Category: Industry News

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.

Crack isn’t just a waste of time. It’s bad for you too

There’s definitely no shortage of research showing the irrelevance of clicks as an indicator of online campaign value.  Our own experience shows it and Nielsen data proves it.  This probably has a lot to do with the fact that the folks doing the clicking are a small portion of population and demographically far from the top of most advertisers’ target lists.   None of this is news, yet there remains a surprising (shocking?) amount of attention paid to click-based “optimization” of campaigns.  Perhaps it’s the crack-like allure that Cory Treffiletti from Catalyst SF discusses in a fun piece from last fall.

For all the richly deserved bad press the click has gotten as a metric, I hadn’t seen anyone focus on the angle that chasing clicks actually works against driving the metrics that do matter (much like how chasing crack limited addicts’ success in other more meaningful pursuits…).  That was the point of Monday’s article by Lotame’s Eric Porres.  Lotame’s research across >100 campaigns shows that “not only do click-through rates fail to measure what marketers are really looking for, they’re often negatively related to brand lift.”  While I haven’t seen the research myself, it looks like it was done based on third-party data from Vizu and Dimestore – both reputable survey technologies.  The findings would also comport with previous research.

The bottom line is that there is no free lunch.  There are tradeoffs that must be made when planning & managing media.  “Optimizing” for a metric that doesn’t matter isn’t just a waste of everyone’s time, it actually degrades performance against the metrics that do matter.


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.

Creative matters.

Very interesting article in Ad Age on Monday.

Not standard fare for this page – I usually focus on media as opposed to broader marketing or creative topics, but I found this article thought-provoking.  The author argues that establishing the right name for a new product category can be just as important in the long term as establishing a brand presence within it and uses several effective examples to illustrate the point.

While his goal is to highlight the importance of thinking carefully and independently about the product name and the category name, I don’t think he would argue that both are essentially branding exercises.  I.e. the same level of thought that goes into branding a product should also go into branding a new category, should you be lucky enough to have that opportunity.

Definitely a theme that we’d be wise to keep in mind in a space as dynamic as online advertising where it seems there’s a new acronym every quarter, whose definitions can often lack clarity even within the industry itself.

I was immediately reminded of the goosebump-inducing carousel scene from the finale of Mad Men Season 1 (worth watching again even if you have seen it several times, by the way).

With all the attention on media and media technology these days, let’s not forget the creative.

Of Taxes & Chaos…

Interesting blog entry from Eric Porres of Lotame earlier this week, about the various and increasing “taxes” levied on online advertising.  I particularly liked his closing thought on 3rd party verification providers.  In a very early stage market with multiple competing vendors and approaches, the real potential exists for the scenario he outlines – i.e., several different parties to a media transaction winding up with different, conflicting “verification” reports and creating chaos. We have seen examples of this in our own business already on campaigns where 3rd party verification was used.

Let’s also keep in mind this problem only gets worse if the verification market moves (as is claimed to be the goal) from passive verification (reporting) to active prevention (blocking).   It’s one thing to have a set of false positives in a reporting package, creating a media provider / agency discussion that is pure friction for both sides.  It would be an entirely different thing to have “underdelivery” (and thus underpayment) due to those false positives.  What is friction squared?

I tend to agree with Eric that the right answer is for the incumbent ad servers to develop their own standards for verification, much as they have done with impression counting.  Personally, I think this could actually be done as either a feature within the demand-side ad serving platforms (DFA, Atlas) or the exchange platforms (AdX, RM, AdECN) themselves.

There are arguments for both, but I think the exchange platform might actually be the right integration point, particularly if blocking is the ultimate objective.   It seems like this approach would also facilitate additional active services.  On the demand side, perhaps focusing more broadly than just objectionable content.  On the supply side, perhaps helping publishers to avoid instances of “blocking” by preventing problems before they occur.

friction2

Privacy Issue Reheating?

Interesting articles in Ad Age and MediaWeek today calling attention to potential privacy & regulatory issues surrounding Behavioral Targeting (BT).

