Mike On Ads

This is a fairly well known problem in the industry — you target a keyword, say ‘travel’, thinking that you will end up on searches & sites relating to travel. Next thing you know you end up next to a New York Times article talking about the recent plane crash in Lima and how it’s limiting travel to South America — oops

Well — the same thing happened to my blog today and good old Mr. John McCain. Although I guess it shouldn’t be too surprising, I found it slightly ironic that John McCain was advertising next my blog post criticizing his advertisements. See the bottom left on the following screenshot:

And the landing page:

Now first off — these ads look much better than before — maybe they read my earlier post? Now I am incredibly curious whether or not these ads are ROI positive in that they bring in more money in donations than is being spent on media. Anybody know??

Saw this John McCain ad on a random blog this evening:

Reminds me greatly of the giveaways you normally see on myspace… seems they forgot to leave out the “get a free lecture on public policy!!”.

Landing pages even look the same — a simple form with a ZIP & email. I wonder if they’ll sell my email address for $2.00 and use my Zip for later retargeting later.

What’s interesting though is that it looks like the McCain campaign is doing some serious remarketing on “clickers”. There are pixels there for the Right Media Exchange, Ad.com’s Leadback and Atlas!

I was just browsing on my gender test blog post and noticed the following ad:

So normally you’d say — so what mike, it’s just an ad for senseo! Well this ad is special because I was just searching for Senseo coffee pods earlyt his morning (both via Google & Amazon.com). I find it highly unlikely that this is a pure coincidence. Here’s the clickstream (broken into multiple lines and shortened for legibility):

http://pagead2.googlesyndication.com/pagead/adclick?sa=L&ai=BSrzSV[...]
http://www.sharesenseo.com/index.jsp?q=a-googlewomen

Funny that there is a nice “q=a-googlewomen” inserted into the landing page — I swear the gender test showed me to be a man!! So this is all purely speculative of course, but if this is indeed true then we suddenly have the world’s best behavioral display network to compete with.

A few weeks ago I wrote a post about the difficult times that tech startups are having in the industry today. Reading through the post, I realized there was a key point that I forgot to make. Whether or not your company is a services business, a technology play or a media company:

If you aren’t generating revenue, it’s time to re-evaluate your business.

There is so much VC money out there these days (although word on the street is it’s drying up!), that it’s easy to forgo initial revenue and start building & scaling a business in a void without having hard cash paying customers. Here’s the thing — you should be able to prove your technology quickly and with minimal investment… if you can’t, you’re overthinking either your product or overestimating the requirements of your clients. In fact, with the right contacts you can probably sell a 20-line PHP script as a “pixel server” — at least to a network or agency that desperately needs to have “behavioral technology” for the next big agency deal.

Of course the script won’t scale, and it probably won’t work as a standalone product for multiple customers which means you’ll have to rewrite it and hire some real engineering talent to turn it into a packageable product. But if you have an idea — build a POC quickly, get yourself a customer, prove there’s interest and start generating revenue! Doesn’t matter if it’s adserver, behavioral tracking, a new media network — each idea has a revenue-generating “quick win” you can close to prove the business works. Right Media was a profitable for over a year before it launched the exchange. A single good CPA deal with AOL funded most of the first year of the company!

And it’s not just about the revenue. Real customers provide real data, real feedback and real stats about scalability & performance — invaluable feedback & information that will help you build a better and ultimately more competitive final product and/or service offering.

I’m not saying you have to be profitable (although if you’re a pure media company you better have a damn good reason not to be). There is definitely an argument to be made that investing in engineering today will pay off in revenues later, but that does not give you an excuse to develop in a void hoping that your product will be a smash hit.

If you’re not making money now, chances are you won’t make any later either.

I stumbled across an interesting post written by Ian Thomas from Microsoft — Online Advertising Business 101, Part I - The Online Advertising Value Chain. It’s a great basic read for anyone who wants to start with the basics of who does what in our industry.

I will point out that Ian is clearly on the tech side of the fence though — he draws the industry as a flow of impressions from publishers to advertisers, whereas most media focused folks will think of the reverse — money flowing from the advertiser to the publisher. If you have no clue what I”m talking about, check out my old post: Business or Tech.

No, this isn’t another “OMG, the facebook API IS AWESOME” post. I mean, it is, it’s pretty damn cool, I’ve played with it a bit this month. The real revolution with the facebook API are the server-side requests.

Traditionally widgets & plugins interfaced with social networks by placing snippets of HTML on profile pages. In the Facebook world no content can show up on a user’s profile without passing through Facebook’s servers first. Even your actual application pages must either be within an IFRAME or pass through Facebook. This process provides Facebook with an extraordinary level of control over what can and cannot be displayed on a user’s page. FB can perform a virus scan on all content and analyze any scripts for vulnerabilities or exploits. By directly serving content Facebook also eliminates cookie access — making it far more difficult to track or distribute data about their users.

