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.

Mar 03 2012
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Ad Ecosystem, Ad Technology, Predictions, Writing

Oh say can you see Convergence?

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

There’s one thing to say about getting sick… you get to watch a lot of television. I just spent a week on my couch, and while being sick is pretty lame — I was fortunate I’d had digital cable installed the week before. Or so it might seem.

I was underwhelmed by digital cable’s programming and video quality, touted as being “digital quality.” I may have been getting four Discovery channels, but I found that without buying premium service, the only other things of interest were Pay-Per-View and the Independent Film Channel. The video quality is compromised by high compression, and it isn’t as good as my old analog cable — at least when viewing the extra channels. But despite all that, all things considered digital cable has great features, and I won’t go back to the old way of doing things.

I’ve uncovered interesting issues at the convergence point of digital cable, interactive TV, game consoles, and broadband. That broadband Internet connections come through your cable company can open up some amazing opportunities you may not have considered before.

Last week’s illness has given me some time to reflect on the consumer experience. I’m a technology nut — as you might imagine. Before I buy a new computer, video camera, television, stereo, or other component, I research the heck out of it. Afterward, I wire all my stuff together and make them do neat things.

Of course, when someone like me intersects with a cable-TV company, some peculiar things can happen. In Rhode Island, where I live, we have Cox cable. About a month ago, I started coming to some of my conclusions when I was researching the various set-top boxes that Cox offers for digital cable. The first thing I did was call customer support and ask what manufacturer Cox used and which boxes were available to consumers installing digital cable.

Based on the rep’s response, I don’t think anyone had ever asked these questions before. But, as it turns out, she was able to get me the answers pretty quickly. The set-top boxes they use are manufactured by General Instruments, which was recently purchased by Motorola. The model Cox had most recently introduced was the DCT-2000 Interactive Digital Consumer Terminal.

Some of the highlights of this consumer box are pretty cool high-end home-theater-type features like S-Video connectors, wide-screen ratio compatibility, Dolby Digital (with an S/PDIF digital coax interface), and MPEG-2 Video. But there are some other interesting (if nascent) features as well. This device provides a two-way interface to the cable network and automatically downloads all the program listings on a regular basis. (Sound like TiVo?) It has parental lockout controls using the new television rating standards, and — although Cox isn’t supporting it yet — it can provide some access to Internet, email, and home shopping.

What is more interesting to me is that Motorola’s next version (which I uncovered during my search) —the DCT-5000 — looks even more interesting. This thing has all the features listed above but also includes a cable modem for use with either internal controls or pass-through for PC and IP telephony. It also offers USB, EE1394 firewire for HDTV interface, PCMICIA support, Smart Card support, a Parallel port (for printing), and the option of a hard drive using an integrated IDE connector. (Can you say personal video recorder [PVR]?)

The reason I go to this level of detail is because I’m paying my cable company $2 per month for my device. And think about it — how far away are we from the incorporation of TiVo, AOLTV, or UltimateTVinto these things? I’d happily pay a small fee every month for integrated PVR support!

That’s not too far off when you consider that AOL Time Warner owns most of the cable networks in the United States and that it has just signed on with Sony to offer Internet access, email, instant messenger, and Netscape to the PlayStation 2.

Now wait a second. Did anyone notice that Microsoft’s new Xbox gaming console, due out in September, includes an ethernet port for broadband access, and its UltimateTV includes WebTV? (These operating units were combined?) And doesn’t Microsoft have an interest in some cable networks as well?

That leaves us with the only nonaligned player in the space: TiVo. And I predict that TiVo is going to jump right into the fray through partnership or acquisition. It’s the only player that isn’t owned by a company affiliated with a cable network. And although many players invested in it, including AOL andNBC, TiVo has the flexibility to go to every other cable operator out there.

And TiVo may well be an interesting acquisition target for a company such as Excite@Home (if it weathers the current storm). Or Sony could take a closer look, considering that it’s one of the manufacturers using TiVo’s solution — which would leave Sony with a prime method of offering I-TV to its PlayStation 2.

This is going to be a very interesting time because many experts are saying that the home electronics system of the future is going to be built around these high-end video-game consoles. They’ll be the heart of the home network and the glue that holds your stereo, television, computer, and even your appliances together. Hey — it’s called “convergence,” baby! Get on the bandwagon!

