Category Archives: Ad Ecosystem

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.

Mar 03 2012
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Ad Ecosystem, Ad Technology, Rich Media, Writing

Is Our Industry a Modern-Day Sodom and Gomorrah?

(Originally Published in ClickZ, April 2002) by Eric Picard

Imagine you’re visiting a respectable news Web site — a major news site, not a niche one — and when you leave the page, suddenly all hell breaks loose on your browser. I’m not talking about a simple pop-under ad. I’m talking about a violent uprising — an advertising onslaught of fire-and-brimstone proportions. I mean a situation so evil that “the hand of God” should come down and squash the perpetrators.

Think I’m exaggerating? I honestly don’t think so. The site was MSNBC, and the advertisement was an “out of body experience” for an online casino. To see this ad (unless it was pulled down), please use this link.

Let’s dissect the user experience:

  1. You visit a news story on MSNBC.
  2. You click any link on the page to leave, or you close your browser window.
  3. Another browser window is launched that immediately expands to cover the entire screen — including your Windows task bar. The content of this window is a full-page ad for an online casino.
  4. A second browser window launches as a pop-up set to a specific size — also for the online casino.
  5. Frustrated, you click to close the small pop-up window.
  6. Growing more frustrated, you click to close the “uberwindow” that covers your entire desktop.
  7. Upon closing the large window, a small system-message window (not a browser window) appears asking, “Would you like to play our NO DOWNLOAD casino games right now?” And below the message are “OK” and “Cancel” buttons.
  8. 99 percent of you undoubtedly now hit “Cancel” while muttering under your collective breath.
  9. 1 percent of you are so intrigued (or angry) that you hit “OK” to find out what happens next. This opens yet another browser window (set to full screen, since the last window you closed was a full-screen window) that gives access to Java-based casino games.
  10. You either immediately close this new window, or play some games and close it later. When you do close it, a pop-up window is spawned that offers to do one of three things for you:
    • Add it to your Favorites.
    • Make it your home page.
    • Receive an email with a link to this site (a form field allows you to enter your email address).

    There is no “close” button, but there is a “submit” button.

    This is not a good idea. In fact, this is a very, very bad idea from virtually every angle at which you examine it.

    Publisher. MSNBC deserves every flame and hacker attack that it undoubtedly got from users who were afflicted with this ad. If I had this experience more than a few times in short succession, I would never return to the site.

    I understand (more than most) the need to hit revenue targets — both for the publisher selling media and for the advertiser buying it. Still, publishers need to make responsible decisions about what kind of ad content they will accept. They need to scrutinize both the product being advertised and the ad vehicle being used to promote it. Users will rebel at a certain point — and an ad like this perfectly illustrates the point when you’ll hear from more than just the “noisy few”; you’ll hear from the “loud masses.”

    <NOTE: I did eventually hear from MSNBC and they apologized and said that they took this ad down, and that this slipped through their ad operations process, but was not condoned or approved.>

    Advertiser. Short-term revenue gains don’t justify an “any means necessary” approach to attracting customers. On the other hand, this is a casino, and I’m not that familiar with this industry. The casino may be doing all kinds of research that says “People hate us already. We can do anything we want and not change opinion.” My advice to them: This is the kind of thing that will drive the regulation of online advertising. And that kind of regulation would be welcome and embraced by most users.

    User. I know almost everything there is to know about Web technology — and pretty much everything there is to know about online ad technology. This ad made me nervous that somehow (even though I intellectually knew it wasn’t possible) these guys were going to steal my email address without me knowing it — or install a virus on my computer.

    If even I had a momentary concern about this, think of the hundreds or thousands of people (depending on penetration of this ad) who were really worried about it.

    If anything is going to turn people off online advertising, this is it. As an industry, we need to halt this kind of thing. I would like to call on the Interactive Advertising Bureau (IAB) to look at asking its members to voluntarily ban this type of ad vehicle. This kind of thing must not be allowed to become a common practice. This cannot be the next X10 pop-under of our industry.

Mar 03 2012
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Ad Ecosystem, Writing

Frosting, Engage, Alt.English.Usage, and Virtual Spokesmodels

(Originally published in ClickZ, April 1, 2002) by Eric Picard

An acquaintance of mine told me a story about her mother, who made a living baking high-end wedding cakes from her home. She baked at least two wedding cakes a week and ended up with a lot of “cake scraps,” which were described to me as delicious cake-crusts about three-quarters of an inch thick. And, of course, there were always containers of some fabulous butter cream or cream cheese frostings. This woman grew up with a nearly endless supply of amazingly delicious cake sandwiches (two cake scraps with frosting in the middle).

This week’s column will be a little like that. Frequently, I have story ideas that don’t quite make up a full column’s worth of discussion. Sometimes I hold onto them and am able to combine a few into a cohesive story — but this time I’m not even going to try. So, enough explanation. Here are some interesting, and hopefully delectable, tidbits for you to savor and digest slowly with a big glass of milk. (Boy, is it going to be hard to live up to this opener!)

Did Anyone Know Engage Is Still in the Ad-Serving Business?

About a month ago, I sat in on a meeting with a team from Engage to get an update on the current state of their business. Most of my readers know Engage well enough — a high-flying CMGI company that was deeply affected by the burst of the Internet bubble. It went through a string of layoffs as the company tried to reshuffle its products and offerings while reducing costs and sorting itself out.