Yet, the approach has it’s limitations for application developers. I tried briefly to build a “stalker tracker” application which using cookies would tell the user how many people regularly checkout their profile page. No matter what I tried, I couldn’t get access to the cookie without somehow initiating a click — rendering my application completely useless.

Why should you care? Well — advertising isn’t that much different from a traditional social networking widget — both are delivered via a snippet of HTML. Online ads have also been plagued by security issues this past year and I wouldn’t be surprised if the bigger players (Myspace, Yahoo, MSN, etc.) start to ask for server-side ad-requests soon. Server-side requests are the only way that a seller can technically guarantee the safety of third-party ads. Of course this will open up a world of technical challenges — server-side cookies storage, strict global latency requirements and a need for increased capacity to only name a few.

A security firm, SecureWorks, has identified ads spreading trojans. Apparently the ads have specifically targeted job sites. Sadly they haven’t posted any details on the actual advertisement that is causing the trouble — I have sent them an email requesting some more details and hopefully they’ll respond and I’ll post the details of the ads here.

I find it kind of funny that the most interactive form of advertising has the worst reputation of all. Take this comment on my post about cookies:

your perspective on the ads seems very strange/scary to me. so a company gathers data about my surfing habits and whatever actions i do, and what do _I_ get in return? Longer load times, ugly flash clips, and bloody kilobytes of useless javascripts in every page.

Admittedly this is somewhat of an extreme reaction, but most consumers do have a very strong aversion to ads. And we as an indsutry are entirely to blame for this.

First and foremost we are often too lax with standards and create ads that can be highly annoying to end-users. Although premium publishers such as Yahoo or AOL are generally very careful about their ad quality many publishers and ad-networks allow highly distracting or even those “seizure inducing” ads that can be incredibly annoying. Yet even the best can be tricked, both AOL and Microsoft have been caught by the Errorsafe scam, which Sandi has documented here for MSN and here for AOL.

It’s not just “bad ads” that have caused this overly negative reaction to online advertising. This slashdot post complains about the latency of ads, a very valid concern when it comes to placing third-party content on a website. It is slightly ironic though that people will complain about waiting a couple seconds for ads to load when on tv we spent almost a quarter of our tv time being forced to watch ads. The thing is, even in a tech-savvy forum such as Slashdot, not a single person points out that all the services and content that they consume for free is paid for by advertising.

Of course consumers often may not even know who they have to blame for the ads that they are seeing. Take this rather typical request for help about “unwanted popups from yieldmanager.com”. For those of you that don’t know, yieldmanager.com is the serving domain that Right Media uses. This poor user thinks that his machine has been infected with spyware whereas what is far more likely is that the websites that this user visits intermittently show popup ads. Popups are of course closely associated with spyware/adware and tend to elicit a very strong negative reaction — it really is kind of ironic of course that popups often result in 10x the CPMs compared to traditional banner ads.

Last, but not least we have to talk about those terribly evil cookies. ClickZ covered this rather well in this article. Every “anti-spyware” program removes cookies and some flag them as “dangerous”. Of course there are privacy concerns, and perhaps adserving companies AND websites should be more open with what they track and how to “opt-out”, but cookies aren’t DANGEROUS, they just track what ads you’ve seen and what website you like. Here’s the little known fact — publishers are often the ones sharing the information and showing those popups, but the adserving companies end up getting all the flak. Instead of launching initiatives such as banning firefox publishers should keep an open dialog with their users about why they have advertisements and how they help to pay for all this free content.

If ads continue to have the reputation that they do we’ll just see a larger and larger increase in the # of users that use ad-blocking technologies. I think that Google is taking some good steps here with their recent blog announcement on their adserving tests. Unlike most companies, Google is very open and honest in their privacy policy about exactly what data they are tracking in their cookies and how they will use it. I suggest all privacy councils take a queue from them when writing their next privacy policy!

Education about what’s in a cookie is only the first step. Websites need to be more honest about the information that they pass along to third-parties and how that is used. Sites should also aim to educate their users that the reason they can consume content for free is because of ads.

The “Exchange” Buzz!!

Back in May I started a three part series on “The Ad Exchange Model” where I focused primarily on the technical benefits that exchanges bring to the online advertising industry. Since then exchanges have received quite a bit of press with all the recent acquisitions and the word exchange has reached buzz-word status, without much understanding of what it actually means. Perhaps most confusing is that many don’t seem to be able to differentiate between an Exchange and an Ad-Network. For example, compare these two quotes from iMedia and Ad.com, can you tell what the difference is?

