Mike On Ads » right media http://www.mikeonads.com Ramblings about online advertising, ad networks & other techie randomness Fri, 18 Nov 2011 00:07:32 +0000 en hourly 1 http://wordpress.org/?v=3.2.1 The World is a’ Changing http://www.mikeonads.com/2008/11/10/the-world-is-a-changing/ http://www.mikeonads.com/2008/11/10/the-world-is-a-changing/#comments Tue, 11 Nov 2008 04:06:19 +0000 Mike http://www.mikeonads.com/?p=305 Unless you’ve been living under a rock somewhere you’ve probably heard that the whole world is crumbling around us. We’re entering the great depression, guard your cash, no more VC, we’re all POOR.

Well, first let me reassure you — so far the nuclear winter hasn’t started yet. The data that exists so far has been fairly sparse and inconclusive — Google is up, AOL is down… Rubicon claims the sky isn’t falling whereas PubMatic claims prices are steadily falling. I’ve had quite a few in depth discussions over the past few weeks on exactly this topic — where is the industry headed? How is the economic downturn affecting online advertising? What are the big boys doing? What’s new exciting?

Last week’s AdECN announcement and a short stroll through the booths at AdTech finally motivated me to get up and write another blog post! (sorry for my absence, life is pretty hectic these days). So here goes in no particular order my views of exciting things in the market today and what’s coming next.

The traditional “marketplace” network model is dead

By traditional networks I mean the models that ValueClick, Casale and Ad.com were founded on — networks that were primarily built by matching large amounts of supply and demand. The name of the game was to get as many advertisers and publishers together as possible to build the largest marketplace. Once the network was large enough, ad dollars naturally flowed to these players as they were a “one stop shop” for thousands of publishers. Large margins are made by buying low and selling inventory to advertisers at a higher price.

This model was used by many companies to build incredibly successful networks — and in fact — most of these networks are *still* very successful. The problem is, the world is changing. Namely:

First, access to inventory is no longer a competitive advantage. Between Exchanges, publisher aggregators and a mass influx of social networking inventory — everybody has access to billions of impressions.

Second, agencies want to cut out the middle man. Agencies have started to realize that networks are taking massive cuts out of their media buys while in many cases simply serving as an aggregator. And indeed, with supply easier and easier to get access to, many agencies are launching initiatives to cut out the middle man. Whether it’s the new Havas Artemis system, the Publicis Vivaki network or the WPP 24/7 acquisition — they’re all moving in the same direction.

Essentially — networks are getting pressure from both sides. On the supply side they are getting commoditized by aggregators and network optimizers and on the demand side a new crop of technology companies is attempting to empower agencies to buy directly — cutting off the ‘marketplace’ networks.

The rise of the pubgregatimizer

Publishers have finally realized that they might not be the best ones to sell their non-guaranteed inventory. Three well funded companies have emerged that are looking to help publishers navigate the sea of ad-networks and best monetize — PubMatic, Rubicon and AdMeld. I think the value prop is obvious — only the largest of publishers can afford the staff to fully manage the distribution of remnant inventory across various networks. At the moment it looks like the three are neck & neck in terms of unique visitors:

Decreased growth rate will force more accountability for agencies

Although the sky isn’t falling, money is getting scarcer. This scarcity will force everyone along the entire value-chain to be more competitive. This will start with the agencies and go all the way to the publisher — everyone will have to prove both effectiveness and figure out new ways to differentiate themselves from others. Scarcity of dollars will also put pressure on agency margins forcing them to look elsewhere on ways to increase their revenues.

Some initiatives have already started here — Publicis has launched Vivaki, WPP bought 24/7 and Havas has Artemis. Although the exact strategies are vague, one thing is clear — Agencies are going to start getting more involved in the buying process as they see their margins drop to 10% or below whereas our traditional networks (dying per the above) are still pulling in 30-50% margins on their media.

The challenge here is that most agencies aren’t setup to buy effectively online. Buying online is much more about technology, analytics & strategy than it is about creativity, ingenuity and imagination. To buy effectively online an agency needs to start working on it’s brain — which of course is currently largely dominated by “right brain” creative folks and lacking in “left brain” analytics. One of the things we see here as an increase in popularity of the ‘media trading experts’ — networks that focus exclusively on helping agencies buy the best possible media for their clients. Leveraging exchanges & aggregators instead of traditional ties to publishers these networks can serve as an unbiased agent of the agency.

Exchanges will move to real-time integration

Even though only one has made it public — AOL, Yahoo, Microsoft & Google are all working on real-time integrations. Why? Any central trading platform for media needs to support different engines & algorithms. If nobody can differentiate themselves on a platform, then nobody will want to use said platform! Although Right Media was a terrific step forward as the first central trading platform, it’s major flaw is that it took the technology out of the network. Real time bidding platforms solve that by allowing smart advertisers & networks to run their own engines. With the big 4 all working on something… it’s going to be interesting to watch what happens!

This combined with all of the above show a great picture for technology focused ad networks. As I wrote about earlier here and here — it is the difficulty of integration that has limited many an online ad technology startup from succeeding. With supply becoming more and more available in more and more programmatic manners — a time is coming when the guy with the best algorithm will actually stand a chance competing against the guy with the best relationships at WPP.

