simple, efficient, repeatable scale of TV.

If we give them a simpler narrative, reflecting a simpler process, the money will move.

Again, I would suggest our goal needs to be, “Your audience moved. Your marketing needs to follow them. Let us show you how the internet can deliver the same quality, scalability and value as TV.”

What do you think?

Google flattens

A quick note today to connect some dots with yesterday’s Google release.  Google announced it was streamlining its display product line / positioning by consolidating its various display offerings under the umbrella of  “Google Display Network”.

I thought this was an interesting data point in the context of our previous discussion on increasing format convergence.  It seems Google not only agrees, but is driving the trend forward.

The online ad world is flat and getting flatter every day.

A “future” cure for online ad pricing volatility

A very interesting post on AdExchanger today covering the first installment in what DataXu expects to be a monthly series of reports on market trends.

DataXu disclosed historical volatility of prices across the landscape of biddable online ad inventory they saw through their DSP platform – billions of impressions across multiple exchanges – between 4/10/10 and 5/10/10.  The figure?   102%.  That’s huge pricing volatility on an absolute basis and (as they point out) much higher volatility than we see in Goldman Sachs share prices, oil prices and even presidential approval ratings.

Broadening the aperture doesn’t change the picture.  For example, 102% is much higher volatility than we typically see in historical data for a wide variety of exchange-traded commodities – themselves a notoriously volatile asset class.  I think the way DataXu has calculated volatility for online ads may even understate the difference.  From the notes on the source post here, it looks like DataXu is calculating this 102% number by measuring the variance of average daily prices within that month period.  Volatility in financial markets is usually expressed in annualized figures (like this).  I’m not sure exactly where DataXu got the other figures they list, but since annualization is very common for these types of figures I wouldn’t be surprised if those are annual figures.  If I am right, then the apples:apples annualized figure for online ads would likely be much higher.

Either way, there’s simply no question that the spot market for online ads is tremendously volatile.

So it has always struck me as odd that the same large manufacturing companies that have active, sophisticated, futures-based hedging programs for raw materials like oats and soybean oil with 30-40% annual price volatility would tolerate volatility many times higher in purchases of online media – an increasingly critical raw material input.  As I have written previously in a pair of articles in Ad Age and Ad Exchanger, I think this will change and indeed must change for online media to become a greater share of overall media spend for key categories like CPG.

But in order for that to happen, we need to give them better tools.  We need a Futures market.