springload

(Originally published in ClickZ, October 2006) by Eric Picard

I’ve been yelling from the rooftops for years now that the consumer is in control. (I’m making a real effort to start calling consumers “people” after Rishad Tobaccowala’s talk at OMMA.) I could probably find a few dozen columns to point at, but I won’t. Just get it through your heads that people are in control of their media consumption and you can’t control their consumption habits the way you used to.

So many business models are based on controlling people’s access to media that this seemingly simple concept will create an amazing amount of pain before it sinks in. Music, TV, movies, magazines, newspapers, books, you name it. Every single media outlet is amazingly constrained in the way it enables content distribution because the world used to work that way.

Unless you had a printing press, you couldn’t get your story told. Unless you owned transmitters, you couldn’t send music or TV over the airwaves. Unless you had relationships with movie theaters, you couldn’t get your film distributed. Distribution has always been a control point, and it’s been leveraged masterfully for hundreds of years by media companies large and small.

That’s all ending.

Marshall McLuhan envisioned everyone having his own television channel. He was really talking about the Internet’s promise — and that was only a piece of the story. He didn’t quite envision the complexity of social networking, and we’re only now beginning to see the power that will evolve from the intricate web of connections that are forming and what those will mean. One thing that will become quickly apparent is that if people can share media content that they’re passionate about with their personal networks, their friends will consume those media.

Remove the constraints from content distribution, and you suddenly arrive in a strange new world. And as we saw with Napster and the music industry, the entrenched media business doesn’t handle sea changes very well. TV is trying. The networks recognize they need to figure out the Internet. My last column discussed financial models the networks should use to sell media over the Internet. But I didn’t have time to cover distribution in detail.

Owners of content in all media types have struggled with what open distribution will mean to them. RSS (define) was one of the first technologies to gain wide adoption in content distribution, but advertising support was simply not thought through very well. And as soon as good DRM (define) was available, content owners began slapping restrictions on how content could be shared.

You can’t really blame them for wanting to maintain control. They don’t want people sharing content they should be paying for. It’s resulted in billions of dollars of lost revenue for the media companies, even more when you consider people sharing content that’s monetized by advertising. Not only does the media company lose out, but advertisers lose huge volume of sales that would be driven had the ads had been delivered.

The real question we in the ad industry should be asking is how we can more appropriately make use of technologies like RSS and DRM. How can we let people stay in control of their content consumption while ensuring advertising still functions? That’s really the trick. And how do we keep the ads while providing a reasonable advertising experience, with value to the advertiser and without annoying the people viewing them?

I’ve talked recently about some ways we can do this, particularly for video with the :05 format. I’ll cover plenty of other ways in coming months. There are ways to salve the wounds we’ve inflicted on the people we advertise to and to provide value to advertisers. And it isn’t all product placements, brand channels on YouTube (or Soapbox), and paid subscriptions for media content. Yes, those types of things will become more important, but they aren’t the only answer.

We must evolve into a world where all content owners provide their media to all people wanting to consume it, in ways that empower them to instantly and easily share that content. In ways that maintain the advertising embedded in the content, don’t annoy the people consuming it, and still provide value to advertisers.

We’re on the cusp of a media revolution to end all media revolutions. The new world will be ad funded.

(Originally published in ClickZ, May 2006) by Eric Picard

I’ve been working with emerging media my whole career, since I began working with ad agencies in grad school. I helped them learn how to shift from print to CD-ROM design in the early ’90s. As I started working on the technology side, I learned an immense amount about how to bring a new advertising technology to market — and how not to. So this column will focus on some of the standard mistakes I see when companies in emerging advertising categories try to build their businesses.

Agencies Are Not the Enemy

Advertising technology companies look at the advertising industry value chain and think the best approach to creating value is to cut advertising agencies out of the loop. At the very least, they think they’ll have more success dealing directly an advertiser’s own marketing team. At the other end of that spectrum, they believe they can create corporate value by disenfranchising ad agencies.

But agencies have proven impossible to disintermediate. Advertisers hire an agency because they provide a service that’s very complex to manage in-house. Most companies have a very strong relationship with their agency, so much so that when a CMO or marketing VP switches companies, she typically brings “her” agency along with her.

