A noteworthy installment from Cory Treffiletti on his MediaPost board yesterday.
I wrote on the topic of media futures several several times and in detail in my past life at Brand.net (the pioneer in this area), so nothing new for me in Cory’s piece. But it is nice to see more and more folks coming around to recognize the need for and value of a futures market for digital advertising.
I specify “digital” advertising here even though (as Cory mentions) the upfront provides a futures market of sorts for “non-digital” television advertising today. It bears repeating that format convergence means all advertising will be digital in the not-too-distant future. The innovation in transactional models for media will continue to be driven in the market we see as digital today, then as more and more IP-connected devices ship we will see the old TV upfront model subsumed by the new futures model that was developed for digital.
Not going to happen tomorrow, but will certainly happen.
I would also highlight Cory’s point that it is large clients – many of whom have sophisticated trading operations in other raw material inputs – that will likely drive this change. With some exceptions (Digitas and Hill Holliday notable among them) most media agencies lack the required skills and perspective.
Given this reality, I wouldn’t be surprised if the desire for a futures-driven approach to align media buying with other raw material procurement initiatives is a catalyst for more than one large advertiser to bring their media buying in-house over the next couple years.
IBM, SAP and others seeking to enter the media market by working directly with marketers should give this some thought.
Just a quick post to highlight a recent piece of research by attribution modeling company C3 Metrics (thanks AdExchanger!).
There’s more interesting detail at the link, but the headline is that in 37% of all online transactions analyzed, search on a branded term was the very last action before purchase.
That’s obviously bad news for the (too) commonly used “last click / last view” attribution approach. As C3 CEO Mark Hughes put it, “If an advertiser is still using last click analytics, they would mistakenly think that brand search was responsible for a third of their results.”
This research underscores the fact that attribution is important, difficult stuff and requires a lot more horsepower than last click / last view. I think folks like C3 have a great opportunity ahead of them.
C3’s findings echo a great piece of Microsoft research from a couple years back. As I mentioned in my commentary when the Microsoft research came out, it’s clear that a lot of the money that brand marketers are spending on other media (online and offline) is having an impact – whether or not we can measure it precisely today.
Worth some thought.
Very interesting article today from Brian Morrissey at Digiday, channeling Jeff Levick of AOL.
As Brian put it:
“The truth of the matter is much of the machinery of the programmatic buying landscape, captured in the Luma Partners slide, is dedicated to non-guaranteed inventory used for direct response advertising. Where’s the Luma slide for guaranteed ad space for brands?”
Now, that’s a great question and Jeff has obviously done some great thinking on the matter.
After you give the article a read, check out our results in connecting online ads to offline sales here.
Some very interesting tidbits in Neal Mohan’s post on the Google blog yesterday.
First is that Google sees display inventory per user declining 25% by 2015. This is a pretty interesting prediction given the conventional “wisdom” that online ad inventory is unlimited. This hasn’t ever really been true (provided one cares about quality of placement) and if Neal’s correct, it will become even less true over time as the industry collectively realizes there’s there is too much low quality inventory out there and it’s not doing anyone in the ecosystem – advertisers, publishers or users – any good.
Combine this prediction with the forecast growth in display spend over the next decade and it’s pretty clear we’re heading for a much more constrained inventory landscape. As these constraints start to bite, it will be interesting to see what happens to today’s auction-driven RTB infrastructure where delivery is not guaranteed.
Expect some serious turmoil as delivery rates drop and volatility increases. Maybe that’s why Google has begun work on a reserved inventory product…
I also want to amplify Neal’s point about 35% of campaigns measured on other metrics than clicks and conversions by 2015, particularly offline sales. Those campaigns comprise the orange box on this graphic – some $6B in spend last year. So Neal’s saying the orange share of online spend will grow from just over 20% in 2010 to 35% in 2015.
That prediction certainly syncs with the qualitative discussion in the eMarketer article I cited above, and if you combine the spend estimates there with Neal’s 35% share forecast, you end up with an online brand advertising market of ~$15B in 2015. Using Barclay’s market sizing estimates for the base you end up with ~$18B. So the online brand advertising market will more or less triple by 2015.
That’s great news for the ecosystem as a whole and particularly for the relatively few of us delivering targeted solutions for Brand advertisers.
Today, I wanted to highlight and echo some recent commentary from two very smart online ad veterans, Dave Morgan and Doug Weaver.
Their thesis in a nutshell is that the online advertising ecosystem has pursued an arms race of targeting upon targeting to the point that it has confused brand marketers and backed itself into a DR-only corner. When it comes to hyper-targeting, as Dave Morgan put it, “Just because you can, doesn’t mean you should.”
I completely agree and would encourage readers to visit the linked articles – there’s a lot more there to think about.
The market’s apparent addiction to overtargeting is especially puzzling given the performance data. I have obviously written on this topic myself quite extensively over the years and just last week a new piece of research came out of MIT, with yet more evidence for the prosecution.
The MIT study, using data from agency giant Havas, found that highly personalized creative underperformed generic creative except for users who were already well down the funnel. I understand that creative (this study) is different than media targeting (commentary above), but the two are opposite sides of the same coin and this result is another point on the same line; i.e., overtargeting is just that.
Or, as MIT researcher Catherine Tucker put it, “just because you have the data to personalize, it doesn’t mean you always should”.
Today’s Ad Exchanger published more commentary on Google’s GDN Reserve announcement last week.
Views from senior execs at VivaKi (Publicis) and Group M (WPP) rounded out the additional commentary from Google that was posted Monday. John also published some additional perspective from Elizabeth and others.
A few things in the various posts caught my eye. One was simply the difference in perspective between Publicis and WPP – clearly two different strategies at work there. Another was the refinement in Google’s messaging between the earnings call last week and Monday’s spokesperson (PR) commentary. Seemed like a careful balance between agency and advertiser in the messaging this time around (what frienemy?). I also thought VivaKi’s mention of Yahoo! in this context was interesting. Y! was once the dominant global player in online branding and reserved display marketplaces. I would have expected more from them sooner, but it’s nice to see the old alma mater at least in the game. If there’s any road back for Y!, this is it.
I’ll close with a quote from VivaKi’s Curt Hecht:
“While our spending continues to grow in the spot marketplace, clients and publishers still desire the controls and forecasting offered in a guaranteed market around context, price and performance.”
I couldn’t have said it better myself.
This being my 100th sermon from the Brand.net pulpit, it’s nice to see the gospel is spreading.
John Ebbert of AdExchanger and we here at Brand.net noticed the same thing on Google’s earnings call last night – the launch of Google Display Network Reserve, “which gives advertisers the opportunity to buy premium inventory on a guaranteed basis.”
This is interesting for a couple reasons.
First, it’s a clear signal that Google understands where the growth will come from in the display market: large brands moving traditional media budgets online to follow their customers. eMarketer laid out the case in December and it’s clear Google understands and agrees; Google launched the guaranteed product because “it’s how brand advertisers are telling us they want to buy inventory.” We’ve been hearing the same thing loud and clear.
Second, to anyone that still had any doubts about Google’s commitment to or progress in Display: Wake Up. Since acquiring DoubleClick 4 years ago this week, Google has moved in a fast, focused way to lock up all the key pieces of the transactional infrastructure for Display. They haven’t been shy about it , especially over the past year, but I still don’t think the market fully appreciates how close they are to the endgame: extending the hammerlock they have on Search to all elements of the Display market. Scalable, efficient forward buying is the last piece of the puzzle. It has been Google’s soft underbelly, but they are clearly doing sit-ups like crazy.
It’s crunch time. AOL, Microsoft and Yahoo!: If you’ve got a second wind in you, now’s the time. Accenture, Adobe, Akamai, Apple, Cisco, IBM, Oracle and others: If you’re serious about bringing your expertise in enterprise class infrastructure and service to the huge advertising market, your opportunity is slipping away. And Agencies: I agree with John’s emphasis on the particular phrasing of the announcement. Don’t let frienemy Google steal a march on you. If they take the Brand business client direct, that’s a big problem. Microsoft has Windows and Office to fall back on. You don’t.
It’s amazing how fast this market is moving.
For those of you that missed our joint presentation with Del Monte at Ad Tech San Francisco yesterday AM, here are the slides Doug Chavez and I presented.
