Author Archives: Eric Picard

Mar 03 2012
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Ad Ecosystem

Let’s Use Percentage of Audience to Buy and Sell Media

(Originally published in ClickZ, September, 2004)

One of our industry’s big problems is the lack of a good predictor of media availability, or media forecasting. This comes back to the stubborn issue of inventory control, which forecasts media availability for publishers’ sales groups.

Yes, a few companies claim new, more effective methods of inventory control and forecasting, notablySolbright and CheckM8. But the complexity of inventory control and forecasting is increasing all the time, mostly because there are too many methods of buying media on the same Web sites.

Ari Rosenberg, a media sales consultant, and I recently had this conversation, as I’ve had with a number of media planners/buyers over the years. Let’s first look at the ways media can be bought today:

  • CPM. Cost per thousand impressions
  • Frequency-capped CPM. CPM with frequency caps applied to limit frequency on unique users
  • Geotargeted CPM. CPM limited to unique users within specific geographic areas
  • Dayparted CPM. CPM limited to specific dayparts
  • CPC. Cost per click
  • CPA. Cost per acquisition
  • Behaviorally targeted media. Buy impressions displayed to specific users based on their profile
  • Surround sessions. Buy impressions around a specific user that follow them around the site
  • Fixed locations. Unlimited buy impressions in one specific placement on a site

If only one method of selling were used on a site, the inventory control problem would remain complex but manageable. Unfortunately, most sites are forced to accept multiple, if not all, types of buys. This results in chaos when forecasting available inventory for the sales team. No one wins if inventory forecasts are wrong.

Rosenberg’s concerned that in CPM, the prevalent method of selling inventory, media value isn’t tied to audience size. CPM prices are fixed, regardless how big the audience is. And a bigger audience doesn’t necessarily convert equally to a number of impressions, as some users visit many pages and others visit few.

Using Percentage of Audience

Let’s move to selling and buying online media by percentage of audience as the baseline. This would be a far more predictable method of selling and buying, as the exact number of impressions wouldn’t be calculated ahead of time. If there’s one thing sites can predict relatively reliably, it’s the number of unique visitors they can expect over a specific period.

No, the numbers won’t be exact. But that shouldn’t stop us from going this way. Many other media are bought and sold without precise control over how many people will be reached. We could even refine it a bit for more control, like buying a percent of audience with a frequency cap.

Here’s what the world would look like when buying a percentage of a site’s audience:

  1. A publisher’s rate card would list the average number of unique visitors to the site over specific periods: quarterly, monthly, weekly, daily, even dayparts. It’d back this up with unique visitor numbers for recent periods so media buyers could verify the likelihood their goals would be met.
  2. The publisher would set a value for its audience, based on the number of unique visitors, their demographics, the type of activity (conversions) driven historically, and other factors. The media buyer and publisher would negotiate the type of buy desired based on the average audience size for whatever period they desire.
  3. Additional desired-audience tweaking by the media buyer would be applied to the model, including things such as geodata, dayparting, frequency capping, and so forth. Each additional targeting level would increase the price. In this scenario, frequency-capped visitors would actually be a preferred selling method for publishers; it would increase available inventory. Of course, this works just as well with behavioral targeting, as it’s also audience-based.
  4. Both parties agree to a threshold. If audience size is outside a certain percentage of the average, a makegood can be negotiated ahead of time. These thresholds must be clear and appropriate.

This method of selling may not be the best solution for all sites, particularly those that sell CPC and CPA media. But it would solve a lot of problems. It’s a great idea for sites that typically sell out or ones that frequently overcommit inventory and sell more impressions than they can deliver.

Hey, I’m not a media buyer or seller. But I do know one thing: The current system isn’t very good. It’s time for industry leaders to start kicking around some new ideas.

Mar 03 2012
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Online Privacy

The Inconvenience of Privacy

(Originally published in ClickZ, May 2004) by Eric Picard

Most people who care about privacy are privacy fanatics. It’s an issue with very little gray area: Either you deeply care about privacy, or you don’t. Truth is, we should all be privacy fanatics.

It comes down to convenience and security. As long as my personal information is used in ethical ways that don’t negatively impact me, I don’t mind. Spam is a hot topic not because of privacy (though a privacy argument can be made). Spam is really a convenience issue.

I’m amazed by people who don’t view spam as a big deal. Invariably, when I ask one of these rarities how much spam they receive on a daily basis, the answer is, “one or two a day.” I hate spam with a passion, but I get over 200 spam messages a day, after aggressive filtering (500-800 without filtering). I spend about an hour a day dealing with spam — and I’m really fast at deleting it. I’ve also accidentally deleted important email in my vigorous pursuit of spam. All this is very inconvenient.

Spyware is another hot topic. People talk about spyware as if it were a privacy issue (certainly, there are some privacy concerns). But spyware is really a security issue. I don’t want any software to be installed on my computer unless I specifically install or authorize it. There are many reasons for this, not least of which is efficiency. I don’t want my machine bogged down with poorly written software that takes over resources. I also don’t want software that floods my screen with pop-up ads. Another inconvenience.

There’s a growing sense that individuals want to control their information completely. They want to decide when that information will be sold or shared, and for what purpose. Without some mechanism to make that task simple, we just let things go. It’s too inconvenient to do anything about it.

So, how can technology help?

 

Spam Filters

Hundreds of spam solutions exist, from blocking software to filtering software to spoofing software. Unfortunately, none really work well enough. All the filters I’ve tried sometimes grab my “real” email.

One company I’ve used for over a year now is Mailshell, an inexpensive personal email service with lots of good features. It isn’t a perfect solution, but it does work well. Apart from some problems caused mainly by my status as an “extreme power user,” it’s pretty solid.

My favorite feature is “disposable” email addresses. Essentially, you create any email address you want, on the fly, using your own domain extension. For example, your domain is “mydomain.com.” At the Someco site, you sign up for a newsletter with “someco@mydomain.com” (an address you made up on the spot). If Someco were to sell your email address to a list and you start getting spam at that address, you know who sold your address and you can simply shut that address off.

I got a call from a mortgage company one day last year. The guy was adamant I had requested contact from the company that very day via its Web site. I asked him what email address he had on the account. He said, “50inchsonyplasmatv@….” I burst out laughing. I’d signed up for a TV giveaway contest that day and had carefully opted out of all offers. When he hung up, he was very puzzled.

Spyware Removal

There are dozens (if not hundreds) of spyware and adware removal products out there. Ad-Aware, by German software company Lavasoft, is popular on Download.com. McAfee also offers spyware protection in its VirusScan product.

I’d be hard pressed to recommend any of the software for a number of reasons. First, because I’m not a privacy fanatic and the people behind these products are. These solutions block and filter too much. In many cases, these companies are nonentities I don’t know enough about to give them access to my machine. Wait, does that make me a privacy fanatic?

Mar 03 2012
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Ad Ecosystem, Rich Media

Make Rich Media Richer

(Originally published in ClickZ, July 2003) by Eric Picard

Last month, I pronounced control the killer app. Let’s discuss how to make use of that knowledge when it comes to the advanced use of rich media.

It isn’t enough to build hot rich media creative to seize user attention. It isn’t enough to follow any one or even several strategic “rules” to get the best results. To squeeze the greatest value out of your interactive efforts, approach your offering from the user’s perspective. Give users as much control as possible. At the very least, don’t make it hard for them to help you achieve your campaign goals.

Back in the days when Bluestreak was primarily a rich media company, I ran our rich media services group. We provided strategy and production. I worked on hundreds of rich media ad campaigns. We learned a lot about what works. At the time, much of that required our proprietary Java technology. Now, Flash supports almost all the things we toiled away on in rich media’s early days.

I no longer consult on rich media creative strategy, so I thought I’d share some insights (given there’s no conflict of interest). Below, how rich media can serve you better than most of what’s online today.

Remove Barriers

Ignore interactive design constraints at your own risk. Far too often, direct response campaigns employ rich media in ways that create barriers to the transaction. In many game ads, for example, a user is required to complete a series of relatively complex actions before gaining access to a form or being able to click to the Web site. This is fine for a branding campaign, but not for direct response.

If the goal is branding and building brand perception, measure as much about the interaction within the ad as possible. Record interaction time, conduct a Dynamic Logic study, track every action taken. This provides a good sense of increase in brand awareness driven by keeping users engaged with the ad.

But for goodness sake, if the goal is to drive traffic or convert users within the ad, don’t erect barriers that keep your audience from achieving your goal. It’s your goal, not theirs. Want to elicit a specific response? Make it easy.

Collect Data Locally

This one blows me away. Plenty of pretty advanced rich media ads collect data. But data is collected on a remote Web site, not within the ad itself. There are huge increases in response when data is captured within the ad rather than on a remote site. Back in the day, we averaged roughly a 70 percent conversion rate for non-credit card transactions within rich media ads.

Part of the increase could certainly be attributed to novelty. Few advertisers were doing this at the time. But much of it has to do with basic human nature. People are unlikely to disrupt what they’re doing to sign up for a newsletter or contest (even if they’re interested). If the conversion can occur right on the same page they want to be on, they’re more likely to convert.

Collecting data in Flash is a simple, straightforward process Flash developers should understand. (If they don’t, the help files are a good place to start. Everything’s clearly explained.) Flash can submit data from an ad to your Web site as easily as you collect it from the site itself. You can even pass data into a Flash file from a remote site using a DNS alias (bounce me an email if you need details) or Flash Remoting.

Create Multipage Ads

Think of a rich media ad as a miniature Web site. There’s no reason to be limited to one page. Flash easily runs multiple “pages” of ads, and even loads multiple Flash files in one main placeholder file. The user experience can be broken into reasonable, bite-sized chunks, all from the same Web page the ad resides on (Warning: Make sure the publisher doesn’t set the page to automatically refresh on a regular basis).

By breaking the ad into multiple Flash files and loading them separately, the file size of each section is low. The ad loads quickly and adheres to the publisher’s size limits. Remember to delay loading additional content until either the page is finished loading (typically less than 10 seconds) or the user clicks within the ad.

Provide Value

Make sure you provide some reason for the user to go through multiple pages of ad content. Too often, rich media use is gratuitous. Each element of creative must be justified from a user perspective:

  • Let the user research your offer. There’s an unlimited number of pages at your disposal. Let the customer research the offer within the ad. Flash can load text files and information files dynamically. Take advantage of it! Use the pages on your Web site dedicated to describing the offer and includethem in the ad rather than popping open a new browser window.
  • Let the user explore. Employ multiple assets to make your case. Rather than build numerous creatives with different purposes, link all creative to the same back end to save money. Again, you can load new Flash as a separate file, so file size limitations aren’t an issue.

    For example, three separate “teaser” ads might attract attention and bring the user into the content. Load the same content into each ad. You could use a tabular interface with one option showing a product video, another providing a product description, a third displaying detailed technical specifications, and a fourth letting users sign up in the ad for more information or a newsletter. Further options might include a print option, chat, customer service or sales callbacks, even full product purchase — all right within the ad.

  • Expand your horizons. Even if you’re not dealing with large-format ads, there’s no reason not to think big. Many publishers let you expand ads right over page content. There’s no reason a 468 x 60 ad can’t expand up to three times the size of the original, providing plenty of room to maneuver.

Don’t Let Cost Stand in the Way

A complex rich media experience will obviously cost more than a simple GIF replacement Flash ad. Even when factoring in the additional cost of rich media production, return on investment should more than justify the expense. Don’t judge results on just a single campaign. You will learn more each time and will likely improve with experience.

Attend conferences, join discussion lists, and feel free to send me questions about your goals. Most of what works well is grounded in common sense. Above all, track everything you possibly can. The data will set you free!

Mar 03 2012
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Ad Ecosystem

Control: The Killer App

(Originally published in ClickZ, June 2003) by Eric Picard

Every once in a while this topic comes up, “The killer application for is [idea of the day].” When discussing the Internet, the following have been described as “the killer app.”

The list could probably run hundreds of items long. But I think I’ve finally figured things out. It struck me today. The killer app of the Internet is really control. Giving a user more control makes online efforts successful.

Brenda Laurel was first one to get close to this in her seminal book on interactive design, “Computers as Theater“. In it, Laurel introduced a concept called “constraints.” This deceptively simple concept made my jaw drop when I read the book in graduate school. Constraints, essentially, are rules about what can and cannot be done within an interactive environment. All interactive interfaces and environments have constraints.