When an emerging media company approaches a marketer, it’s typically given a meeting. It’s usually sexy stuff, after all. But after the meeting, the marketer invariably tells the company the next step is to meet with his agency.

How much do you want to bet an agency account director or media director who gets a call from a zealous sales rep at an emerging media tech company is happy and excited to work with them — after they find out they’ve been gone around? Agencies feel it’s their job to present new opportunities to the advertiser. They tend to be angered about situations in which they’re not able to do this.

At the same time, agencies are notorious for their slowness to respond to emerging media. I can’t tell you how many times I’ve arrived at an agency for a three-person meeting to show off a hot new technology and 50 people show up. Despite this, you wait months for the first test, then months more before a second test is run. In cases where I’ve seen tech companies count on agencies alone to bring their product to the market, the ramp time is very, very long.

So what to do? Go around agencies and you alienate them. Rely on agencies alone and you have a long ramp time. My goodness — the answer’s so simple, I’m almost embarrassed to tell you.

Advertising.

If you’re an advertising technology startup and you’re debuting a hot new technology that’s supposed to be very effective, you may want to consider doing some trade marketing. Oh, and some PR, too.

Almost all ad technology startups fail to spend any money on advertising at all within their own trade journals. You may also want to do some PR work and perhaps sponsor a (professional-looking) booth at some trade shows.

And you may want to consider hiring a team of agency relations people who speak an agency’s language. Frankly, you’re in serious trouble if you don’t.

Format Differentiation Is Not a Winning Strategy

Let’s look at the rich media ad space for a moment. Every online rich media company started with its own unique ad format. Bluestreak had the expanding ad and video ads. Unicast had the Superstitial, a branded interstitial. Eyeblaster had the floating ad. The Comet Cursor had a customizable cursor.

Are any of those formats still unique to the companies they began with (if they even survived)? Nope. Every single category soon had three other companies offering the same thing. Now that rich media advertising has matured, every one of the companies still standing offers virtually identical ad formats as their competitors. All of them spent years of fruitless labor getting every publisher to accept their unique implementations of a new format.

The same will happen to any company in every new category that tries to differentiate itself by having “such a cool ad format, everyone will want to use it.” The formats may be cool, but unless an advertiser can buy a significant amount of inventory you won’t get any traction.

So it’s another chicken-and-egg problem. How do you achieve adoption across publishers (giving you inventory an agency can buy), while getting agencies to use your company’s stuff? And if you can’t differentiate on format, what should you differentiate on?

Counting Methodology Is Not a Point of Differentiation

Methods of counting impressions in emerging media aren’t a place to compete. Organizations do this work; talk to the Interactive Advertising Bureau (IAB) and the Media Rating Council (MRC). Get involved with your competitors, and don’t believe the way you count an impression is how you can buck the trends.

This will be played out very soon in video-game advertising. Every company in this space counts impressions differently. That doesn’t work, and the IAB and MRC will likely get involved to help sort it out.

Honor the Ecosystem and Honest-to-Goodness Business Sense

Stop trying to disintermediate everyone. If you must fight, pick someone you can beat. Find critical alignment by determining where your value proposition aligns with companies you must work with. If you’re going to battle a category player, learn where the rest of the ecosystem is in turmoil. Solve that problem. Be the pain reliever.

If you require your technology to be adopted across enough publishers to provide access to a critical inventory mass, the publisher has to sell your ads, or at least some of them. If agencies are the ones buying your ads, you may want to make it easy for them. PointRoll did a great job of this by making its ads available from major publishers at no additional costs. There was also a perfect market condition that allowed this to happen. Essentially, the publishers offering this deal held rate cards on their ads at a time when no agency paid anything close to the rate card.

But there are always angles to play.