Originally formed by CMGI through a series of mergers and acquisitions, Engage included assets from (among others) the original Engage, Accipiter, Flycast, Adsmart, Ad Knowledge, and MediaBridge. Last fall, as Engage was quickly divesting itself of business entities, offices, and personnel, Bluestreak (the company I cofounded) acquired the Ad Knowledge assets. Flycast and the rest of the company’s media business have been shed, and Engage has recast itself as a software company. Considering that a new, outstanding CEO is at the helm and (dare I say it) that the company’s actually hiring, some interesting times may be ahead.

So, what is Engage doing these days? I have to admit that I was completely out of the loop. As I mentioned above, Engage exited the media business — but it didn’t exit the ad-serving business. Though it does have a few other offerings, it turns out that the AdManager and AdBureau products are doing very well and posting record growth. Many customers stayed with Engage for the company’s site-side ad-serving business, and Engage has continued to build its customer base.

This was almost shocking to me, given that I follow this space as well as anyone and Engage had managed to remain below my radar. Things had looked very clear-cut to me; with the consolidation in the industry, it seemed like we were really looking at a very limited field made up of DoubleClick, 24/7 Real Media, and a handful of other players. That perception has shifted for me over the past few weeks. Engage looks ready to burst back onto the scene with its product offering more clearly and simply defined than ever. And I’ve been hearing rumblings of a number of other offerings about to enter the market as well, but I don’t have a lot of details on them yet.

Lingo Schmingo, English Schminglish

Another ClickZ columnist, who will go unnamed (hint: He shares this column with me), forwarded a disparaging flamemail from a disgruntled member of the alt.english.usage newsgroup. This person’s email was something to the effect of, “Where on earth did you learn English, and who gave you permission to murder it? ‘Creative’ and ‘metric’ are adjectives, not bloody nouns!”

Now, aside from the fact that the poster’s email address was on the risque side (and appeared to be spoofed), there was something so very wrong about this email and the associated newsgroup postings that I had to mention it in this forum. Apparently Jeremy’s column last week (oops, now I’ve done it) so infuriated some members of that newsgroup they had a long conversation about the fact that “journalists” in our field use too much lingo and bad English (never mind that we’re not journalists, but practitioners).

I have to laugh at the idea of either Jeremy or me being used as “global” illustrations of journalism or our articles being used to illustrate that “bad English” is killing our culture or some such nonsense (although it is a welcome departure from a more appropriate debate about advertising killing our culture). It really seemed to bother them that Jeremy used the term “creative” as a noun — which makes our entire industry guilty as sin, I suppose. I think I’ll start using “creative” as a verb in my next few articles and see if I can get this character to blow a wing nut. Maybe I can creative him with a few metrics of my own.

Virtual All Over Again

In a former life, I built glorious virtual reality worlds filled with high-end graphics that took ultra- expensive computers to run. It was a lot of fun, and I’ve been addicted to the world of 3-D graphics since. But I got very tired of building stuff that could only be viewed on $100,000-plus computers — hence my shift to the Web.

These days, I look out for any potential technologies that promise to bring interesting 3-D applications to the Web, and there finally seems to be some hope of that happening (years after the death of VRML). Sure, there are the established players, such as Viewpoint, but some smaller companies have recently entered the market with specific-use 3-D applications.

Last week I had an enlightening conversation with Dennis Crane, CEO of LifeFX. These folks have built a very interesting technology that puts a “virtual spokesmodel” onto a Web page. I’ve seen applications like this before, but what is interesting about LifeFX is that it has the most mature of the offerings I’ve seen.

The company uses an advanced system for modeling human physiology, and it draws on research about the way facial expressions enhance communication. The idea in a nutshell: auto- generate a 3-D replica of the model’s face from a photograph of a human face. Then take audio messages and synch the moving of the model to the playing of the message. The result is a compelling virtual presentation that can be tweaked to add any kind of emotional edge to the message that you’d like. Want a sympathetic user response? Have the model act in such a way to elicit that response. Want an excited user who is ready to act? Well, you get the picture…

Of course, there are obvious uses, such as putting a virtual salesperson right in front of visitors, but the company has also done some pretty advanced integration with database-driven applications and voice generation — basically building interactive “human” conversationalists.

Let’s all go out and creative our industry metrics higher, shall we?

Mar 03 2012
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Ad Ecosystem, Ad Serving, Ad Technology, Rich Media

Technology Partners, not Vendors

(Originally published in ClickZ, December 2001) by Eric Picard

The online advertising industry requires technology to exist. More than any other ad medium, we’re technology-driven.

Recently, my colleague Tig Tillinghast wrote a mind-expanding article about the inefficiencies of the Web as an advertising medium. In it he states: “Newspaper can print a whole 32-page tabloid with 250 ads in it for $0.20 each, but it costs a Web site 25 percent more to serve the same number of ads.”

This may be true, but let’s analyze why it costs more. We’ve been printing (and advertising in) newspapers for literally hundreds of years. That’s plenty of time to figure out what the economies of scale are and to enable printing 250 ads for $0.20 each. The technology is relatively simple. Any changes over the past 50 years have only made it cheaper to produce a higher quality product.

You can’t compare the delivery of 250 online ads with that of 250 print ads, any more than you can compare print with TV ads. It’s apples to rhubarb.