“An ad exchange is a company that brokers online advertising by bringing publishers and advertisers together on a website where they can participate in auctions for ad space.” iMedia Connections — Ad Exchanges At a Glance

“Websites have ad space. Advertisers have ads. We’re the middle man – using our phenomenal technology to match ads to space.” Advertising.com Homepage

The ‘Nasdaq’ Analogy

One of the most common explanations I have heard goes something like this — “An ad-exchange functions just like the Nasdaq.” (this is in no way a jab at ContextWeb’s Adsdaq, this analogy is regularly used on all ad-exchanges). You like the Nasdaq right? Good, the Nasdaq is efficient has some fancy electronic trading and does lots of good things, which is why you should buy this ad-exchange. Oh, well of course! Ad exchanges bring efficiency just like the Nasdaq does, that makes absolute perfect sense! Try explaining an ad-exchange like this, it’s actually quite amusing. Generally what happens is the other person’s eyes glaze over slightly and he starts nodding as if everything has been made extremely clear even though he still has no clue what the ad-exchange actually does. You see, the Nasdaq analogy really doesn’t make sense but nobody wants to sound stupid and say “I don’t get it”, so they let it slide and remain confused.

So why doesn’t it make sense? Well, we could argue semantics of stock markets versus commodity and future exchanges — but who cares. The real problem is that the Nasdaq analogy works just as well for Advertising.com as it does for Right Media, adECN or AdsDaq. The Nasdaq is a mechanism which enables people to buy and sell stocks. Ad-networks are mechanisms by which people buy and sell ad-inventory. If this is surprising, it shouldn’t be — an ad-network is a mini-marketplace, very similar to an exchange or stock-market. The whole reason we have them to begin with is to enable thousands of sites to work with thousands of buyers. Can you imagine Netflix writing individual checks to the thousands of different sites where their ads are displayed?

So what’s the difference

Even though an ad-network may perform many of the same functions as an exchange there is a subtle difference. The network operates and controls all aspects of the mini-marketplace whereas the exchange is an “agnostic” platform that many buyers and sellers use to run their own businesses. In most ad-network limits each transaction (or ad-impression) to three parties: a buyer, the network and a seller. The exceptions to this would be networks such as Tacoda where a fourth data-provider might receive a cut of the transaction based on information about the user that the network provided. Of course in reality online advertising is far more complex than that and a single online ad impression can involve far more parties.

That’s where the exchange model shines — instead of one party “operating” the exchange on behalf of a number of buyers and sellers, the exchange provides a single technology platform upon which many companies — advertisers, publishers and networks — can buy and sell ads. Each impression can have anywhere from zero to many middlemen.

Who cares?

First off, the exchange is many companies versus one in the case of the ad-network. The platform is an ecosystem that supports a large variety of business models which results in more innovation and competition. Then there are certain basic technical benefits from having multiple participants in a transaction use the same platform, something that isn’t possible with an ad-network. For example, a proper exchange removes the operational barriers that have limited access to inventory in the past are eliminated in an ad-exchange. This enhanced the liquidity of the marketplace, which results in higher and more stable rates for publishers. I’ve covered most of these benefits in detail in my ad-exchange series.

Of course some of the above is still somewhat theoretical as we are just now starting to see the exchange model mature. As the model grows, most standalone networks will find life difficult without some level of integration with one or more of the coming exchanges.

In Parts II & III of this series I’ll talk about some tactical steps Publishers and Advertisers can take to leverage exchanges as either sources of inventory or pools of advertisers to maximize ROI and revenue and perhaps some bits on how Networks can different themselves in the coming landscape.

I was introduced to the online radio Pandora this afternoon. Pandora is the human interface into the “Music Genome Project”, a 5 year project that had human music experts classify every single piece of music created (except for latin & classical) since 1900 with various characteristics. Specifically: arrangement, beat, form, harmony, lyrics, melody, orchestration, rhythm, syncopation, tempo, vamping and voice (source). The Pandora way it works is remarkably simple. You start your own radio station by seeding it with a song. Pandora then analyzes all the genome aspects of that songs and finds songs with similar aspects to play. Even straight off the bat I found the selection to be absolutely amazing. Each song you hear you also have a chance of ‘training’ Pandora by giving it either a thumbs up or down. I threw 7 very varied and rather random songs at Pandora and was absolutely shocked by the quality of the selection.

Now here’s my question — to me music seems so much more complex than online ads. Lets think about this for a minute… lets say on average 50 billion ads are shown a day. That means that this year alone we’ve shown about 17 trillian ad-impressions. Lets be somewhat pessimistic and say an average click-rate of around .1%, or 17.8 billion clicks. How is it possible that we as an industry haven’t been capable of showing users more relevant ads?

One of the interesting things of course is that Pandora requires on a “seed” and then subsequent feedback from a user. Is the future world one where you start your day with a search on Google, which then gets treated as a ’seed’ for your days ad-stream until you search for something different? Can we ever convince consumers that with only a little bit of their help we can greatly improve their online experience by showing them ads that align with their interests?

As an added note, I must say Pandora does a terrific job of integrating advertising with the site. Check out this “Bose Ad” that I received midway through my stream: