Monthly Archives: October 2013

Who Will Win The Digital Media War?

By Eric Picard (originally published in AdExchanger October 17th, 2013)

Lately I’ve had many conversations about the digital advertising market and how it’s evolving.

The most-asked question: “Who will win the battle over digital advertising – Google, Facebook or Twitter?”

I’ve also recently been asked about other companies, such as LinkedIn and Adobe, and how well they’re positioned to beat “whomever.” And by “whomever,” everyone almost always means Google. But more often lately, I’m hearing about Facebook, too.

So, who’s going to win?

Well, it’s not so simple. I take a very different view of the market. I don’t believe there will ever be one winner in this space. Even from an ad-technology perspective, I don’t think all roads point to Google owning it all – although there’s little question that they dominate. And from a publisher perspective, Google is dominant in paid search but not in other areas.

I can hear your brain spinning right now. You’re thinking, “Wait – did you say Google is a publisher?”

Yes, I did. Google has leveraged a massive market share in paid search, and grown into other forms of advertising as well. But for some reason, people in our space don’t seem to think of Google as a publisher.

Google happens to be the biggest publisher of search – but, somehow, calling Google a search engine seems to mask for many people that Google is a publisher. They also are a publisher of maps with Google Maps. They publish video via YouTube. And they publish all sorts of other content related to the results of various vertical searches, including restaurant reviews and travel information.

Google’s also a technology company, and yet – amid all the excitement about various office applications, self-driving cars, balloon-based Wi-Fi and all the other efforts – they are primarily a publisher, one that makes almost all of its money from the sale of advertising. Even their massive DoubleClick business is in many ways really about building opportunities for more ad revenue flowing through their ad exchange and back to Google, tied to a percentage of media spending.

But even though they can almost legally be considered a monopoly, they are not the only publisher in search. Microsoft certainly hasn’t given up there. And beyond the two major publishers of search, there’s an entire ecosystem around paid search that Google can’t and won’t own. That opens up other opportunities.

A Range Of Opportunities – For Many Players

I see the market as a series of opportunities. Even if Google continues to be the dominant player across all forms of digital advertising, from a publisher or an ad-technology perspective, I don’t think that matters from a market perspective because the publisher space is far too fragmented for any one publisher to gain control. Any one publisher may dominate in one area, but won’t be a complete monopoly – not even in search. It’s even much less likely in other forms of media.

So when people talk about who’s going to “win” in advertising, I think it’s more complex than one winner and many losers. There are many opportunities to win here. And many of these markets are more than big enough for the “second-place” player to have a very big business indeed. In many cases, there will be a large number of big businesses in various verticals. Television is a great example of a market where there are many big players and no one player that has significantly dominated the market, at least not in the way we think of Google dominating search.

So what are the other areas we should be paying attention to? These areas could be very large – potentially as large as paid search – but at least as large as display ads or radio.

1. Consumer-Facing Social Media

Publishers: Obviously Facebook will dominate here. This means Twitter has the backup position in this market. Facebook is too far ahead for Twitter to come close any time soon. I think that Google+ is an outlier and could blow up at some point if Google keeps at it and really invests heavily, maybe in advertising Google+ rather than trying to gain share more organically.

Technology: There are tons of players, but nobody is dominant yet. And every major player wants to be the big gun here. I expect that, eventually, Google, Adobe and Salesforce will dominate, either through organic growth or acquisition. There are a lot of smaller players who could rise quickly depending on how innovative they prove and how good they are at executing.

Secondary Marketplaces: I think AppNexus will win. Others will play.

2. B2B Social Media

Publishers: Clearly, this belongs to LinkedIn. Google+, Facebook and Twitter will also play here, but it’s uncertain how much market penetration they’ll achieve. I’d guess that Twitter has a good opportunity to be bigger here than in the consumer space as a secondary player.

Technology: Again – too early to know. I like Rallyverse quite a lot, although they’re playing in several places here.

Secondary Marketplaces: Too early to be certain.

3.  Video / TV over IP

Publishers: Obviously Hulu is a standout. You can’t ignore YouTube, either. Netflix and Amazon are very focused, and Microsoft’s Xbox is super interesting. But video and television content over the Internet is very fragmented, and I don’t see one strong winner.

Technology: Freewheel seems to be getting tons of traction (quietly, too).

Secondary Marketplaces: Clearly Google’s got a good foothold because of its anchor-tenant relationship with YouTube. Tremor had a great IPO, and there are many players like TubeMogul, YuMe and Brightroll – but this space looks to be about as fragmented as the television ecosystem, or even display ads. Part of the reason is just that there’s a lot of demand and money floating out there looking to be spent on video advertising.

4. Mobile

Publishers: Mobile is not a media type. Well, sorta. But it’s not a media type that so far is significantly differentiated as one. I suppose you could point at Apple and Google (as leaders?) for their app and content marketplaces.

Technology: This part of the market is super fragmented.

Secondary Marketplaces: I’m looking forward to Google and AppNexus duking it out over this marketplace from the exchange point of view – but there are many ad networks in this space as well, including Millennial Media, which is clearly the powerhouse of the market.

5. Cross-Media Plays

Let me break out of my model for a moment and say that while the market has certainly fragmented into players focused on each of the various channels, I think we’re now starting to see a lot of investment in cross-media initiatives. These range from publishers to technology companies and marketplaces.

But the real interesting thing to me is that in the ad-technology space we’ve rarely seen the ability for companies to support multiple media types simultaneously and become a dominant player. That is changing.

Publishers: Google, Yahoo – yes, I said Yahoo – Microsoft, Amazon, Apple, AOL and a plethora of others are starting to gain real cross-media traction. I don’t see any one publisher dominating across media, but certainly there will be publishers who stand out because of their cross-media footprint.

Technology: Obviously Google stands out here. But watch out for AppNexus, which is really investing heavily in video, mobile and social to extend beyond its display roots.

Secondary Marketplaces: Again – I think it’s Google and AppNexus that are really poised to win here.

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Why dynamic creative has bounced back from failure

By Eric Picard (Originally published on iMediaConnection October 14th, 2013)

Back in 1999 (when the moon did not have a moonbase Alpha, nor did an explosion send the moon rocketing across the cosmos — a reference for old-timers like me) while at my last startup, Bluestreak, we started experimenting with dynamic creative.

The idea was that there were e-commerce companies with thousands of products available online, and that based on location we should be able to test and optimize which products led to the most clicks and purchases. Over the next few years, we worked with several customers to experiment with this. We ultimately ran ads with several publishers that would rotate through a list of products, and we used our creative optimization technology to determine which combination of offers was getting the best results (based on clicks, interactions, or conversions).

It turned out that there were various combinations of location (publisher) and product that worked much better than others, and the tests were successful. But the question was really about matters of degrees. We saw significant improvements in results, and we developed great technology that supported all this. But after the bottom dropped out of the market in 2000 and 2001 and the price of inventory dropped significantly, the improvements in performance stopped mattering as much.

Essentially, the price of inventory was so low that it was cheaper to just run much higher volumes of unoptimized ads than to pay for optimization service.

But I knew that creative optimization and dynamic creative would have its time and place. Either the impact of the creative optimization would drive significantly better results, the price of inventory would come back up, or we’d be able to optimize the offers based on user targeting rather than just by publisher.

Creative optimization and dynamic creative dropped out of the industry for eight to 10 years, but it came screaming back. As I guessed, the major driver was targeting based on user data. And over the past few years, the growth of real-time bidding and audience targeting has led to significant improvements in dynamic creative and optimization.

There are now several significant companies that have built their business around the idea of optimizing the offer shown to users based on their profiles, including a lot of retargeting. They build advertising campaigns that are driven by databases — ones that pull together the creative in ways that include hundreds or thousands or even millions of possible combinations. The best offer is selected based on a variety of criteria, including audience targeting attributes such demographics, behavioral data, and retargeting data. This information is extensively available and can be used to drive significantly better optimization than just location.

We all know that with real-time bidding and ad exchanges, ads can be targeted based on this kind of data. And we all know that with basic tracking of impressions, clicks, and conversions, bid prices in ad exchanges can be adjusted to optimize results based on the number of clicks or conversions. But dynamic creative optimization can take things to the next level. Using all of these technologies and techniques in combination can significantly drive up ROI. The only question is how many different products, offers, or options are available for optimization purposes.

The more opportunities to adjust the creative — especially if those products or offers can be somehow predicted to match against different audiences’ preferences or interests — the more likely the user is to act.
Read more at http://www.imediaconnection.com/content/35170.asp#sxRJhl1kvggxUiAe.99