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.
For anyone who may not have checked imedia today, I wanted to steer you towards my featured editorial piece on page-level quality. Online media quality is obviously a critical issue for brands, and one that Brand.net has focused on since day one.
Brand.net doesn’t just buy from a carefully screened and curated set of top comScore sites. That’s just where we start. Brand.net doesn’t just report on the pages where your ad was placed adjacent to brand-damaging objectionable content. We keep it from happening in the first place. Our industry-leading SafeScreen™ platform is the gold standard for active, page-level quality management and is included free of charge with every Brand.net buy.
Starting with the best sites and applying active page-level filtering technology to each impression. That’s a real quality solution.
Still digging out of my baby-induced blog backlog and came across an interesting MediaPost article by Adam Kasper of Media Contacts. He basically poses a challenge to the online media industry to pull together and come up with an online GRP. This theme is echoed in a recent (and fantastic) whitepaper from Microsoft’s Atlas Institute, which gives a more comprehensive treatment along with some practical suggestions.
Development and use of online metrics comparable to those routinely used in offline media is an extremely important topic. As Kasper points out, comparable metrics make it easier for marketers to follow their audiences online. That’s for sure (and we still have a lot of work to do there), but there are also some practical reasons why these tried and true top of the funnel metrics are as important online as they are offline. First off, keep in mind that nearly 90% of retail commerce still occurs offline (even higher in some key ad categories like CPG). Offline sales simply do not generate the same volume of online-actionable direct metrics that, for example, a company like NetFlix does. So there’s a real practical limit to the in-flight optimization that can be done for marketers whose supply chains terminate offline. Concepts like composition, reach and frequency are still tremendously useful tools in this environment. Secondly, for many campaigns more precise targeting may not valuable and/or may not be available at scale. Privacy issues aside, I’m not sure that “laundry detergent purchase intender” targeting gets you much further than “women, 25-54 with children at home” does. But I am sure that it’s more expensive and offers smaller scale. These points are just a brief treatment of an issue I have written on at length in the past.
The bottom line is that, even though less sexy, these “offline metrics” can be just as useful online and we shouldn’t be ashamed of using them. Brand.net has shown that quality media, tight management of frequency, maximized composition and full budget delivery drive measurable results at the cash register. That’s sexy enough for me.
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.
As I work through my current events backlog after coming back to the office, I wanted to call out this press release from Microsoft re: their recent deal with comScore to provide enhanced R/F and audience composition tools for branding-focused media buyers. The release highlights a theme we are passionate about at Brand.net and have mentioned time and again on this page: online advertising lacks brand-friendly metrics and tools, which makes it too difficult for brand buyers to plan and manage campaigns in a manner consistent with the rest of their (primarily offline) spend. These metrics and tools position brand marketers to deliver real business results and are essential in helping brand budgets follow audiences online. Our friends at Microsoft were even kind enough to quote our analysis estimating only 5% of brand budgets have yet made this transition. As today’s Wall Street Journal also observed, this represents a major opportunity for all the players in the space. It’s great to see the online ad industry increasingly recognizing the brand challenge/opportunity and mobilizing to address it!
His basic point is that Ad Exchanges in their current incarnations have failed to live up to the promise of “ad exchange” as a concept. I agree. As Cory points out, current exchanges require too much effort and involve too many compromises for both advertiser and publisher for them to become a critical piece of the advertising technology “stack”. Current exchanges can be effective for some direct marketers where CPA is essentially their only requirement, but they fall far short of many advertisers’ – particularly brand advertisers’ – requirements. Without some changes for all parties in the value chain, unfortunately I think Cory may be right; the pendulum may swing back towards more custom solutions. I think that would be lost opportunity so I’d like to make some suggestions about how to improve from the status quo.
Here’s what needs to change:
Exchanges: Embrace the reality that brand marketers are essential to the health of the online ecosystem. Many, most campaigns cannot be reduced to a CPA – an issue I have discussed at length. In order to become critical infrastructure, exchanges must build for brand requirements as well. This means content quality filtering, R/F management, composition management and smooth guaranteed delivery.
Publishers: Open inventory to competition from multiple sales channels. Remove barriers to revenue and efficiency in the form of advertiser block lists. Manage channel conflict using other tools.
Advertisers: (yes, you’re part of the problem) Embrace efficiency for some portion of your buy. Consider that a streamlined, scalable operational process for a more standardized buy may deliver better results when considering all costs (media, headcount, serving fees, etc) than a less efficient process for a more customized buy. For example, consider whether non-standard creative (integrations, expandable units etc), fine flighting, custom targeting with limited scale are delivering results in-line with the significant operational friction they create.
These steps are not easy, but they are essential to building a long-term scalable advertising ecosystem. Let us know how we can help.
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.
Great piece on NPR’s Marketplace last week. Northwestern marketing professor Eric Anderson spoke with Marketplace host Kai Ryssdal about the impact of the current recession on brand loyalty. Anderson made some important points about balancing the need to show short-term tactical results with consideration of the long term strategic impact of advertising. In particular, he recommends investments in building equity by aligning brands with themes that consumers are concerned about (e.g., the environment) rather than focusing on short-term promotional initiatives. Good advice for those concerned about the long-term health of their brands, as Anderson cites decades of research that shows share loss to private label brands tends to be permanent – a topic that has received a lot of attention recently.
Quick note on the ClickZ article last week about CPG companies ramping up online spend. Branding is tremendously important in this category, which includes many of the largest advertising spenders on the planet (P&G, Unilever, etc.). Companies like these are increasingly realizing that their customers are consuming a greater and greater share of their media online, so if they want to protect their brands they need have their ad budgets track that shift in behavior. The alternative is to risk losing share to new brands or – particularly as wallets tighten through the recession – private label products. Research indicates that such share losses can be permanent, so continued investment is critical even in “this economy”. Glad to see them staying sharp.