The specter of regulation has loomed since the NebuAd debacle, but has seemed somewhat less menacing as Washington has focused on a stream of crises beginning with the financial meltdown in late 2008.

That now seems to be changing.  In addition to these articles and others, privacy/regulation was recently both a major theme in IAB CEO Randall Rothenberg’s remarks to the IAB’s 2010 Leadership Meeting and the subject of the hilarious Onion article mentioned in the Ad Age piece.  Quite a range of coverage.

I think there is legitimate discussion to be had about both consumer privacy and the related issue of data rights/ownership in the value chain.  These are both critical issues and the industry has only just begun to scratch the surface on both.  So it will be interesting to see if the privacy angle in particular gains steam once again in Washington now that the Health Care battle seems nearly over and the dust has settled somewhat from the “Great Recession”.

Something tells me the embers of the NebuAd conflagration are still good and hot, just awaiting a little oxygen.

More great stuff from Michael Zimbalist

Another great article from Michael Zimbalist in this week’s Ad Age, echoing many of the themes we discuss on this page.

A very smart publisher indeed!

It’s Time For The Futures Exchange

A quick post to direct readers to today’s guest article for AdExchanger.  It will be pushed to the broader AdExchanger audience tomorrow in John’s roundup, but I wanted our readers to have a “sneak peek” to get the dialog started.

As always, I am very interested in your thoughts and comments.

The (Ad) World is Flat

I wrote a recent post in which I outlined our view on convergence in the online media market.  At a high level, we believe there are two major forces at play in the media market:  (a) increasing standardization of “online” media formats and (b) device convergence blurring the lines between what are today thought of as “online” and “offline” media.  Because of these forces working in parallel online display, online video, mobile display, TV, print and even billboards end up not that far down the line as one big (huge) 12-figure market.

In addition to expanding the market for online players, these twin consolidating forces will drive several broad and related trends:

  • Trend 1: Niches Vanish. Differentiated solutions for big, general problems will drive the most value (for customers, companies and investors) in this future, merged media marketplace.  That means focusing less on the medium and more on the customer’s business objectives, solving problems that exist in and across all media.  Solving format-specific problems will mean limited opportunity, as it will increasingly be the case that relatively small improvements within the pool of media that has already converged will be more important than even a major breakthrough in a specific medium that has yet to be “plumbed to the main line”.  And while we’re on the topic, that plumbing itself is more trade than investment.  It can create speculative value in the short-term, but gets marked to zero quickly as industry-driven, open standards emerge.
  • Trend 2:  “Good” gives way to “Best”. Building on the notion that niches vanish, the bar will quickly rise for what capabilities qualify as “differentiated”.  This dynamic echoes globalization.  In a global market, the best athletes (literally and figuratively) can earn dramatically more than the best athletes from previous generations.   However, those with less differentiated skills are increasingly marginalized – there’s a reason why millions of manufacturing jobs have moved to China.  As best of breed vendors in each medium begin to jump format boundaries and compete aggressively in a converged media pool, only the strongest, most customer-centric solutions will survive.
  • Trend 3: Higher Technology Hurdles. Scalable differentiation requires technology, so this rising tide of convergence also raises the bar sharply for technological sophistication.  As Warren Buffet famously said, when the tide goes out you see who has been swimming naked.  Well, as this tide comes in you’re going to see a lot of folks who can’t swim at all sink to the bottom, surprised by the speed at which the water rises.  For example, there was a time when a network could be run as a bucket shop, substituting hustle and excel for real technology.  That model won’t float in the media mainline.

So who wins in this world?