I’ll sign off now — because this is starting to sound like a conspiracy-theory newsletter.

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

IAB Rich Media Task Force: One sided?

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

As many of you may have heard, the Internet Advertising Bureau (IAB) has undergone some interesting changes lately. First, it changed its name to the Interactive Advertising Bureau. Second, it changed its focus to support the publisher community specifically — to the exclusion of all other parties.

Additionally, the IAB has formed the Rich Media Task Force to set industry-wide standards for rich media. The team is large and composed of some of the luminaries and unsung heroes of rich media in the industry — like Bettina Fischmann from CNET, Gary Hebert from Disney Interactive Group, Nate Elliot from DoubleClick, and Chuck Gafvert from AOL. This is a pretty smart group of people and I have the greatest respect for them.

But since the IAB has excluded rich media technology companies from participating — which is sort of like forming a group focused on fine cuisine but not allowing any chefs to participate in the forum — I’m writing an open letter to the task force here. After all, its members are about to set industry guidelines that profoundly affect my ability to feed my family, and I’m a little concerned.

Luckily, Emerging Interest seems to be stepping up to the plate with support for the rich media technology providers — but I won’t steal Bill’s thunder.

An Open Letter to the IAB Rich Media Task Force

While I have the greatest respect for many of the individuals participating in the task force, I have some concerns about the kind of standards that publishers might come up with, given the history of the industry. It would be tragic to take a step backward from where the existing rich media technology providers have gained acceptance so far.

As I said before in an earlier ClickZ Advertising Technology column, publishers have been too protective of the user experience for too long. They’ve taken feedback from early adopters and used that feedback as guidelines for the way the Web should work. Early adopters are the loudest group of users; they’re notoriously fickle and hard to please — and publishers have bought off on this group as their audience.

The Web is now a mass medium, and the expectations of the masses differ from those of the early adopters. Marketers and creative teams working with agencies want more flexibility to get their message across and to elicit a direct response. Rich media producers can provide them with this need without alienating users.

If the IAB Rich Media Task Force is hoping to make a real difference, it is time to step up to the plate and knock the ball out of the park. Make a bold statement with these standards — don’t just agree to a set of minimum standards that are more prohibitive than the widely accepted rich media formats today. As an industry, we should be forging ahead, not lagging behind.

This group has a powerful opportunity. Advertisers have complained repeatedly about the restrictions of online advertising. Let’s take this chance to challenge and change that mindset.

Here are my general recommendations for all formats:

 

  • Make sure your guidelines are for interactive advertising. Don’t use television models to restrict these ads. It has much less to do with limiting the time an ad runs than capturing interactions with users. Restricting run times will actually frustrate and anger users who are interacting with an ad — and user interaction is the goal of the medium.
  • Remove loop limits. This is the most prohibitive and most outdated of all requirements that are widely accepted. The biggest concern about looping animations is that continuously looping animations are annoying. Perhaps they annoy the members of this forum as users — mainly made up of early adopters, like me — but you are not the target audience of your customers (the advertiser). And in most cases, neither are the very vocal early adopters who complain about continuous looping.
  • Allow audio upon mouseover of rich media ads. Unsolicited audio is generally prohibited, which I agree with in principle. BUT, if a user rolls over an ad, and a sound plays, that’s a different experience.
  • Don’t limit file size. The metrics used by publishers to allow or disallow content are not correct for the medium. File size is a relative thing when discussing rich media because most technologies have built-in mechanisms to address this issue. A more proper metric would be something like this: an initial file load of 15K, total file load per page of 50K — unless content streams.
  • Permit advanced technology. Flash can be built to stream in content. Audio and video are virtually always streaming. Enliven uses the built-in streaming of Director in its standard product and can make use of Flash streaming in its Flash products.
  • Sequential or polite loading. Bluestreak’s Java technology uses a sequential loading methodology with load priorities — never overloading the user’s connection with too much of a content dump. This doesn’t slow down the page load by competing with the page content. Unicastmakes use of the “polite download” of its interstitial technology, which loads content only when a user’s connection is free. The savvy technologists in this industry will continue to innovate new ways of getting more content to users without slowing down the connection.
  • Bandwidth detection. Reward technologies like bandwidth detection by loosening restrictions for those who employ it. Additionally, publishers should start enabling their ad servers with bandwidth-detection technology to alleviate some of these issues.

Respectfully,

Eric Picard

Mar 03 2012
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Ad Ecosystem, Media Agencies, Publishers, Rich Media

Analytics: Beating Ad Clutter

(Originally published on ClickZ, March 2001)

The outlook for online advertising is good; we just need to fix the problems. A typical Web site publisher runs an ad on every single page of the site. If it has unsold inventory, it either runs a public service announcement or it runs a house ad.

Jupiter Media Metrix just released the report “Online Advertising, Market Perception vs. Reality.” It was very enlightening.

While growth has slowed since online advertising’s meteoric rise over the past few years, the industry is still developing at a healthy clip. And as I’ve been saying since first noticing this dip, it’s not like people have stopped going online: There was a 22 percent increase in the number of unique users online between 1999 and 2000. More important, the amount of time users spend online went up 31 percent in that same time period.

With the consolidation of sites as dot-coms fail and the resultant concentration of user traffic, we’re going to see more value placed on those sites that survive this dip. This is very good news for the long term.

Information Overload

One point made by Marc Ryan, director of media research at AdRelevance, really caught my attention. He said, “Publishers should run house ads more sparingly, surgically, to reduce clutter and allow clients’ ads to have more impact.”

Publishers are selling less inventory, and the inventory devoted to house ads on their sites is increasing. One of the greatest problems online ads face is user information overload. Ads appear over and over in a site’s design in exactly the same static ad space. The theory is: If we leave it empty part of the time, it will draw more value out of those ads that do appear.

This notion hit me pretty hard; it’s basic stuff, but I hadn’t thought about it this way. And as is my wont, I started thinking about the problem from a technology standpoint.

The first step is to validate this theory — it sounds logical, but so have lots of things that haven’t been proven to work. So how would we validate our theory? If publishers can figure out what the effect of NOT running house ads is, then they can make intelligent decisions about best practices. But…

Optimizing Inventory

The majority of publishers and even agencies haven’t invested in analytics solutions — and I’m not talking about a roomful of people looking at campaign stats. That kind of analysis isn’t helpful without a good tool to sort the vast amounts of data before the human eyes start looking.

Part of the problem is that these solutions are extremely expensive and require a staff of people who are experienced analytics specialists. Virtually no agencies have this kind of staff. And the scary part is that the vast majority of publishers don’t have this kind of staff, either.

Yet analytical tools would solve many problems for publishers. They would be able to quickly and easily see value across their properties — and they could actually optimize their inventory differently. They could build new pricing and inventory plans. Imagine what would happen if publishers could show a value proposition to media buyers that leads them through their buys, AND the end result shows a greater ROI.

For example: Traditional media planners are used to buying broadcast media in time slices for specific channels, whether it’s a radio station or a television station. For the most part, we haven’t done this online, partly because of technical reasons and partly because of the absence of a value proposition showing that it works. If the publishers could make this work technically and run some tests, they could analyze the results and see if there’s a business case to be made.

Without analytics capabilities, publishers can’t possibly know what works and what doesn’t. Essentially, most have been flying blind.

So what’s the answer? Publishers need to dive deep into analytics over the next year. It isn’t a critical issue yet — but expect it to start looming soon. And they need to start doing research into what kind of questions they need answers to.

My advice: Please don’t make the mistake of thinking it’s about click rate. And do include rich media ads in the mix when doing the analyses. This is another reason tools are needed, because if you can’t figure out what’s happening with GIFs, how are you going to figure it out for rich media, with exponentially more data to crunch through?

While the industry is not doing nearly as poorly as some fear, it’s time to start cutting through theGordian Knot to solve some of the problems that clearly do exist.

Mar 03 2012
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Ad Ecosystem, Ad Technology

Interactive TV: Don’t repeat Web advertising’s mistakes

(Originally published on ClickZ, March, 2001) by Eric Picard

Jeremy Lockhorn, who alternates writing this column with me, has been raving about interactive TV for a while now, and he’s giving me technology envy.

Jeremy, a newlywed, was somehow able to accumulate a bunch of hot stuff before getting married. I’m lucky if my wife takes me half-seriously for five seconds when I say something like, “You know, I think I’d like to buy a TiVo. It’s only $399!” As far as my wife is concerned, I watch far too much television. But I can’t help myself; I’m a born early adopter.

I know that if I weren’t married, I’d own just about every gadget and toy out there. You know my type: I’d waffle between an absurdly large mobile phone (because it has a huge screen for surfing the Internet) and an absurdly small mobile phone (because it is SO cool). I’d have the flat-screen 40-inch plasma display television and digital cable (not basic). My version of TiVo would be upgraded to Microsoft’s new Ultimate TV the moment it came out.

But I don’t have any of these things, because my wife is the voice of reason. She’s not only much more practical but also much smarter. And she does occasionally let me win and get something fun. Although now that I think of it, she uses our cable modem more than I do since she’s discovered eBay. Things might be changing.

First, it’s time to take a look at how these new media models are going to play out as they move past the early-adopter stage. Second, how can we circumvent the difficulties we’ve faced with Web-based advertising in these new mediums?

The Time Is Right

I am finally convinced that the time is right for interactive TV. Which means we probably have one to two years before our mothers have it. But all the single men you know will have it in six to eight months.

The definitions are still very blurry: Is TiVo interactive TV? What about Web TV? Maybe, maybe not. But I can see some very interesting things on the horizon:

 

  • Wal-Mart is carrying the Philips TiVo unit, although Sony’s version matches my Wega television. (Like I said, sometimes she let’s me win.)
  • Microsoft has built a new campus in the Bay Area to support its television ventures.
  • Sun (finally) is getting into the mix.
  • And AOL TV is rearing its head.

When AOL gets on board, you better start listening — right? Maybe. This product is for the typical early adopter — and AOL’s user base is NOT that. There’s no free CD for AOL TV. It costs $300 up front, and $24 per month after that. If you’re an AOL user already, you can get AOL TV for a low $14 per month — but that’s on top of your regular payment. Yes, you can check your email without leaving the couch — and you can chat right alongside the show you’re watching, which is very cool. But it’s pricey for the typical AOL user.

In fairness to AOL — I’m not worried. It’ll figure it out soon given its newly expanded cable empire lurking in the wings. You know it’ll build the killer app for its audience — the all-in-one personal video recorder, broadband set-top box, and Internet appliance with instant messaging service. It’s only a matter of time.

Learning From the Web’s Past

But when it does, how will we make this medium work for advertising? As you might imagine, I have a few suggestions:

 

  1. Don’t set standards too soon. We learned the hard way that the advertising industry has an uncanny ability to crystallize around standards and become inflexible. In my last column, I talked about the extreme financial pressures required to shake up some new ad standards. Stay flexible until you really nail it down.

  2. Make sure that your advertising formats are intrusive but not obtrusive. Web publishers were overly worried about the user experience for too long. Early adopters won’t put up with much — they are notoriously fickle and hard to please — and Web publishers bought off on this group as their audience. The masses coming next will put up with a lot more, and the agencies will work hard to build ads that entertain as well as brand or drive direct response.

  3. Make use of rich media inherently in your technology. Don’t expect simple animated GIF ads (or even basic Flash ads) to work when applied against a television background. Television commercials work because they interrupt the flow; this very interruption is a necessary thing in the television model. And make sure you get all sorts of transactions going right from the beginning. If we’re going to crystallize around something, let it be of value.

  4. Cable modems are your market — broadband is required for this to catch on. Huge hard drives with room for dozens of hours of video will be the norm in the varied devices of interactive TV. Make use of it — load broadcast-quality interactive and fulfilling advertising into these spaces.

That’s it for this week. Go buy something online. Help the economy.

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

Rich Media: Time to pay the piper

(Originally published on ClickZ, February 2001) by Eric Picard

Editorial note: As announced last week, the Rich Media column has been renamed Advertising Technology to broaden its scope. Eric Picard and Jeremy Lockhorn will cover rich media, as well as technologies for ad serving, analytical tools, wireless, interactive TV, and other intersections of technology and advertising.

We’ve all watched with horror and fascination as some of the established leaders in the rich media industry have driven into the financial guardrail lining the information highway. From my perspective, it’s been an incredibly strange ride as companies I’ve sparred with have ended up in the rearview mirror.

So the question is: What happened? Why do we see companies like ePod shutting their doors andEnliven’s future in question? The real answer is the quiet little secret being kept in this industry. The biggest reason these companies are failing is probably… you.

Advertisers and agencies alike have done a lot of complaining about the poor performance of banner ads, and they’ve taken advantage of the soft market — demanding favors of rich media providers and pressuring them to accept lose-lose terms in order to win business. This has kept many rich media providers from gaining traction as businesses and, eventually, has driven them out of the marketplace.

I’ve had numerous conversations in the past year with people who consider themselves forward-thinking about online advertising, then turn around and “prove” that mindset by demanding free tests of technology and services. I’ve had people gleefully tell me, “It’s easy to get a free test of rich media, so why should we pay for it?” This is a dangerous cycle — one that’s hard to break, not only for the rich media provider, but also for the advertiser and agency. New players in the market are always going to offer some free tests to get some leverage. Established players can’t afford to fall into the trap of competing strictly on price.

Over the past six months, as some established providers got closer and closer to that guardrail, they responded to this pressure by giving away technology and services to win business. But as we’ve all seen, a deal can’t be a winner unless all parties win. And while it might be easier for a provider to swallow this practice when dealing with a large advertiser, it’s a trap that’s very difficult to exit. There may be some value to having a showpiece created for a top advertiser, but it isn’t so easy to move beyond that free test, even when you significantly surpass all of the client’s goals.

I’ll tell every advertiser and agency right now: It ain’t free — and it never will be. You’re going to pay one way or another, either with cash or with the time and energy it takes to learn how to work with a partner — and that’s time and energy wasted when this partner subsequently goes out of business. This is not good business, and it isn’t good for the online advertising industry.

And, frankly, you shouldn’t expect it to be free. Rich media has proven value that needs to be recognized by all the players involved. In times of tougher accountability, it’s beginning to be the only kind of campaign that makes sense at all. Of all the things in the world your company has to pay for, you should spend wisely on those that have proven effective at increasing ROI.

And let’s not forget that it’s taken incredible market pressure to force publishers into providing new rich media formats — and they’ve finally done this only as they neared desperation. Some publishers have been proactive — testing and accepting new technologies, working with rich media providers to make sure we’re compatible. While accepting a proven rich media technology in the banner space is a fairly safe bet, until recently there has been very little willingness to provide more innovative and higher-yielding formats.

The hurdles are understandable on the publisher side — irritating ad formats certainly can drive users to other venues. But there are many ways to balance higher returns without negatively impacting user experience. Usually the biggest roadblocks to providing more advertising value for advertisers are at the lower levels, where a junior person is strictly following the written policies of the publisher. It takes someone higher up to agree to go forward with anything out of the norm, but often the culture in these groups breeds a sense of superiority, making it difficult to reach the decision makers.

So publishers take note: Since your implementers are often not willing to step outside the boxes you’ve carefully laid out for them, put a process in place to enable these special deals. Reward your team for being proactive — sometimes very large potential deals go stagnant simply because the person in trafficking bounces back anything unusual. Listen carefully — not only to the advertisers but also to the rich media providers out there. Some of us have good ideas.

So there you have it — yet another lesson in traditional business that the Internet economy forgot or ignored. No deal works unless all involved can gain from it. Leaders on all sides of the industry need to start making command decisions and stepping up to the plate. Unless you invest in success, you and all of your partners are bound to fail.

The good news is that publishers are finally coming around and actively experimenting with rich media and alternate ad formats. Major advertisers who have — up until now — merely dabbled with online advertising are starting to get serious. There’s nothing that will motivate performance among the rich media providers like a major competitor failing in a public way. And there’s nothing to motivate advertisers and agencies to adopt technologies focused on ROI and accountability quite like cold, hard market reality.

Looks like a perfect setting for success.

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

Embracing the Promise of Interactive Advertising

(Originally published in ClickZ in January, 2000) by Eric Picard

The explosion of rich media advertising in 1999 was just that, and it forced many traditional advertising agencies to evaluate how they could offer this exciting, dynamic interactive medium to their clients. While some successfully made the leap to rich media, too often the alleged limitations of the technology – or simply a fear of it – prevented people from tapping into the wealth of experience they had accumulated through ad creation in broadcast and print, as well as in GIF banners.