The real world of online advertising requires certain technologies. Therefore, you need to forge relationships with your technology providers.

There’s a difference between viewing a technology provider as a vendor (weak relationship) or a partner (strong relationship). Dictionary.com defines “vendor” as: “One that sells or vends: a street vendor; a vendor of software products on the Web.” “Partner” is defined as: “One that is united or associated with another or others in an activity or a sphere of common interest.”

This should apply to your approach to tech providers. You can relate to them as a utility, like the electric or gas company. You can view them as a mission-critical service provider, like the phone company. Neither model suffices. You both have the same interests. They succeed if you succeed. Grow your business, you’ll have more need for their services.

Even services such as ad serving, often referred to lately as a commodity, are not mature enough to treat dismissively. There are not enough providers to choose from (and fewer after this year). There’s too much volatility, too much change, and too many issues for you to make that mistake.

Here are some basics about partnering with technology providers:

  • Yes, the economy sucks. No, you can’t beat up your tech partner on pricing to the point that it can’t turn a profit. It’ll go out of business, and that doesn’t help anyone. 
  • Find ways to pay your technology partner more by having it help grow your business. Tie your businesses together to gain the most from your partnership. Don’t slip into a valueless “paper partnership.” Apply resources and watch the relationship flourish. 
  • No company has every feature or widget you need. Product development (or customization) is required before you’ll be happy. A technology company will meet the needs of partners before worrying about customers who treat it like a vendor. 
  • Partners often participate on advisory councils and are involved in product research and development. This leads to measurable benefits, such as accessing new features before anyone else. You’re not likely to get that level of service from a mere vendor. 
  • Choose technology providers with upside potential and whose values match your company’s. Ask hard questions about service expectations, commitments to quality, and what the plan is when problems do arise (they always do).

Work from a common set of realistic expectations. There’s been so much over-promising and underdelivering in our industry that most customers are wary of committing to deeper relationships.

If a tech provider makes claims that set off your “spidey sense,” have it explain exactly how it’s going to live up to the claims. If high expectations are set by sales or marketing, ask to speak with a senior product or engineering rep to ensure the entire company is in alignment.

Make sure the company knows you want to partner with it. Be clear about expectations you have from a partnership as opposed to weaker relationships it might have with other customers. Make the opportunity attractive. Sell the company on your value as a partner. Expect and demand more. Be willing to cooperate. You’ll both come out ahead.

I hope your holidays were wonderful, and you and your family are approaching the new year with great expectations. –Eric

Mar 03 2012
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Ad Ecosystem, Ad Serving, Ad Technology, Media Agencies, Publishers, Startups

Advanced Ad-Serving Features, Part 2: Third-Party Ad Servers

(Originally published in ClickZ, November 2001) by Eric Picard

Last time, we discussed advanced features of site-side servers. Now let’s go deeper. This week, we’ll go into the even-more-advanced advanced features of third-party ad servers.

Third-party servers primarily serve the needs of advertisers and agencies. Sometimes they are called buy-side servers. They are part of the business infrastructure of these groups and must reliably and accurately deliver and report on ad serving and related user actions associated with the ads.

In addition to delivery and basic reporting, third-party servers provide unified comparative reporting for all publishers in a media buy, as well as many advanced features. From a feature standpoint, a third-party server is more complex than its site-side counterpart.

One thing to keep in mind: A third-party server is not able to “refuse” a call for an ad. If an ad tag is supplied from a third-party server to a site-side server and that ad is called, it must be served. Only a site-side server can schedule and deliver ad calls to users.

Beyond Banner Tracking

This is the big feature. Tracking beyond the banner enables the view of an ad session from impression to conversion (and beyond). This is a major reason a third-party server is a must for most advertisers. Some tracking types beyond the banner are:

  • Tracer tags. Tracer tags are single-pixel images placed on pages of the advertiser’s Web site so that activity on those pages can be correlated to the view or click of an ad. 
  • Post-click analysis. The user sees an ad and clicks on it. She arrives at a landing page on the advertiser’s Web site. She travels across three pages that have tracer tags on them. Each intersection of creative/tracer is credited to the advertiser’s reports. 
  • Post-impression (also called post-view) analysis. The user sees an ad but doesn’t click on it. That user (remembering the message) later travels to the advertiser’s Web site on his own. He moves across a number of pages with tracers on them. Each intersection of ad and tracer is correlated and credited to the advertiser’s reports. This analysis is a definitive branding measurement and is sometimes called a brand response report. Not all third-party servers collect post-impression data.

Reporting

  • Cross-publisher reports. A major reason to use a third-party server is that reports are covered across all publishers within a campaign. 
  • Comprehensive data sets. Since both post-view and post-click data must be recounted, reports must be unified and comprehensive.

Analytics

Some third-party servers offer advanced analytics capabilities. This is one of the fastest growing areas in the industry. Far more data is captured in an online ad campaign than in an offline one. Turning that data into actionable information isn’t simple. It takes days or weeks of human intervention and interpretation.

A powerful analytics package solves these problems by providing tools to get at actionable information more quickly. There are two basic types of tools to discuss:

  • Online analytical processing (OLAP) tool. This very powerful analytics tool enables the most control of data and reporting. Great power and flexibility comes at a great price, and few people are technical enough to use an OLAP tool to manipulate their data. In most agencies there are only a few, if any, people who can use these tools. It gets even sparser at the advertiser level. 
  • Wizard. To address problems with OLAP, some companies have started coming up with wizard-based interfaces for the most commonly asked questions. A good wizard-based interface can likely answer such questions as: Which publisher is the best media buy for my campaign goals based on the past six months of running ads across various publishers?