The top line is that $200K of Brand.net-managed media drove $1.5M of incremental offline sales for Del Monte’s Kibbles’n’Bits brand. That’s an additional 2.2 million pounds of dog food sold due to this campaign alone. That much dog food would fill a bumper-to-bumper caravan of semi-trailers stretching from the Empire State Building to the Bryant Park Hotel – more than a half mile.
Tangible evidence indeed that Brand.net’s Media Futures Platform delivers tremendous results for many of the world’s largest marketers.
An insightful post from investo-blogger Jerry Neumann yesterday on Ad Exchanger. I like what he’s thinking about in the post and agree with much of it, but there’s an important meta-point that he didn’t mention.
Jerry’s first point was that there is a huge shortage of experienced talent in the online ad industry and what does exists is primarily clustered within the myriad tech vendors in the ecosystem. Agree. His second point was that even as the exchange ecosystem (which at its core promises increased efficiency through a common set of pipes) grows, we see continued fragmentation of supply / demand relationships. Agree.
But I would also argue that these two observations are causally related. The reason things continue to fragment is largely that there are too many tech companies making too many pitches to too many media buyers and sellers that are still coming up the learning curve. Tech company convinces still-learning buyer or seller to participate in “private market” promising some advantage in terms of functionality or monetization. Careful A/B testing is hard to do without committing even more limited time/resources (hence it’s rarely done at all). Whatever advantage was expected may or (more likely) may not actually be delivered, but such decisions are infrequently revisited. As a practical matter, once the sale is made the arrangement has tremendous inertia, regardless of relative value add.
So Jerry’s “thin exchange standards” may well become necessary, but I think that would have much more to do with folks not thoughtfully using the tools that already exist rather than a “real” need.
“Private markets” are rarely the most efficient alternative. The more participants in the market the better, assuming careful thought is given to structure and business rules. I saw frequent examples of the private market dynamic in my time at Yahoo!. Some enterprising salesperson would convince a content group GM to dedicate a placement to a particular advertiser. Such arrangements almost always under-monetized relative to an open, competitive market for the same placement. There was just an article last week in the ‘Journal offering up some more evidence from Goldman’s experiment with private markets. Or coming at it from another angle, have you ever tried to sell anything locally on craigslist, failed, then posted on eBay? eBay’s national market with huge liquidity almost always closes the deal at a fair price.
The faster we collectively get up the learning curve, the faster things will consolidate so we can actually realize some of the efficiency gains we’ve all been chasing.
A couple interesting articles by/about Adnetik earlier this week.
The first, written by Adnetik CEO Ed Montes (formerly Manager Director for Havas Digital, North America), argues against the over-reliance on last click / last view attribution – what Montes terms a “false positive”. Microsoft has published extensive research on this topic as well, but last click / last view is still all too standard in the world of online advertising.
As Montes lays out, the bulk of online ad infrastructure is designed and tuned around last click / last view, leading the industry to “throw smarter money away”. This itself is bad enough, but it’s even worse when you consider than in many cases the target of all this “optimization” is an online metric that has very little relationship to the ultimate objective of offline sales.
So for example, let’s say you’re a big CPG company and you invest the time and brainpower necessary to move beyond last click / last view attribution. Montes’ point is that this change in attribution may drive some fundamental shifts in your media mix, which will make you much more efficient in driving online “conversions”. That’s great if these conversions are meaningful, but if you’re selling toothpaste doesn’t the really meaningful “conversion” happen at an offline point of sale 95% of the time? Shouldn’t you be spending 95% of your time figuring out better ways to drive those offline conversions?
The second article, an AdWeek editorial piece, presents another interesting angle. Adnetik is taking the position that last click / last view is distorting publisher economics as well as advertiser economics – essentially undervaluing premium content (I agree). They hope to address this issue and ever-present privacy concerns using a targeting approach that focuses on quality and context rather than behavioral micro-segmentation.
Adnetik’s approach here is similar to Brand.net’s (although we add demographics and geographics) and in addition to reducing privacy concerns, it also enables dramatically increased scalability. So we applaud them for moving the dialog along.
It’s good to see Adnetik adding some more nets to the fleet!