When I taught photography classes in graduate school, I once had a student who felt she couldn’t comment on her classmates’ work because she wasn’t a “photographer.” This woman, a talented fabric designer, had a powerful sense of contrast and texture, and was certainly qualified to comment on just about any visual media.

But she ignored her extensive knowledge of design and all her proven design skills because she found herself on uncertain ground. I pointed this out to her, and over the length of the course, she ended up consistently giving other students extremely insightful commentary on their work.

Rich media advertising holds the great promise of increasing both click rates and conversion rates, but only if advertisers consider it as an evolution of advertising solutions, rather than an offering that exists in a void.

In the past year, the underlying technology has evolved and become an easy-to-use solution for creating attention-grabbing, interactive campaigns. The technology now enables advertisers to choose how, when and where to use the medium, depending on the objectives of the ad campaign.

However, the real success of rich media advertising rests squarely in the hands of the creative team that conceptualizes and creates the banners. Currently, very few agencies have figured out how to tap into the full power of rich media to use it for creative, effective ad campaigns.

Simply overlaying GIF-creation mentality is not enough. Creative departments need to approach this new medium with the same vitality and energy that they brought to traditional ad campaigns and standard banners. By doing so, these teams can quickly begin creating rich media campaigns.

Three things advertisers should keep in mind when working with rich media:

Draw on your experience, but don’t allow yourself to be shackled by it. Innovative and unexpected use of the technology is the most important aspect of building effective rich media. In the same way that you begin to ignore the “to do” notes you’ve plastered on your monitor, users stop clicking on ads that use certain “tricks” once the novelty and excitement wear off.

Therefore, you need to continually tweak an ad to keep it fresh and interesting. The most effective way to accomplish this is to tap into previous experiences and put a new twist on them. Do something unexpected. For example, if you’ve gotten great results with dark backgrounds and light text, keep on doing what works, but include a subtle (or not-so-subtle change) to grab the viewer’s attention. Maybe make the shadows move, or create some call to action that invites the viewer to interact with the ad.

Don’t rely on your competition to figure it out for you. Your competitor may have a successful ad campaign, but don’t simply copy what they’ve done. At the same time, don’t ignore their success. Push yourself to experiment with the medium and don’t limit your ideas because no one else has done it. Rich media is still in its infancy, and we will continue to see methods and practices prove themselves over time.

Keep an eye on the future. While so much of the click rate is dependent on great creative, our team at BlueStreak.com has been running experiments to learn methods of improving click rates that are non-specific to the messaging or creative. Basic issues like effective colors and messaging are already well-documented in varying studies of banners. But things that we are learning now will allow us to make automated improvements to any ad – regardless of creative content – in the near future.

In the end, a powerful combination of proven techniques, innovative approaches, scientific methods and new advances will determine what works best with rich media.

In the meantime, advertisers need to take advantage of the great new technologies being developed. If agencies with no rich media experience want to make the move to offering this medium, I would recommend the following: Remember everything you’ve learned creating broadcast, print and GIF banner campaigns. Bring to the new task all your vitality, creativity and well-honed skills. And fully embrace the possibilities of rich media.

Mar 03 2012
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Ad Ecosystem, Ad Technology, Startups

A Not So Brave New World

(Published Originally in ClickZ, July 1999) by Eric Picard

There’s been a flurry of interest in rich media across the online advertising community in recent weeks. In fact, I’ve also been in close contact with some of the individuals at major portals, networks, and sites responsible for setting guidelines for the placement of rich media within their sites. But take a look, sometimes the web is a not-so-brave new world when it comes to rich media.

You can’t really blame the sites for their concern. We’ve all seen technologies foisted on us, claiming a revolutionary approach that will change the way we use the Internet. Frequently these approaches were “not quite ready for prime-time,” and that has made some sites gun-shy.

People in decision-making positions need to look at the problem from a clear vantage point. Techniques such as choosing an intelligent file loading order, keeping the code very tight, and where appropriate, using streaming media, can make big differences in the way these technologies work. Intelligent Java coding and server-side enhancements can go a long way toward speeding things up, too.