Optimization

Analytics deals with historical analysis to improve ongoing and future campaigns. Optimization deals with live campaigns that must be improved while still running. When done by hand (as is most often the case), only so much can be changed. Humans can optimize to a level of detail only so deep. This is best handled by technology, which provides much deeper analysis of data. Two types of optimization are:

  • Real time. Real-time optimization is the most powerful. Changes are made automatically to creative in rotation across placements based upon actual results read by the optimization tool. Real-time optimization requires real-time data to make changes. Few ad servers use a real-time reporting architecture, relying instead on 24-to-48-hour-delayed data. Real-time benefits include microtrend discovery (intraday changes in behavior within placements) and greater lift based on feedback loops. Additionally — if the system doesn’t make changes automatically, relying instead upon human approval or intervention — the lift is going to be lower. 
  • Recommendation. For situations where real-time data isn’t available, recommendation-based systems are the alternative. These systems read data when available and provide a list of recommendations to enable the customer to make changes. This inherently is a poorer performing model as changes are not happening quickly. Therefore, additional learning for the optimization tool is lost. The faster changes are made, the better the system gets at predicting performance. Still, this is a better method than hand optimization.

Targeting

  • Geographic targeting. Geotargeting is similar to site-side servers but somewhat less effective. You pay for the media regardless of whether you had an appropriate creative for the users an ad was served to. Wherever possible, try to geotarget at the publisher level. 
  • Profile-based targeting. As I detailed last time, ads can be targeted based on Web-surfing habits. Third-party ad servers have the same issues as site-side servers do. 
  • Session-specific targeting. Specifics include domain, browser type, and operating system. Again, this can be accomplished on the site side, usually to greater effect as the publisher only shows the ad (and bills you) when there is an appropriate fit. When served by a third party, you pay for the media even if it doesn’t fit your demographic.(Remember, there are plenty of other types of targeting I’m not covering here).

Trafficking Controls

Without a third-party server, trafficking ads to multiple publishers is a problem. It can be complex, with many points of failure. A good third-party server simplifies the process of trafficking campaigns and should provide valuable accounting methods for successful delivery and approval of your ads by the publisher.

Dynamic Ad Serving

Most publishers have a limit on the number of ads they will accept at one time. Usually this ranges from 5 to 10 creatives per week. Third-party servers use dynamic ad serving to rotate multiple creatives through one ad tag. This allows the advertiser/agency to traffic as many creatives associated with those tags as they want. This simplifies life for the advertiser and the publisher by cutting down significantly on the work done by both.

Conclusion

There are other ad server features not covered here. But this is a column, not a book! You should now be educated enough to talk to a salesperson without too much trepidation.

Next, I’ll write about a topic near and dear to my heart: how to work with tech companies for long-term success. It’s time to set a few things straight about this marketplace. Customers need to understand that while they are in a position to beat up their tech partners (notice I don’t call them vendors) on issues such as price, they should think twice. If there are any tech firms out there that would like to voice their thoughts on the topic, drop me a line.

Mar 03 2012
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Ad Ecosystem, Ad Serving, Ad Technology, Publishers

Advanced Ad-Serving Features, Part 1: Site-Side Servers

(Originally published in ClickZ, November 2001) by Eric Picard

A few things have happened since my last article:

  • DoubleClick did not buy Real Media, as was widely speculated.
  • 24/7 Media did buy Real Media.

With all the turmoil in the ad tech market, it might be time to review your tech partners’ stability. You can read my comprehensive (if a little dry) recommendations from way back in June. Boy, it sucks being right sometimes.

Last time, we talked about the basics of ad serving. I got a few emails from ad-serving companies arguing that I didn’t cover enough in that article. That was the point, actually, to write a quick overview. I doubt I’ll hear that complaint again — this two-part series goes into plenty of detail.

I will say up front that this is still a generalized overview. There are individual features of various ad-serving products that I won’t be covering. You still need to do a comprehensive review of various offerings before making a final technology decision.

I did get emails from individuals who couldn’t see much specific differentiation between a site-side and a third-party server. One wrote: After reading your article, I still do not see the advantage of having a third-party, other than the same reports in the same format… What more do third-party servers provide other than the number of impressions delivered and the number of clicks? Is there some other type of analysis of the campaign that the third-party provides?

First, I am not advocating the use of third-party servers over site-side servers. The two types of ad servers are designed with different purposes in mind. Site-side and third-party servers are not competitive. Site-side servers are aligned to publishers, while third-party servers are aligned to advertisers and agencies.

This analogy won’t earn me any points from the site-side server companies, but we could put it like this: A site-side server is to a third-party server as a freight train is to a passenger train. Both must be able to travel on the same tracks. Both must travel at the same speed. Both must deliver their content accurately and on time. But the passenger train needs to be a bit more refined in its amenities. The freight train needs to be able to handle a heavier load and deal with different delivery protocols (after all, passengers walk off their trains while cargo needs to be unloaded).