  • Data and Data Infrastructure. Information and insights are always valuable, and become ever more valuable as size of the spend across which you’re deploying them expands.  As more and more media becomes effectively “online” media and thus more dynamically targetable, the value of targeting technology and data itself increases.  This will benefit targeting technology providers like Blue Kai and Exelate, but will also benefit data owners like Acxiom, Facebook and Expedia.
  • Measurement. While I believe online media have over-emphasized measurement relative to other elements of the online media value proposition, this is a moot point in a converged media world.  It is true that measurability is a particular strength of online media so as more media comes “online” it will create opportunities for measurement vendors like Nielsen, comScore and Vizu to innovate, expand and drive increasing value for customers.
  • Supply  Side Platforms (SSPs). The fact that it will be technically possible for an increasing number of players to join this media mainspring does not mean each of them will have the knowhow and capability to do so competitively.  There is a space to help the “supply side” players– content owners and media companies – connect into the media mainspring, and make the most of it.  Folks like Rubicon and Yieldex have opportunities here, although the technology bar will be particularly high in this space.
  • Demand Side Platforms (DSPs).  Finally, we come to the “demand side” – the buyers of media. Last, but by no means least as demand drives the market.  Similar to the supply side there is a space for broad platforms to help manage and optimize campaigns over a diverse and complex online media inventory landscape.  As I have previously mentioned, there are fundamental differences between technology required to service DR objectives in the spot market and technology required to service Brand objectives in the futures market.  Most of the energy here has been focused on the DR/Spot side, but we’re going to see that change rapidly as major consumer brands get into the game for real.   For DR/Spot, Turn and Efficient Frontier are well-positioned and aggressively pursuing this opportunity.  Appnexus also has an interesting “meta-DSP” play.  For Brand/Futures, Brand.net is the clear leader, with market leading technology and strong customer traction.

Winners mean losers and the main theme in the “loser” category is the ad network shakeout – widely and frequently predicted over the last 5 years – finally materializing.  Here we go:

  • Single-Format Players. Those players whose businesses are built primarily on execution in one format and who don’t have best of breed capabilities that are broadly applicable to all media will wither without the shelter provided by format barriers.
  • Naked Swimmers. Demand side players that have substituted people for technology will get increasingly squeezed between agencies and exchanges.  Supply side players will find themselves with stiff competition from large exchanges in providing more/easier functionality for publishers.
  • Non-Aligned Exchanges. Between Google and Yahoo!, the market already has more than enough basic spot-market transactional capability.  Microsoft will likely also make an additional acquisition to accelerate their internal efforts, but once it does the music will have stopped.  With these huge, technically sophisticated, players already ramping quickly it’s too late for new entrants.  Only one current player will get picked up, and the rest better have a very strong DSP or SSP option or they’ll find their game over.

While this next wave of evolution poses serious challenges to many current players, it unlocks tremendous opportunities for those players with the right capabilities to ride the wave.

As always, I welcome your thoughts and comments.

What is a DSP?

Just a quick post to go “on the record” in the context of the recent AdExchanger threads (1 and 2) defining/discussing “Demand Side Platforms” (DSPs).

I agree with those who indicated it is way too early to lock down a narrow definition of DSP.  Arguably anything that’s really a “platform” should never need a description that’s as detailed as the list offered in the first post, but regardless its definitely too soon in this particular market.

At this stage I think all are better served by a more general definition.  Fundamentally, I think any entity that meets the following criteria with sufficient breadth of capabilities is a DSP:

  • Technology that interfaces directly with demand-side entities
    • “Interface” does not necessarily mean GUI.  An API could be even more useful if it meets the customer requirements
    • Demand-side entities may include agencies and/or advertisers
  • Technology that adds significant value in the process of buying and/or management of media
    • Value could originate from data integration, forecasting, buy automation or other operational efficiency gains, supply source integration, delivery and/or pricing risk management, increased ad effectiveness through optimization, impression filtering/categorization
    • Etc., etc., etc…
  • Technology that operates as directed by the demand side entity (i.e., the customer)
    • The technology can be used flexibly and transparently by the customer in a way that benefits its business, with limited incentive conflicts

Obviously, technology is the common thread; DSPs will compete on the strength of their technology and networks with weak technology (essentially bucket shops, substituting people and excel for real technology) will find themselves increasingly squeezed between DSPs and exchanges.

One final point:  “platform” implies broad capabilities.  Many companies exist with valuable capabilities that meet the above criteria, but that couldn’t properly be called platforms.  I would suggest that Demand Side “Tools” (DSTs?) is probably more appropriate for more narrow capabilities.  These tools may be used directly by demand side entities and/or be packaged by DSPs.