Businesses succeed not because they have a gimmick or extremely cool technology that doesn’t solve a real business problem. They succeed because they offer real value. Some tips for building that value:

• Find the market’s pain points and build solutions to address them. Don’t assume the pain point is the ad format. That’s a hook, not a winning strategy.
• Look carefully at the ecosystem you work in. Map it out and determine where the power lies. If you can find a point in the value chain that’s ripe for disruption, test your theory. But be sure you can compete with the one you hope to disintermediate.
• Build a very strong client services team. If you don’t provide good customer service and technical support, you may as well forget it. Acquisitions typically have more to do with customer relationships than technology, or at least equal importance.
• Work with competitors in these emerging categories. Your real competition is the absence of your business model in the marketplace. Without one or two strong competitors to help share the burden of building a new market, you’re in more trouble than you realize. Embrace your competitors, and keep them close. They’re more with you than against you.

(Originally published in ClickZ, February 2005) by Eric Picard

On November 15, 2004, the Interactive Advertising Bureau (IAB), American Association of Advertising Agencies (AAAA), Media Rating Council (MRC), Association of National Advertisers (ANA), World Federation of Advertisers (WFA), and numerous other industry organizations released new global measurement standards for online advertising. I was part of the Measurement Guidelines Task Forcethat established these standards, so I have a unique perspective on them.

There’s been a lot of misunderstanding around the measurement guidelines. Let’s start with the official name: “Interactive Audience Measurement and Advertising Campaign Reporting and Audit Guidelines.” It’s a mouthful, but it’s important to understand what the document aims to accomplish.

The document sets standards for audience measurement in online ad campaigns and for ad campaign reporting. It also establishes auditing guidelines for how various vendors and publishers should be audited, both to ensure everyone is doing things properly and to reduce discrepancies between publishers and third parties.

This all started because of Adam Gerber, who at the time chaired the AAAA’s Interactive Marketing & New Media Committee. Gerber was trying to resolve one of the industry’s biggest issues: constant discrepancies between publishers and third-party ad servers. This problem leads to significant work on all sides and has a huge affect on internal accounting processes because of the procurement guidelines most major advertisers are required to follow.

One of the first things this document tackles is the oft-disputed definition of an ad impression. It’s amazing it took so many years to establish the definition of our currency, but it’s now accomplished. Next, the document establishes the appropriate methods of counting impressions for publishers and third-party ad servers and a few related things, such as caching and robot and spider filtering.

The measurement guidelines require third-party ad servers and publishers to be audited. It defines the audit process. The guidelines also recommend which set of numbers to use if one party isn’t audited: if the third party is audited and the publisher isn’t, the third-party numbers should be used for billing. If both sides are audited, the publisher numbers should be used. This second point is left to final negotiation between the publisher and the agency/advertiser. Larger advertisers will likely have more negotiating power than smaller ones.

The guidelines seek to lower systemic discrepancies below 10 percent. They try to explicitly determine whose number is used for billing, and under what circumstances an investigation is warranted. If everyone goes through the excruciating auditing process the MRC is putting together, you can trust all the numbers will be as good as we (as an industry) can get them.

Complying with these standards will be expensive. Big publishers won’t have a problem as they’re already audited. This is just another layer of refinement to existing audits. But for startups that aren’t currently audited, this will be costly.

The good news is the auditing guidelines are comprehensive. When the publisher and third party follow the proper methodologies and are audited, discrepancies should be minimal. The exceptions, the outliers, are really at issue.

If the guidelines are followed, impression discrepancies between the publisher and third-party server should be under 10 percent. If an outlier event occurs (discrepancies higher than 10 percent), both parties should investigate. It’s highly unlikely either party would refuse, as this is a standard practice.

The outcome should be for contracts between publishers and advertisers to define which set of numbers to use for billing, so discrepancies shouldn’t hold up billing. But for extreme examples, say higher than 25 percent, this may require discussion. I’ve heard of discrepancies as high as 60 percent, which obviously should be considered extreme.

Perhaps the contractual language should require that in the case of discrepancies greater than 20 percent, the higher set of numbers will be used. Typically, true discrepancies lead to the “wrong” party having lower numbers, so this would be safe. I’ve seen legitimate cases as high as 20 percent, caused simply by Internet latency.

There are systemic problems and exceptions. The guidelines are designed to reduce these. You should see average discrepancies well under 10 percent once all parties comply. If there are specific problems with implementation or if someone has a network problem during a campaign (this happens across the board more often than people realize), those issues should be relatively easy for most publishers and third parties to sort out between themselves.

(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.