Second, unified reporting and trafficking procedures may not seem like a big benefit if you’re an advertiser that doesn’t do lots of trafficking and reporting for large media buys. But if you have to integrate 20 or more unique site reports into one single report for a client, it isn’t a simple process. It can take days or even weeks.

Otherwise, the reader is on the right track (pardon the railroad reference). The real strength of a good third-party server comes from its advanced features. There are plenty of advanced features to discuss on the site-side as well.

So let’s go deeper. This time, we’ll look at site-side servers, and we’ll go into depth about third-party servers in my next article.

Site-Side Ad Servers: Advanced Features

Just to reiterate: Publishers use site-side servers (sometimes called local- or sell-side servers) as part of their business infrastructure to accurately deliver and report on ad delivery. This includes trafficking controls, workflow, inventory management, and many other parity-level features. Many (but not all) site-side servers include the following features.

Targeting

  • Geographic targeting. This feature works best when applied on the site side. The ad will be sent to only those users who are where you would like the ad to be seen. The main issue in geotargeting is accuracy. There is wide disparity in the accuracy of methods used to target based on user location. Not all solutions are created equal. Some subitems include targeting based on IP address, Standard Industrial Classification (SIC) codes, and ZIP Codes. 
  • Profile-based targeting. A few of the bigger players spent millions trying to build accurate databases of user activity so that ads could be targeted based on Web-surfing habits. You can, for example, send an ad for a motorcycle to people who visit sites for motorcycle enthusiasts. This is sound in theory. In practice, it’s difficult to implement and very expensive to maintain — a critical consideration, given current market conditions. Ask how frequently a vendor’s database is refreshed and what the average age of its profiles is. Some experts question the validity and value of profile-based targeting, while others claim success. 
  • Content-based targeting. This is a feature generally offered by portals, networks, and search engines. Subcategories might include keyword search results and content categories. 
  • Session-specific targeting. This includes domain, browser-type, and operating system.

There are other types of targeting that you may come across, but the above are the primary methods.

Creative Rotation Controls

  • Frequency capping of creative. This allows you to specify how many times you want an individual user to see creative before you “shut it off.” Experts recommend frequency capping be used to limit the number of exposures an individual user will have to your campaign. Being able to cap frequency is the culmination of the desires of brand advertisers from offline media, which they cannot do offline. Direct marketers should take note, because it is possible today to review the effect of frequency on conversion. 
  • Sequential serving of creative. This feature lets you specify a sequence of creative elements shown as the users travels across Web pages. For example: A car drives along a highway with a tantalizing opening message. Next, the same car appears with the second part of the message. Finally, the last message appears with a hook or call to action to draw users in. 
  • Accounting interfaces. Some site-side servers include interfaces for popular business accounting packages, such as Microsoft Solomon.

You’re on your way to becoming an expert. Next time, we’ll examine the even-more-advanced advanced features of third-party servers.

Mar 03 2012
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Ad Ecosystem, Ad Serving, Ad Technology

Ad Serving 101

(Originally published October 2001) by Eric Picard

The ad-serving world has seen a lot of turmoil of late:

  • DoubleClick is on a site-side ad-server buying spree, with plans announced to purchase L90’s technology business and possibly Real Media. 
  • Bluestreak bought Engage’s third-party ad-serving business, AdKnowledge. 
  • Engage shuttered its media business (the former Flycast Network), leaving it with only its site-side serving business. 
  • Mediaplex (a third-party server) was recently snapped up by ValueClick. 
  • MatchLogic (also a third-party server) closed its doors not too long ago.

Site-Side Ad Servers

Back at the beginning of time, online publishers needed to monetize inventory through advertising. At first, they simply plunked ads onto pages as regular images and served them with standard Web servers. This worked for a little while, but it quickly became apparent that greater features were required than could be handled by standard Web servers.

Advertisers needed accountable reporting. They needed audited impression and click numbers, and they needed to know that methodology was used. They needed to be able to access reports for their campaigns on a regular basis and for specific date ranges.

As more ads got served, advertisers wanted to be able to rotate ads based on various trafficking criteria — just like in offline media. This required that publishers have control over their inventory — and that they could schedule ad flights to run in specific rotations and for a specific number of impressions. This is complex, because it involves prediction of available inventory based on current and past impression volumes.

The job of a site-side ad server is as follows:

  • Serve ad creative every time a page is called without serving “broken” banners — this is a mission-critical job process 
  • Manage the inventory of available ads and make sure appropriate ads are served to appropriate locations based on the media buys 
  • Report on the number of impressions and clicks that have taken place for a specific flight of media

A site-side server has many other features, such as geographic targeting, frequency capping of creative, and sequential serving of creative. But from a basic ad-serving standpoint, that’s the role of the site-side server.

Third-Party Ad Servers

As the online advertising industry matured, it became clear that though site-side ad servers performed their job for the publisher, they weren’t very friendly to advertisers who ran campaigns across multiple publishers.

Here’s a fictional example:

XYZ Finance is a big financial firm. It runs ads across 10 different publishers. Every month, it runs a new campaign with 20 different creatives. So, every month it sends 20 different creatives out (trafficks them) to the publishers. And every month, it gets reports back from the publishers with all its statistics.

 

The problem is that it then has 10 different reports in 10 different formats. All of which must be put into Excel and merged. Additionally, all it gets from the publisher is the number of impressions and the number of clicks, plus a click rate. As enlightened marketing professionals, we know the click rate is a horrible measurement of overall performance.