When designing anything interactive, a primary concern is to constrain users in an unobtrusive manner. In other words, design your system in such a way they won’t want to do things that they can’t do.

A real-world example we can all relate to:

An automobile is an interactive device, perhaps the quintessential interactive device. You can go wherever you want in a car. If you crash a car into something, it tends to stop working. Therefore, most drivers avoid running into objects. Most drivers don’t want to crash into objects because the consequences ruin their interactive experience.

What I’m propose is pretty much the inverse of the constraint concept. A constraint limits control. If you want to elicit a response from users in an interactive environment, give them control.

An example of a constraint in online marketing relates to spam. Putting your email address in a questionable online form often leads to spam. Hence, people are often reluctant to give out their email addresses. The proliferation of anti-spam software is a result of the reduction in control users have over their email communications. It’s a good bet anti-spam software will be successful for that reason.

I’ve often been told by people who “get” the Internet, “It’s all about interactivity.” That’s a hard thing to argue with. Of course the Internet is about interactivity. But that still doesn’t explain why the Internet is powerful. It’s like saying water is valuable because it’s wet.

The Internet’s strength is the control over information and communications it provides users. To really drive online marketing, we need to understand the kinds of things users want to do and enhance their ability to control contact.

Recently, in an online discussion list, Derek Hewitt, a former Fortune 100 senior interactive marketing executive (now president of iMediaLearning) said his former company’s greatest branding successes came from “themed content.” Content more editorial than advertising. This reflects the medium.

In any medium, ads should reflect the user’s state of mind. Online, users are willing to spend time digging into the details — in fact, they demand the opportunity to do so.

Yes, cool rich media ads that draw users in are more successful than static banners. But ads that provide real opportunity to learn more about a topic that interests the user are the ultimate winners. This is clearly indicated in search marketing’s success. It’s why paid contextual links have always performed. Users actively seek information about services and products related to their online investigations.

The primary problem is most online ads are either completely direct response focused or eye candy. But there’s a sweet spot enabling a perfect intersection between the two.

Years ago, we built a rich media ad for a major car company primarily renowned for safe vehicles. Its core market was families with children. The ad was an interactive quiz about the proper way to use a car seat.

The ad provided five multiple-choice questions about car seat safety, then calculated a score. Depending on the score, the user received a targeted message and was enabled to learn more about car seat safety. It was an immensely successful campaign from both direct and branding perspectives.

By giving users an opportunity to dive into detail and more control over the way they get details, you’ll succeed in online marketing. If you hit users with fly-by creative in hope of driving response or try to build a deep emotional connection with complex TV-style creative, you probably won’t achieve the full benefit of the medium. Both approaches work, but there’s so much more on offer.

Mar 03 2012
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Publishers, Rich Media

Why Rich Media Is Suddenly Everywhere

(Originally published in ClickZ, May 2003) by Eric Picard

Obviously, I believe in rich media. I founded an early rich media advertising company. I risked everything, convinced a few friends to join me, and started a company with the mission of improving online advertising results with innovative rich media ad technology.

Rich media has since ceased to be “standalone.” It’s a feature, not a product. It’s the special sauce, the frosting, the packaging that catches a consumer’s eye and draws her into a message.

I always believed rich media would dominate online advertising. Even to the point the term “rich media” would one day disappear. “High-fidelity” audio is an example of a term that vanished once the description became ubiquitous.

Rich media is on the verge of ubiquity. Every site I visit on a daily basis is filled with it. It’s a medium of choice for online ads. Animated GIFs account for the majority, but we’ve seen huge increases in Flash ownership. In 2001, Flash accounted for less than 2 percent of ads served through our ad servers. Today, over a quarter of the ads we serve are Flash.

The real question is, “Why?” Why did rich media finally achieve prominence? Why now?

Broadband Adoption

This is a sore point for me. Broadband adoption has soared over the past few years. Certainly, it hasn’t penetrated as quickly or deeply as some predicted, but it’s made huge gains. Broadband is a factor in rich media adoption, but its effect is more psychological.

Flash (for example) doesn’t require broadband to be effective. Most rich media technologies have employed mechanisms for some time to mitigate dial-up speeds. The misconception that rich media requires broadband certainly made it hard for adoption to take off before there was a consensus that broadband penetration was high enough.

Many of the biggest ad agencies are watching broadband adoption rates because they long to run online video (another story entirely). Until now, they didn’t feel the audience was large enough.

Flash Player Penetration

Macromedia has done an excellent job of hollering from rooftops that its Flash player is on nearly every browser on the planet. Once media and creative teams were armed with stats to show clients, the Flash adoption battle was won.

Branding and Direct Response

Numerous studies prove clearly online advertising has a significant branding effect. Many of those studies show rich media use significantly improves recall and other branding criteria. At the same time, plenty of studies indicate significant conversion boosts when rich media is used. This is one of the few times online brand and direct response advertisers have had consensus.

Falling Click Rates

Any sophisticated online marketer shudders at the thought of the click rate being used as an indicator of effectiveness. Unfortunately, it’s still a widely misused marketing success metric. As rich media enjoys much higher click rates, the metric is easy to use when trying to demonstrate an increase in effectiveness or mitigate a decrease in click rate for nonrich media.

Natural Selection

Possibly the least-discussed but highly significant factor in rich media’s rise. Since that oft-mentioned bubble burst, the online advertising industry suffered tremendous layoffs. Individuals who survived really are the cream of the crop. You’ll find very few dim bulbs anywhere in this industry today. It’s no accident the leaders in this space are all proponents of rich media and willing to push the creative and media planning envelope.

Publisher Financial Need

The number one reason rich media flowered. Online publishers have suffered huge revenue losses. They struggle to get a tiny fraction of prices they once charged for online media. This has made even the most conservative publisher open to almost any type of campaign.

If you’d told me three years ago Yahoo would be a Flash and rich media bastion, I’d have scoffed. The battles I was fighting! It wasn’t that long ago Yahoo had strict limits on the number of rotations an animated GIF could cycle through. Today, the site teems with floating ads, expanding banners, and all sorts of rich media that wouldn’t have been tolerated in the past.

Mar 03 2012
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Ad Ecosystem, Ad Technology, Economics

How to Fix Online Advertising (Part 2)

(Originally published in ClickZ, February 2003) by Eric Picard

In Part 1, I discussed three major problems rooted in online ad technology’s architecture. Now, possible solutions.

Neither is final, but at least we have a starting point for discussion. For those of you who read this for the “sparkling wit” of my commentary, bear with me. This is serious stuff for serious times.

Any solution must be industry-wide. It isn’t something one company working alone can achieve. Many approaches are possible. Below, two possible directions, both of which address the following:

  • Media costs are too low to support the industry. The widely accepted solution is conversion to reach-and-frequency-based media buying and selling. There’s no way to implement this today due to technical barriers.
  • Discrepancies between site-side and third-party ad servers are too high. Both proposals remove serving duplication by the publisher and third-party ad servers. Only one counts impressions.
  • Inventory control systems are too unpredictable. My proposals make this more predictable by streamlining inventory control system function and selling by audience as opposed to general volume.

Let me clarify my definitions of ad servers. I refer to an ad server representing a publisher’s inventory as a “site-side ad server” (SSAS). An ad server delivering an advertiser or agency campaign on its behalf is a “third-party ad server” (3PAS).

Some basic assumptions are made in each proposal (you may disagree):

  • Reach and frequency planning and buying are desired to increase online media’s value.
    • Media planners/buyers need tools covering reach and frequency/gross ratings points.
    • Third-party ad serving is required for multiple-publisher buys.
  • Business models are as important to the architectural changes as working technology.
  • Adopting a new architecture will be a long process but must happen within two years. A plan must be achievable in that timeframe.

Architecture Today

Current architecture separates SSASs and 3PASs. Integration issues include:

  • A 3PAS is managed by the site-side system through a redirect, but site-served ads are not. This is the root of the discrepancies between the systems.
  • Advertisers pay twice to serve ads: to the publisher and the 3PAS company.
  • There’s no mechanism for a 3PAS to request the SSAS change how the media is rotated or handled. This is required to support cross-site frequency capping (a root requirement of reach and frequency).
  • Inventory control is viewed as a linked system to site-side serving. No mechanisms support views into inventory control from the 3PAS or from media planning tools.
  • Little integration exists between all systems used in online advertising, and virtually no automation exists.

Cookies: A Major Barrier

A barrier to any workable system overhaul is HTTP cookie handling. Due to cookies’ use restrictions, a solution enabling identification of unique users between publisher and 3PAS is needed. Not a privacy issue — this is anonymous. To track and value activity of aggregate anonymous users, a mechanism is needed to recognize them when they intersect with a campaign across multiple publishers.

There are two schools of thought resolving this issue. One advocates a universal cookie carefully shared across the industry with companies agreeing to a strict privacy policy. The other calls for some kind ofDNS-alias-creating mechanism. Both are complex, but it’s believed resolution is possible. The solutions below assume the cookie problem is resolved.

Solution 1: Divorce Inventory Control From Ad Serving

Change the relationship between inventory-control and ad-serving systems. The 3PAS’s nature won’t change much. It still serves its own content and the site maintains control over inventory. But hierarchy changes. In essence, the site separates inventory control from content delivery. Any ad serve is treated as a redirect, whether served by the publisher or third party. The impression is tracked at the same point for either server.

Pros:

  • Media pricing will be “purer.” Ad delivery cost is separate from media cost.
  • The advertiser can have content delivered by the SSAS or 3PAS. Paying twice for serving isn’t an issue. This reduces costs.
  • The ad server — site side or third party — remains on one level, eliminating the discrepancy issue.
  • This supports the need for the 3PAS to serve its own content to track rich media activity (particularly Flash).
  • It creates more room for innovation when a third party serves the content. 3PAS can differentiate technically from others with varied capabilities for rich media tracking or other solutions, such as automated optimization.
  • Inventory control is simplified, with a more specific focus on that part of the system without concern for ad serving.

Cons:

  • Third-party serving fees are not reduced. Savings would have to be on the media side, when the publisher didn’t serve the content.
  • Publishers must trust the 3PAS for tracking or open a pretty deep API (which many are reluctant to do) for tracking integration.
  • Advertisers must accept publisher media volume numbers (impression opportunities) as distinct from the impression number given by the ad server. A business model shift, but the fairest way for all parties to be paid an equitable fee. Billing media on page views versus ad serves is an old debate.

Walk-through:

  1. The media planning tool hooks into the publisher’s trafficking and account management system and queries available inventory. It recommends inventory to the agency or advertiser based on criteria.
  2. The media planning tool exports campaign information to the 3PAS.
  3. The 3PAS traffics the campaign to the publisher’s trafficking and account management system (a component of the SSAS).
  4. A user visits the publisher’s site through a browser. A call is made to the publisher’s server, generating an HTML page.
  5. While generating the page, the publisher’s server calls the inventory control system for an ad tag. The system selects the relevant ad tag based on available inventory, confirms the user is not subject to frequency capping, and returns that ad tag to the publisher.
  6. Depending on the architecture, a call to the ad server (SSAS or 3PAS) may occur. Most likely, this step is skipped.
  7. The page is rendered in the user’s browser, which reads the ad tag. A call is made to the ad server (SSAS or 3PAS) for the creative. Methodology (including the redirect of the user) is identical for all ad servers.

Solution 2: Third-Party Servers Stop Serving Ads

Solution two removes ad serving from the 3PAS. It turns the 3PAS into a campaign management, data collection, and cross-publisher media management system. On the surface, publishers are comfortable. Their side looks much as it does now. But most advertisers will find limitations on rich media and reporting problematic.

Pros:

  • Media pricing model stays much as it is. The publisher charges a mixed cost for ad delivery and inventory.
  • Third-party ad-serving fees drop (the majority of the charge today is for ad delivery costs).

Cons:

  • This solution requires more work and trust between publishers and 3PASs.
  • Reporting timeframes are restricted to what the publisher can support. Most use log files, meaning data will not be updated within campaigns for longer periods of time than most 3PAS customers are used to.
  • There is no way to use a 3PAS to “audit” publisher activity. The publisher supplies all impression and click data. With the broader mix of 3PASs on the market, advertisers and agencies can choose one they feel is accurate rather than rely on the accuracy of the publisher’s tracking.
  • Many innovations are reduced in effectiveness or simply not possible, including rich media tracking (which requires a 3PAS to serve the creative). It relies on publisher-side solutions, traditionally less advanced than those offered by 3PASs and rich media companies.

Walk-through:

  1. The media planning tool hooks into the publisher’s trafficking and account management system and queries available inventory. It recommends inventory to the agency or advertiser based on criteria.
  2. The media planning tool exports campaign information to the 3PAS.
  3. The 3PAS traffics the campaign to the publisher’s trafficking and account management system (a component of the SSAS).
  4. A Web user visits the publisher’s site through a browser. A call is made to the publisher’s server, generating an HTML page.
  5. While generating the page, the publisher’s server calls the inventory control system for an ad tag. The system chooses the relevant ad tag based on available inventory, confirms the user isn’t subject to frequency capping, and returns the relevant ad tag to the publisher.
  6. Depending on architecture, a call to the 3PAS may occur. Most likely, this step is skipped.
  7. The page is rendered in the user’s browser, which reads the ad tag. A call is made to the SSAS for the creative.
  8. Impression and click data passed back to the 3PAS.

These solutions were assembled in my “spare” time. I’m not a programmer or an architect. I just happen to have a good brain for how technology works and an understanding of how things are configured today. My goal is to get things moving. To be a catalyst for change. Without someone taking a stab at this, I fear nothing will happen.

Mar 03 2012
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Ad Ecosystem, Ad Technology, Economics

How To Fix Online Advertising (Part 1)

(Originally published in ClickZ, December 2002) by Eric Picard

 

A few months ago, I wrote an article about some of the problems with online advertising. As a follow up, today I’m going to discuss some major industry problems, but this time from the perspective of how these problems can be addressed. Those problems are:

  • Media costs are too low.
  • Discrepancies between site-side ad servers and third-party ad servers are too high.
  • Inventory control systems are too unpredictable.

I’m going to be so bold as to offer a solution to the industry — probably not the actual solution, but apotential solution — that is, a viable solution that, at least on paper, would solve these problems plaguing the industry.

Today I’ll lay the groundwork for my proposal, and next month I’ll offer a version of the proposal to the industry. This is a big undertaking… and a bit of a risk. Frankly, I know the solution I come up with is not going to be a final solution, but at least it will be a starting point for discussion.

First, let me clarify my definitions of ad servers (for the millionth time) just to make sure I don’t get yelled at by misunderstanding vendors. I’ll refer to any ad server representing a publisher’s inventory as a “site-side ad server” (SSAS). Any ad server that delivers an advertiser or agency campaign on their behalf I’ll call a “third-party ad server” (3PAS).

How Do We Get Online Media to Be Valued Properly?

As I said last time, media costs are low for a number of reasons. But the general consensus in the industry (not complete consensus, mind you) is costs are low because “traditional” offline media teams cannot plan and buy media online the same way they do offline. There isn’t even a translation mechanism available, as far as I am concerned. Therefore, online media does not get valued properly.

Offline media teams plan their buys using reach- and frequency-based tools. The idea is simple. Reach is defined as the unique audience who saw an ad over the course of four weeks. Frequency is the number of times you reached the members of that audience over four weeks. This translates into a system of gross rating points (GRPs) by which each media vehicle is valued.

A number of companies are developing media planning solutions for the online space based on offline metrics. But even if they succeed, there are still big holes that must be filled.

Offline media is very predictable compared to online media. A radio media plan, for instance, is very accurate when it is bought — the planner knows almost exactly how many GRPs he is going to get. Online media is much less reliable — it fluctuates wildly. This means a stabilization factor must be added to online media buying to compensate for this.

Luckily, there is an answer — frequency caps. The idea is simple. Once an individual member of your target audience has seen your ad the desired number of times (across publishers), turn off your campaign for that user.

Unfortunately, implementation isn’t as simple as the idea, because currently no technology is availablethat the market could adopt to meet this need. It just isn’t available today, nor is it possible for one company alone to build this solution. A broad cross-industry solution is needed to enable this, and it won’t be easy to build.

Media Planning, Buying, Trafficking, and Discrepancy Resolution

The next two problems may seem very unrelated but are actually tied together in the chain of processes within our industry. Let’s look first at the way our industry processes work together.

As you can see in the graphic below, the business model for working online is complex.

Working Online Business ModelFor an ad to actually appear on a Web site:

  1. The media planner must research the available Web sites and assemble a group of sites from which to buy inventory.
  2. A media buyer contacts the sales teams at the short list of publishers she’s interested in with a request for proposals (RFP).
  3. The publisher’s media sales team must review the company’s inventory management system to see if the inventory is available, generate an RFP, and send it to the media buyer.
  4. The media buyer reviews the RFP and, if approved, sends an insertion order (IO) over to the media salesperson.
  5. Next, the IO is handed off to the ad operations team on both ends.
  6. The publisher ad operations team gets the space reserved within inventory control.
  7. The agency (or advertiser, if it’s handled internally) creative team and ad operations team put the campaign into a 3PAS.
  8. The creative team creates the ads; the placements are generated with creatives assigned.
  9. The agency ad operations team traffics the ads through the 3PAS to the publisher.
  10. The publisher ad operations team picks up the ad tags through the 3PAS and places the ad tags into the SSAS.
  11. The campaign runs, and the agency reviews reports from both the 3PAS and the SSAS.

Now, in a perfect world, the campaign would run perfectly. The publisher would run the exact number of impressions specified in the agency’s IO. The impressions and clicks shown by the publisher’s SSAS and those shown by the agency’s 3PAS would match exactly. Unfortunately, in the real world, this just isn’t common.

Most likely, the campaign will be either under- or overdelivered by the SSAS. This happens for many reasons, but primarily because the problem of managing real-time inventory is very difficult. Also, the media buy is negotiated by volume of general delivery rather than by audience delivery, which makes the whole thing less predictable.

In addition, there will always be a discrepancy between the SSAS and the 3PAS. It is inherent in the nature of the technology — the SSAS counts before the 3PAS does, and users sometimes close a browser or click an available link before the ad call is received by the third party. This is just a basic fact. Because the SSAS and the 3PAS count separately, the likelihood of them having matching numbers is almost nonexistent.

These are three big problems. How do we fix them? I’ll tell you my answer next time. But I’ll leave you with one last issue to ponder.

Today, SSAS and 3PASs support the workflow model I’ve shown above. Below is a diagram of the way these systems interact, so ads run on the user’s browser when she views a Web page.

SSAS and 3PAS InteractionWhen a user calls a publisher’s Web site in her browser:

  1. The publisher’s Web server asks the SSAS inventory control system for an ad tag.
  2. The browser calls back to the SSAS for the ad (an impression is recorded) and is then redirected to the 3PAS.
  3. The 3PAS delivers the ad to the browser (and counts an impression).
  4. The user clicks on the ad, is sent to the SSAS (a click is counted) — and then is redirected to the 3PAS.
  5. The 3PAS counts the click, then redirects the user to her final destination.

This process is far too complicated. Even though these redirects typically take less than a second, the fact we’re counting at different times makes discrepancies unavoidable. This model also requires publishers to bear the brunt of coordinating complex delivery schemas, when they’re already dealing with a difficult inventory control issue.

In addition, this system requires publishers to continually upgrade their ad-serving systems to manage increasingly complex rich media implementations. Meanwhile, the 3PAS has a far more demanding reporting role and must serve much of the rich media content anyway, so rich media and post-event (beyond banner) tracking can occur.

My proposal will be a comprehensive plan to solve all three of these problems in one rebuilding of the existing process. I hope this column and the next will spark some ideas with readers — ideas that will move the industry forward. See you next time when I make my proposal.

Mar 03 2012
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Ad Ecosystem, Ad Technology, Economics

The Three Biggest Ad Headaches

 

(Originally published in ClickZ, October 2002) by Eric Picard

What does this industry need to fix? I’ll delve into three specific problems here… for starters.

Media Costs Too Low

This might not seem like a problem. For many marketers, it’s a godsend. But it’s a huge snafu. Media costs are depressed, making publishers’ margins too low. The cost of building and maintaining their sites and of serving ads are too close to the amount of money they bring in.

Media sales commissions are hardly lucrative. Really great salespeople won’t stick around in an industry where they can’t make money, because great salespeople are driven by a desire for wealth.

From an operations standpoint, the only way to effectively implement and manage an online advertising campaign across a large number of publishers (from the marketer/agency perspective) is to use a third-party ad server (3PAS) to manage, traffic, and report on campaign activity (see my column on 3PAS). Two years ago, using a 3PAS was a no-brainer for anyone who understood the value proposition.

At that time, media costs averaged around $15-20 CPM. The 3PAS costs were around $1-3 CPM. This was 5 to 10 percent of the media buy. Today, media costs hover around $2 CPM, and 3PAS costs around $0.75 — 20-40 percent of the cost of the buy.

For marketers and agencies that understand the value proposition of a 3PAS, value still significantly outweighs cost. Without a 3PAS, it’s difficult or impossible to calculate return on investment (ROI) and a campaign’s true value. Unfortunately, some advertisers won’t OK the additional cost to agencies managing their online campaigns. The advertiser loses the ability to properly evaluate campaigns, as site-side servers don’t offer post-event tracking (post-impression and post-click analysis). The additional labor involved in trafficking and reporting without a 3PAS cancels out the savings.

Ad-Server Discrepancies Still Too High

A few years ago if you asked what the biggest industry problem was, there’s a good chance the response contained the word “discrepancy.” Nothing’s changed.

Example: Advertiser buys 1 million impressions from publisher. The advertiser traffics the ads using a 3PAS to the publisher. The campaign runs. When it’s over, the publisher’s report shows it served 1 million impressions. The 3PAS shows a lower number. In some cases, a significantly lower number.

The industry average discrepancy rate is 20 to 30 percent, depending on who you ask. A few people tell me they regularly experience 40 percent discrepancies. That’s a big difference. The problem gets nastier. Since the advertiser has an available lower number, it often tries to get the publisher to accept the 3PAS number and lower the bill accordingly. This causes the publisher to request a discrepancy investigation, which costs both the site-side server and the 3PAS time and money.

Why discrepancies? By definition, there should be discrepancies. Really. The publisher serves the ad tag that calls for the ad. At that moment, the publisher counts the impression. The call goes to the 3PAS, which serves the ad and counts the impression at that moment. While the call is being sent the user could close her browser or click away, interrupting the process before the 3PAS counts the impression. By nature, there should be some discrepancy. Worse, some scenarios have 3PAS with ahigher number of impressions than the publisher, counterintuitive as that seems.

One cause is from publishers who filter IP addresses of employees. This is prevalent at large networks that systematically filter out employees at their own IP or domain. As these networks have a large internal population visiting their properties, this alone can cause a significant discrepancy.

Possibly the most common cause of this type of discrepancy between site-side server and 3PAS is caching (a Web page is stored locally for quick future retrieval). If the publisher counts page views rather than ad calls (as IAB counting methodology guidelines require), the publisher may not be aware of a page request if the content is cached. As 3PAS generally “busts cache” effectively, the advertiser may have higher numbers than the publisher. Its number would be more accurate. Since the advertiser got a deal from the publisher in this case, it generally doesn’t complain about this discrepancy. Effectively, the publisher gives the advertiser free impressions.

What’s an acceptable discrepancy? Only you can answer that. Most experts say 10 to 15 percent is OK. If you’re getting a lower discrepancy, you should be happy. When evaluating ad servers, ask the following questions:

  • What’s the average discrepancy between site-side servers and your product? If it’s over 15 percent, ask why.
  • What’s your discrepancy resolution policy? This sets expectations for resolution timelines and what form resolution may take.
  • What’s server response time (the time it takes the server to choose an ad and count the impression while sending the response back to the user)? The lower the response time (sometimes called matching speed), the lower the discrepancy. These should be measured in milliseconds. Due to the nature of Internet traffic, charting can show even a few milliseconds can cause significant changes in discrepancy rates.
  • How do you bust cache? The technology should use at least two methods.
  • Do you follow IAB counting methodology guidelines? This answer should be yes, and make use of the IAB robots and spiders list.

Technical Implications of IE 6 and Third-Party Cookies

Internet Explorer (IE) 6 has a default method for handling third-party cookies. IE 6 only allows cookies to be set by the domain visited, unless a third party has a P3P-compliant compact privacy statement.

This is relatively simple to set up. The third party confirms it’s not collecting personally identifiable user information. On paper, this sounds good. If you’re on Yahoo, for example, only Yahoo can set cookies on your PC unless the cookie is “safe,” meaning it won’t steal any personal information.

But Microsoft did this alone, and it doesn’t reflect the way the Internet works. It’s easy for ad servers. Most 3PAS and site-side servers (to my knowledge) are in compliance. Many publishers are owned by networks of sites that make use of consolidated cookies across all properties. In that case, if any of the servers that set cookies have different domain names, do collect personally identifiable information, or neglected to set up compact privacy statements properly, IE 6 blocks its cookies. This can cause problems: from the inconvenience of not having forms prepopulated or settings remembered to frequency caps not functioning on pop-ups (which really annoys users).

As you surf with IE 6, a red eye in the bottom of your browser’s window provides a privacy report when clicked. It’s illuminating to surf high-profile sites and learn they’re not P3P compliant.

There are plenty of other problems. These three are significant and often misunderstood. Let’s solve them and move forward!

Mar 03 2012
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Ad Ecosystem, Ad Technology, Economics, Media Agencies, Predictions, Publishers

Has Interactive Failed? Not the Way You Think

(Originally published in ClickZ, September 2002) by Eric Picard

Interactive industry pundits are complaining a lot lately about the negative treatment we’re getting from The Wall Street Journal and other traditional media.

Can we blame the media? An appalling lack of understanding about industry issues exists even among the online advertising “experts.” If our experts can’t get a handle on the issues, how can anyone outside be expected to do so? We stink at explaining ourselves to the outside world. We stink at communicating internally.

We argue about a host of issues, all from Balkanized perspectives with little respect for other ways of doing things. Add to this cacophony agendas and approaches within various marketing departments, and confusion starts piling up.

Walk in the Other Person’s Shoes

We need empathy — the ability to see things from another’s perspective. How do you respond to the following statements?

  • Online media should be bought using traditional offline metrics, such as reach and frequency.
  • CPM media buys are absurd. Everyone should buy CPC or cost per acquisition (CPA).

The statements are one dimensional. Each points to valid issues but not to answers.

I see five major constituencies in our industry, although there are probably others. How the two statement above are heard and perceived depends on which group the listener is in:

  • Traditional brand advertisers have advertised offline for years, buying media by gross rating points (GRP), reach and frequency, and other traditional brand media metrics. They understand clearly the science behind branding and prove their value to advertisers by showing them how many people they hit within the target market (sometimes through brand recognition studies).
  • Traditional direct marketers scientifically approach consumers via direct mail and other direct methods. They focus only on successful acquisition and care little about brand effect. They have the research proving what results will be before they lift a finger. This group uses very specific methods and language to describe their work.
  • “Traditional” online advertisers/marketers think of themselves as a hybrid of the first two. They love talking about the branding “side effect” (offensive to brand advertisers) and embrace direct measurement. Their dialect doesn’t quite make sense to brand or direct people outside the online space. Most are decidedly weak in their knowledge of traditional offline marketing concepts. They typically misunderstand the direct marketer’s proven science and have virtually no understanding of branding and associated relevant measures, such as reach and frequency.
  • Online brand advertisers have decided the only way to save online advertising is to build measurement tools that will match those used by their offline counterparts. They have stared to eschew direct-response type information in favor of building consensus for the traditional brand path as applied to online.
  • Online direct advertisers only buy CPA or CPC when they have any say in the matter. They buy CPM when they must, but they make darn sure their actual CPA is very low. Some understand traditional direct offline science pretty well, others think they invented the concept of measuring return on investment (ROI). Those who know the science of offline direct are successful by using the same indices to build models online.

What does this all mean? Just because you’re an online direct advertiser, doesn’t mean you should issue orders that the entire industry move to a response metric to value online advertising. And just because you’re an online brand advertiser, doesn’t mean you should suggest we ignore responses and only focus on methodologies such as GRP. There may be two paths to take — as there are offline.

Rather than snipe at each other because each group has its own agenda, we must unify the messaging from our industry. A divergent but strong positioning of each segment (without diminishing the others) would be an improvement. For example:

  • Online advertising is proving to drive direct response better than any other medium.
  • Online advertising offers the best ROI on branding efforts of any medium.

Issues to be aware of: Online direct has been boosted by lower online media costs. If the online brand crowd is successful, online media will be revitalized — and costs will rise. This will hurt online direct, because they rely on cheap CPC/CPA buys. Unlike offline, online direct and brand share a much higher percentage of the same media space.

Diversionary Tactics

As troubling as the lack of perspective between groups is the lack of clarity in technology companies’ marketing messages. Many use industry issues (real or imagined) as weapons in their own marketing arsenals in ways that further confuse an already confused marketplace.

My comments are not aimed at the companies used as examples (which is why I’m using fake names — although some of you know who’s who), rather at their messaging. I’m not saying marketers at these companies should ignore the value they offer customers. Rather, they shouldn’t inflate minor issues or make untenable claims spun as solutions to major industry problem.

TrueMethods’s marketing inflates minor issues. Its Site Side Ad Serving Solution is promoted as the only privacy-friendly server in the industry, making the case all its competitors share ad-serving data across customers. Virtually nobody in this industry does this. Even those who do cleanse and segregate data to protect customer information. They’d be out of business if they didn’t. This is a minor issue for a few publishers and marketers. It’s not a broad industry problem.

OneStream is a rich media technology company. Its message claims it is building standards for rich media advertising. OneStream doesn’t promote industry standards, just its own solutions. As a business, it should sell its products. What does it have to do with standards? Nothing.

A standard, by definition, applies to numerous offerings from different companies. Anyone can build to agreed-upon standards. OneStream suggests that the solution to a lack of industry standards is for the entire industry to unilaterally use its products. How inconvenient for competitors. If its mission is truly to help set industry standards, it should open its formats and offer standards that competing technology can be built to.

ZeroMedia offers an ad-serving and proprietary client-side creative format for ads. It claims to have solved all problems inherent to “first generation” locally installed ad-serving solutions (such as RealMedia and NetGravity) and “second generation” hosted ad-serving solutions (such as DoubleClick) that use their own server farms. ZeroMedia claims to have solved these problems by using CDNs to serve ads and a proprietary “patent-pending client-side intelligence.”

Many ad-serving solutions use CDNs (including Bluestreak, RealMedia, and others). Their “patent-pending client-side intelligence” requires individual users to choose ad preferences so ads can be targeted to them based on their defined criteria. Since the ad-serving solution seems to rely on this, it drags more issues into question.

Unless this industry starts communicating well, we’re not going to get past the misunderstandings in traditional media. If The Wall Street Journal doesn’t stop bashing online advertising, we’re in trouble. But we can’t complain about misrepresentation in the media if we can’t get our own story straight.

The stories above are on my mind, but I’m sure there are others. What are your suggestions for issues needing some housecleaning? We’ll try to air them here.

Mar 03 2012
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Ad Ecosystem, Ad Technology, Predictions

The Future Is Coming! The Future is Coming!

(Originally published in ClickZ, August 2002) by Eric Picard

Two years ago, I made some predictions (some privately, some publicly) about what the world would be like in five years. These can be placed into four categories:

  • Unlimited long distance will be free in the next five years.
  • Cable operators are going to integrate personal video recorders (PVRs) into digital cable boxes, and pausing television (and skipping commercials) will be the norm.
  • Rich media advertising will become the norm for the online space, if only because iTV audiences are not going to respond to animated GIFs. But even without iTV, it will happen in the next five years.
  • Some technology advance is going to radically change the way the Web works and affects our daily lives, and it will be completely unexpected. This could happen any time, but certainly within five years.

It’s amazing how much has shifted in the world since I made these predictions, and I certainly could use the sweeping changes in the economy and in the world to take them back. But, if anything, the circumstances have only solidified the likelihood of these predictions coming true — if only because companies are making innovations spurred by that highest of motivators: fear.

Unlimited Long Distance

My reasoning behind this prediction comes from basic math. The growth of data transfer has outpaced voice by a very high margin. At a certain point, it makes sense to “throw in” long distance voice to attract customers for data services. But things have shifted since I formulated that opinion, and reality is outpacing my prediction.

MCI has jumped the gun by instituting its new service, “The Neighborhood.” It’s the strongest bundle of services I’ve seen yet in the nonwireless space. It includes unlimited calls (long distance and local) within the U.S. and all the bells and whistles (call waiting, caller ID, speed dial, three-way calling, and voice mail). The price is only $49-59 monthly (depending on where you live). Think about that for a minute. Because this includes local phone service, you deal directly with MCI instead of your Baby Bell-remnant local provider.

The only question most consumers will have is whether MCI will be around long enough to support this offer. But the genie is out of the bottle. It’s only a matter of time before this becomes a standard offering across all providers.

PVR Support With Your Cable Box

 

In my mind the biggest problem with PVRs — whether you’re talking about TiVo, SONICblue, UltimateTV, or another company — is they’re add-ons. Individual consumers must make the decision to go out and buy a PVR, set it up, and get it running. Though every existing PVR owner is out there evangelizing the hell out of this technology, the reality is they’re still early-adopter buyers. PVRs are great solutions, but my parents are not going to understand the value proposition.

However, if a PVR is a standard offering within your digital cable, then the ballgame changes. Seamless integration with your cable remote really will change things. Come on
— if you can simply pause live TV without adding anything to the system, that’s a big deal.

Earlier this month, The Carmel Group issued a new report that cited these amazing estimates:

  • PVRs will penetrate an estimated 1.5 percent of U.S. TV households by 2002, increasing to 25 percent in 2008.
  • Six PVR players will account for about 73 percent of the total market by 2008. The manufacturers are Digeo (Moxi), Metabyte Networks, Microsoft (UltimateTV), OpenTV, SONICblue, and TiVo.
  • Two pure-play PVR providers will emerge as leaders in the digital video recorder (DVR) race: TiVo for its branded PVR solution and Metabyte Networks for its unbranded PVR solution.
  • Cable operators will be more inclined to work with unbranded PVR solutions, such as Metabyte Networks and OpenTV, because they provide greater flexibility and control.
  • By year-end 2005, U.S. cable operators will have an estimated 4.8 million PVR-based users, up from 300,000 users in 2002.
  • By year-end 2005, U.S. direct broadcast satellite (DBS) operators will have an estimated 4.9 million PVR-based users, up from 1.0 million users in 2002.

In addition to these amazing estimates, Metabyte and Digeo (the two leaders in PVRs marketed toward cable operators) have announced major integrations with some of the leading cable infrastructure technology providers. Digeo is offering its Moxi solutions through Motorola and Scientific-Atlanta. Metabyte has also integrated with Scientific Atlanta. This is a major step, especially given the Moxi integration with Motorola supports existing infrastructure out of the box.

I’ve talked about the Moxi solution before, and I can’t stress enough how cool this solution is — and the cool factor goes a long way with home electronics.

Rich Media Will Become the Norm

I won’t spend too much space on this one — I think most of the leaders in the online advertising space would agree this is a basic truth. But it is likely happening faster than most realize, and I believe the time of rich media is finally at hand. Next month, I’m going to write a comprehensive review of the rich media space and detail what everyone should be watching for.

In my role at Bluestreak, I have access to the aggregate stats from our ad-serving efforts. We’re a great benchmark of what’s going on in the industry (although our rich media background does give us a bit of an edge in this category).

When comparing January stats with June stats, you can clearly see a big shift in the proportion of rich media being served.

Bluestreak Ion Server Stats
by Media Type
Ad Type Ads Served (%)
January 2002
Images 96 percent
Rich media 4 percent
June 2002
Images 80 percent
Rich media 20 percent

This came amidst a 32 percent increase in the number of total impressions served between those two months. About 80 percent of the rich media served in June was Flash, and the rest was spread pretty evenly between third-party rich media technologies (including our own) and HTML ads.

The Changing Face of the Web

Although I’m uncertain exactly what shape this radical technology advance will take, I’m pretty sure something’s coming along that will change the face of the Web. There are a lot of indicators of this, from the amazing work being done in digital identity to the innovations of Flash MX. It’s likely this change will seem subtle when it first emerges, but its implications will be broad.

To give you an idea of the kind of clear change I can see from a tool such as Flash MX, just look at this innovative Web site: Chipotle.com. This is a definite indicator of what I believe Web sites are going to be like in the next few years. They will be much more interactive, dynamic, and interesting. And this site only uses Flash the way its been used for years (albeit much better than it typically is used). See my coverage of Flash from a recent column, if you want a fuller picture of the specific implications of Flash MX.

Digital identity is a broad topic and difficult to sum up in a few sentences. It promises to revolutionize the way Web sites are built, used, and controlled. But it will be a quiet revolution, not a loud one. See more about the digital ID revolution at Digital ID World.

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