File Size

In rare cases, I’ve seen file size limits as low as 8k for banners. This seems a bit excessive. Even for a search engine, 12k is much more reasonable. There are two main reasons that sites impose file size limits: 1) user experience, and 2) impact on advertisement impressions being properly registered.

Most rich media companies are far more concerned with user experience than any individual site could imagine. For us, it’s everything. If users complain about us, then we might get the axe from the web sites. Every company uses its own methods to load more in less time, and mainly these invalidate the traditional method of applying file size limits to rich media. There isn’t a cookie-cutter model that we can all be fit into, but if the ad doesn’t load fast and wow the user, there’s not much point — for any of us.

The search engines have the biggest concerns over the effect of rich media on impression counting. If the ad loads more slowly than the content of the search page, the user may click on the first link before the ad impression registers. On most other kinds of sites, a low file size limit isn’t critical – a 15 or 20k traditional banner ad isn’t a big deal. But again, it’s not all driven by file size. There are many factors that go into the speed of loading an ad – rich media or not.

Streaming Media

If the technology is streaming (truly streaming), then file size doesn’t matter at all. There should be no limit for true streaming media. I say true streaming media because in the past, some technologies have claimed to be streaming but use the term vaguely. I would define “truly” streaming media as media that pre-loads enough data so that the entire download process doesn’t overload a slow Internet connection. The efficacy of streaming media should be assessed on a per-technology basis.

For true streaming media technology there is no reason to apply file size limits. In theory, it just doesn’t matter. Certainly it would be ludicrous to apply a file size limit to a live radio broadcast or video broadcast. How could this be quantified?

Expanding Banners

Then there’s the issue of the expanding banner. We at BlueStreak.com have our E*Banner technology that allows us to expand any ad to any size. Narrative has its Enliven technology that has an expansion component as well. I’m sure we’ll see other companies come up with expansion methods over time. How do sites set file size limits for a banner that expands — basically loading more content based on time and user interaction?

Like I said earlier, a 15 or 20k download is no big deal for most sites, even though the trend seems to be moving toward highly conservative smaller file size requirements. By breaking that file into two parts (in the case of our E*Banner, a small Java Applet and a similarly sized graphic), the user experience is impacted less, since the page load will not be negatively impacted by a longer wait.

Once the page itself has loaded, the site should not have any issues with extra data being loaded to improve the ad experience. It just doesn’t impact their site in any way, and it improves “stickiness” while the user explores this expanded ad experience.

That deals with the initial file size issue, but what about the expanded space? How should these file size issues address the expanded space? You really need to think of these expanding ads as miniature web sites. Expanding the ad is the equivalent of going to a new page in a browser. In order to have a fair comparison, let’s look at the front pages of some of the major web sites.

If I go to the first page of Disney.go.com, I get an HTML file that is 46k and graphics that total 57.9k. Just for a simple (the entry page, no less) web page, we’re looking at over 100k. The first page of Infoseek.com is 36k just for the HTML and about 10k for the graphics. Lycos is slimmer at 19.4k for HTML and 7.7k for graphics. MSNBC is 24k for the HTML, but 48k of graphics. AOL.com’s welcome page is 50.5k for HTML, and 19.1k for graphics.

None of these sizes are unreasonable for the expanded space of an expanding banner. It’s mainly an issue of bang-for-the-buck. Are 5 extra kilobytes worth an extra 0.5 percent click-through? What about a 5 percent improvement in conversion? That’s up to the advertiser and site to come to terms with.

The expanded page is loaded at the specific request of the user. If the user doesn’t want to wait, then they are able to move somewhere else. All expanding technologies are not going to work exactly the same way since every technology has a slightly different purpose–some focus on transactions, some of branding, some on games. But whatever the focus, the user experience is the only issue; that should be addressed by utilizing appropriate solutions to varying needs.

Bottom line: Advertisers will continue to request rich media solutions, and web sites will continue to feel the pressure of dollars pulling in that direction. Traditional banner ad requirements do not and cannot address rich media technologies. The companies developing these solutions employ numerous techniques to break beyond the banner that (in many cases) mitigate the needs for the stringent requirements placed on traditional banners.

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