Additionally, if XYZ wants to change creative during the run of a campaign, numerous manual steps must be gone through, from contacting the publisher and having it pull the current ads to getting new ads trafficked out and having the publisher turn them live.

So the answer to these problems is the third-party ad server. While the job of the site-side server is mainly about delivery and management of inventory, the third-party server is more focused on trafficking, reporting, and analysis of results across multiple locations.

Here’s how it works at its most basic:

  1. The advertiser (or agency) has a contract directly with the third-party server. 
  2. The advertiser uses the third-party server to upload and traffic all its ads to various publishers. 
  3. The publisher, instead of placing actual ad creatives into its system, places an “ad tag” into the system. The ad tag calls the third-party server when it is placed on the page by the site-side server. 
  4. The third-party server is responsible for delivery of the ad when it’s called by the site-side server. Again, this is a mission-critical serving job and can never be down. 
  5. The advertiser has 24/7 access to the third-party server and runs reports any time for any date range. The reporting and analysis tools on the third-party server are much more powerful and refined for the advertiser’s needs. 
  6. Since reports are generated by only one solution, they are unified and similarly formatted. This enables clearer value analysis of each media buy. 
  7. If the advertiser wants to change an ad during the life of a campaign, this can be done dynamically — swapping the creative in one central location. That change populates automatically across all publishers.

Third-party servers have plenty of other features; these are just the basics of the value proposition. Next time, we’ll talk about some advanced features of the ad-serving space and see what kinds of advancements are being working on.

Mar 03 2012
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Ad Ecosystem, Rich Media

Rich Media: Damn the standards, full speed ahead!

(Originally published in ClickZ, August 2001)

The Interactive Advertising Bureau (IAB) released its new rich-media standards a few weeks ago, and a number of articles in the industry trade pubs have disparaged the new standards and reprimanded the IAB Rich Media Task Force.

I’m not going to recap what’s been said elsewhere too much — after all, I wrote an open letter to the IAB Rich Media Task Force months ago, outlining my concerns. I believe that they took such concerns seriously and addressed many of them in the final released version.

Bill McClosky summed up my feelings quite well in his recent article on Media Post. I just feel deflated. As for the rest of the rich-media technology providers, I think you can get a sense for the way things are going from Pamela Parker’s excellent article in TurboAds.com last week.

Given that plenty has been written about the new guidelines and their benign affects, I’d rather take this opportunity to talk about the real state of rich media in this industry: What kinds of things we have seen — what you can really run — and what seems to be the trend among publishers and advertisers.

Publisher Trend: Pay Up or Get Out

There is a definitive movement on the part of the major publishers to cater to a smaller group of highly valuable advertisers, shuffling all others to the side. I can’t give any specific examples, because all the discussions have been prefaced by people saying, “Don’t quote me on this,” or something similar. But here’s the trend.

Several of the major publishers (there aren’t too many left that fit that category) have said virtually the same thing to me:

We aren’t trying to attract advertisers who run one or two $10,000-$20,000 campaigns a year with us. We want high-profile, high-paying customers to make bigger commitments to us — and then we’ll pull all the stops out for them. The rest of the advertisers will get “standard” service from us. The days of advertisers running us ragged for a small piece of their media budgets are over. Rich-media campaigns must be either lucrative or very easy for us to absorb.

Luckily, Bluestreak, Enliven, and others offer rich-media solutions that are easy to implement from all sides — agency, advertiser, and publisher. But this trend will change the way the industry works. If you’re planning to build a complex edge-pushing rich-media campaign that requires extreme effort for the publisher to implement, and if you’re planning on spreading a smallish media buy across many locations, good luck.

This will have two effects:

  • The publishers will drive use of new rich-media technologies more than the advertisers and agencies (which was how this had been happening). 
  • The new IAB standards will be marginalized or used as a lever to apply higher prices to more cutting-edge campaigns.

Another example of this new approach is the trend toward publisher-specific rich-media offerings. For the first time, publishers are working directly with the rich-media technology providers to build custom offerings that ignore the standards in place. They are differentiating from each other — and it has nothing to do with running campaigns across channels. They want to keep your media dollars with them. Publishers want top dollar for very effective and innovative special promotions.

These publisher-specific formats will require custom creative work by the advertisers who make use of them, with the payoff being better results. This actually follows the online sponsorship model, not the online advertising model. I predict that you’re going to see a trend that blurs the lines between sponsorship and advertising in the very near term.

The good news about all this is that there are fantastic partnership opportunities for advertisers out there — and publishers are more willing to work with you.

Advertiser Trend: Publisher Partnerships for Highest Value

We’re going to see, along with the change in policy by publishers, a change in practice by advertisers. Major advertisers are going to choose a small group of publishers to partner with — and we’re going to see big innovations from them. This already started with Yahoo running those well-publicized Ford Explorer ads a few months back. Publishers will be doing far more of these deals — and they’re going to be much more open to innovation.

I predict that uninitiated video will be all over the place in the near future. It makes a lot of sense: With online publishers who have offline properties, they can cut cross-media deals to run video ads online without any difficulty. Advertisers have always wanted to run their offline videos on the Internet.

The “traditional” thinking of online advertising strategists has been that running offline video commercials is a terrible idea; the thinking has been that effective ads on the Internet must be interactive to elicit a response. Given the recent data on branding effectiveness of online ads, there is a lot of value to running video ads online just for branding.

We’re going to see a lot more of the kinds of deals that got press recently for LifeSavers when the “O” in About.com’s logo was replaced with a LifeSaver. I would guess that the advertiser or the agency came up with this idea, not the publisher.

In the end, money talks and everything else walks. Advertisers are finding ways to get more value from the online space. And publishers are showing that innovation comes from necessity — and that the realities of making the business run in a post-bubble world require thinking outside the box. How are you going to fare in this new world? Let me know what you’re doing to shake things up. If it’s interesting, I’ll write about it.

Mar 03 2012
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Ad Ecosystem, Ad Technology, Predictions

Wireless location based services will change everything!

(Originally published in ClickZ, July 2001) by Eric Picard

I have to admit that lately I’ve been feeling a little frustrated about the state of wireless when it comes to advertising. The “best” idea I’ve heard on using the space for marketing was to fire Starbucks coupons at customers as they walk by store locations. And that’s just plain stupid. Certainly, using text and graphics to advertise on wireless Web pages will grow and continue, but that’s neither new nor very interesting.

That all changed for me last week. I came across some information about a company called iProx, a small start-up in London focusing on supplying location-based services (LBS) infrastructure technology to wireless providers. It might not sound exciting, but LBS would be the enabling technology to let Starbucks bounce a coupon to a potential customer walking by the store. It is also opens up amazing new opportunities.

Now, I like this company, and I spoke with cofounder and COO Ravi Kanodia during my research for this article; but regardless of whether it is iProx or another company that breaks open this space, this is one of the most exciting technologies I’ve heard about in years.

The Federal Communications Commission (FCC) has mandated that by October of this year, U.S. wireless providers must be able to pinpoint the location of 911 callers from mobile phones within 100 meters. But there’s nothing in the FCC requirements that limits using this technology for 911 calls — and there is a mad dash to provide this capability to the wireless providers.

iProx is the most exciting of those companies that I’ve seen. If it has developed what it claims, we could see a wireless revolution, with thousands of new services and business models coming from it. Not to be clichi, but this could really change everything.

To illustrate why iProx’s solutions are amazing, let me explain how LBS works today. Currently, to be located by an LBS, I need to initiate a call. When I make the call, the wireless provider triangulates my location by cross-checking my location between transmitters. Then my location can be aligned with potential offers that intersect my needs at the moment, and an offer based on location and time can be made.

Logically, we need to be able to continually track the location of users and push information to them based on preselected needs or preferences. Kanodia likens this problem to the need for air traffic control in the aviation industry, because in a wireless network environment there are problems with simply pinging every user’s wireless device at short regular intervals. The wireless networks would simply melt down from the volume of pinging traffic.

iProx has solved this problem through its Correlation Engine, which tests users’ locations based on various criteria, including velocity and the user’s profile. For example, if you are sitting at your desk, not moving, iProx will ping you at very long intervals. But as you start traveling, it pings you more often — and speeds up the interval based on how fast you’re going.

This simple solution makes many amazing things possible, and they go far beyond pushing relevant time- and location-based offers at users.

Here are a few scenarios from an application standpoint.

  • Imagine that you’re on the road traveling and have a 6:00 flight to catch. Because you’re still 50 miles from the airport at 5:45, the airline can automatically cancel your reservation and reschedule you for the next flight (if you signed up for this service).
  • A shipping company could be instantly notified if a valuable truckload of computer chips were to suddenly start moving in the wrong direction. And obviously this is the next generation of LoJack for cars with hard-wired wireless devices.
  • For the first time, it would be possible to value outdoor advertising with unquestionable evidence. Even with the user-identifiable information removed, it would be extremely valuable if Macy’s could learn that of the measurable 10 million people who drove by its billboards last week, 300,000 of them visited Macy’s stores. This could work for any retailer, even the movie industry.

And this opens new vistas of analytics and demographics. For the first time, truly detailed and “clean” demographics can be assigned to populations. The privacy implications aside, this is a huge opportunity for a company to build datasets on human activity at a level that hasn’t been possible before.

iProx has also built a mobile location-aware “buddy list” application on top of its Correlation Engine; the application has integrated mapping and navigation capabilities (from Navigation Technologies). The idea is that you can be notified when one of your buddies has come within a certain distance of you — and instantly shown a map detailing your locations. You would be able to search for your buddies (if they’ve agreed to allow this) as well. Simply run a check as you leave work to see where the gang has gathered, and go meet them.

From an interactive marketing perspective, this feature could be used by marketers to build pools of buddies who could be introduced to each other based on affinity. Additionally, we could fire an opt-in application to any unregistered user as he or she walked into or out of a store location. There are virtually unlimited applications for this technology once it is implemented.

iProx has taken the right approach: Its solutions are vendor agnostic. It can make use of whatever technology is installed by the wireless provider — so, however closely the provider can pinpoint location, iProx will make use of it. And that’s one reason I think it’s onto something.

Start thinking about how you’ll make use of these advertising solutions as they arrive — because arrive they will. It’s only a matter of time.

Mar 03 2012
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Ad Ecosystem, Ad Serving, Ad Technology, Media Agencies, Publishers, Rich Media, Startups

Protecting yourself from exploding Ad Technology partners

(Originally published in ClickZ, June 2001) by Eric Picard

As you might have heard, AdForce closed its doors last week. CMGI shut it down after failing to find a buyer. What a strange world we’re living in. It makes you wonder whose balloon is going to pop next, doesn’t it? It wasn’t so long ago that these companies were awe inspiring to many of us in the industry. How quickly things change.

So what is an agency or advertiser to do? If you make decisions about or manage the relationships with your technology partners, maybe we can come up with some guidelines for you on how to judge a company’s stability. The world is a dangerous place right now, and getting caught unprepared if your ad-serving infrastructure suddenly goes up in smoke could really hurt.

Public Companies

Let’s start by looking at the public companies. Once, you could assume that if a company was public, it would most likely be around in a few months. Not any more. Being public actually works against most companies in our space these days.

A very well-known industry analyst once told me that any company with a stock price of under five dollars is focused only on appeasing the investors, not on doing business, and certainly not on innovating. At the time, he said he didn’t even pay attention to those companies. I have to wonder if he still operates on that principle. Today, companies in our space with stock near or above five dollars are like superheroes.

I just looked at the list of 43 stocks I’ve been tracking for the past three years. It’s made up of companies either active in online advertising or peripheral to it. I noticed that 34 are trading under five dollars or are no longer trading at all. Of those 34, 12 are trading under one dollar, and 17 of them are no longer actively trading. Some have stopped trading because of merger or acquisition, but most are just out of business.

So how do you make sure you’re safe?

  • Look at the makeup of your technology partner’s customers. And I don’t mean its “portfolio” — since this often contains customers no longer working with the company. I mean active customers.
  • Ask your contacts for active customer references. This might be a tough play, but at least you’ll be able to judge the stability of the company. If a company doesn’t have one customer willing to say something good about it, you might want to reconsider.
  • Find out how much operating capital the company has. DoubleClick is an example of a public company in our space with lots of operating capital. 24/7 Media is an example of one without any operating capital.
  • Make use of the fact that the company is public. Look closely at its public disclosures. Read quarterly reports. Read analyst reports. Judging which companies are in trouble is mostly a clear and commonsensical act.
  • Check if the company traded as an over-the-counter or bulletin board (OTC:BB) stock. If so, you should be especially wary, because the regulations about reporting here are much less clear. Since there is less regulation, companies trading as OTC:BB are often seen as stock scams at worst and as a little shady at best.

    The main change these days is that since many companies have been de-listed from the Nasdaq, as victims of the times, they have ended up on the OTC:BB. If the company is a real business, you should be able to tell pretty easily. One quick test is to verify that its “gallery” or case studies are real, not mocked up. Be direct and ask — even ask for real customers you can talk to if you feel uneasy.

    One of the first questions I ask a company is if it is public or private. If it’s a small company and it’s public, I immediately ask if it’s an OTC:BB.

Private Companies

Now that we’ve looked at public companies, we should review how to judge the stability of a private company. It’s not so different, but some of the information isn’t available publicly.

First, make sure that the general items are covered from above — and especially focus on customers. Since public companies are accountable for things that they say in public, they usually are relatively credible (minus the marketing spin). Private companies are not so tightly regulated, so make sure to do your due diligence.

Usually, private companies’ financial health is the hardest point to establish. And today, this is the most critical factor to review. There are, usually, some indicators:

  • Private companies generally start up through bootstrapping or venture financing. If it’s the latter, you’re in luck. It’s a huge win to get investment from a venture capital (VC) firm, and the general response is to issue a press release.
  • Review the company’s press releases, and try to figure out how much money it’s raised.
  • If it has been growing and hasn’t raised any money in the past six to eight months, your warning bells should go off. The only situation in which that shouldn’t worry you is if the company is bringing in lots of revenue. This is tough, given the market right now.
  • Next, you should figure out how much time it has to get profitable. Once you do (explained below), feel free to ask the company directly how it plans to achieve profitability. Again, you may not get an answer, but it doesn’t hurt to ask.
  • Get a general idea of the company’s burn rate by using the following guidelines:
    • How many employees does it have? Usually, the company will tell you.
    • Where does the company have offices, and how many people are in each?
    • What kind of capital expenditures might it have? If it’s an ad-serving company, how much is it spending on server farms?
  • This is closely held competitive data, so a company is unlikely to just hand it over, but you can make some educated guesses about these things:
    • Figure that a company with 30 employees is burning $150,000 a month for salaries (if it’s aggressive).
    • If the company is in New York, figure that it’s paying big-time rent (even with some of the new deals opening up). An office for 30 people will run roughly $35,000-45,000 a month, depending on location and other costs beyond rent.
    • That gives us close to $200,000 monthly without even getting to hardware or server infrastructure.
  • When you look at (a minimal) server infrastructure and costs for setting up and maintaining the business, we’re talking about $250,000 monthly, or about $3 million a year.
  • That gives a company of 30 about two years of life if it’s raised $6 million. You can work out the various scenarios for different sizes and funding.
  • I’m being quite conservative here, and this is based on a whole lot of assumptions. For instance, if the company happens to have offices in New York and San Francisco, you can imagine that the costs are a lot higher.
  • If the company is too large for the amount of funding it has, it will burn out fast. If it’s too small for the amount of business it has, you’re going to get horrible service.

So now you’re an expert in evaluating those companies you’re working with. Go out and look at them. There’s no time like the present.

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