Final Thoughts

This is an incredibly exciting time in the industry — the whole industry is fragmented, there is little standardization and there is a massive amount of pain. I think big changes are coming. I’ll try my best to be a little more prompt about blogging about it while it happens

Also — if anybody is going to be at Adrevenue 08 and wants to meet up, shoot me a note.

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One buyer, many cookies, now what? http://www.mikeonads.com/2007/07/12/one-buyer-many-cookies-now-what/ http://www.mikeonads.com/2007/07/12/one-buyer-many-cookies-now-what/#comments Thu, 12 Jul 2007 17:34:50 +0000 Mike http://www.mikeonads.com/2007/07/12/one-buyer-many-cookies-now-what/ Introduction

Back in March I wrote a post titled “Battle over the Cookie. I’m going to quote myself real quick — (I know, kind of tacky)

So why the title “Battle over the Cookie”? Well, people are starting to catch on that if they own the cookie, they own the market. Think about it, if one exchange succeeds in capturing a massive percentage of the market, the barriers to entry will be practically insurmountable. What value is your exchange if you can’t provide services like global frequency caps, cross publisher behavioral targeting, etc. etc.

So who’s fighting? Well, my employer (Right Media) for one. Doubleclick is said to be launching a marketplace, AdECN is another. I’d expect others to start soon — as long as someone hasn’t won, there’s still a chance.

Well, as we all know, Right Media has been bought by Yahoo (if you hadn’t heard yet, the deal closed today), Google is buying DoubleClick, etc. etc. etc. So how are these developments changing the battle over the cookie?

There won’t be a single cookie

That’s right. It ain’t happening. At the minimum there are going to be three different marketplaces, three different adservers and hence three different cookie domains. Think about it — Google/Yahoo/Microsoft are arch-rivals and even though some may build more open solutions than others they are most definitely not going to be fully integrated, and they most definitely won’t be sharing a single cookie space. Add on to that the remaining independent adservers (e.g. AdECN, Zedo, OpenAds) and I don’t see any way in which there will be one unified marketplace.

To be honest, this saddens me quite a bit. One single marketplace would have been extremely beneficial to both publishers and advertisers, but of course there are simply too many people fighting to control the means by which ads are transacted. Ok, so now what?

What’s next?

To be honest — it’s too soon to really tell how this new battle is going to unfold. I don’t think it’s very clear what Microsoft, Yahoo or Google (how about we call them MYG) are going to be doing with their new acquisitions. One thing is clear, it’s going to be difficult to get access to inventory without working with MYG. Advertisers should benefit from consolidated buying. I imagine that networks not working with MYG will find it difficult to survive without a really compelling story and publishers should benefit from increases in both innovation and competition.

In the next couple posts I will be digging into how companies should prepare for this new online advertising landscape — How will ad-networks continue to grow over the next couple years? How can large publishers increase rates by leveraging the new marketplaces? How will behavior work without a single cookie? CAN behavior work cross-platform?

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The Ad Exchange Model (Part III) http://www.mikeonads.com/2007/05/04/the-ad-exchange-model-part-iii/ http://www.mikeonads.com/2007/05/04/the-ad-exchange-model-part-iii/#comments Fri, 04 May 2007 18:53:48 +0000 Mike http://www.mikeonads.com/2007/05/04/the-ad-exchange-model-part-iii/ I’d like to continue my series. If you haven’t already, be sure to read Part I and Part II first.

After my first two points I received multiple questions around the lines of “Who will make money off of this?”, and “Who benefits most?”, “How will ad-networks survive in this environment?”. Well, I thought we’d take a look at the various types of players in the market today and discuss how they will thrive/survive/die in the exchange environment. When discussing each of these I imagine a world in which there are two or three major ad-exchanges. Say, Googleclick, Righthoo & Micro7 … Any business that wants to play has to in involved with one or more of the exchanges as in this new world, 95% of all inventory gets sold on the exchange.

Publishers

This one is a no-brainer. The publishers still own the inventory they sell, and they have the sole right to sell this inventory. The exchange model will enable better technologies and more competition, which will increase demand for the Publisher’s inventory. CPMs will go up.

There is one type of publisher that may have trouble surviving in the coming Exchange environment — desktop software/spyware/adware publishers. Today, it’s extremely difficult to stop ads from running on Spyware (if you don’t know what I’m talking about, go visit Ben Edelman’s site). One of the main reasons this is so difficult is because desktop software companies essentially ‘launder’ their traffic by passing it through multiple ad-networks before it reaches the advertiser. Since the exchange model doesn’t have multiple redirects this will become increasingly difficult.

Agencies

This is an interesting question. Exchanges will make media buying far easier than it is today. With no more ad-tags to pass back and forth or pixels to setup it will become much easier for Agencies to buy online. The question arises then: how many will survive and how will they differentiate themselves from each other? Now to be honest I’m not too familiar with the Agency model, but as I understand a lot of the business revolves around relationships — which is something that won’t necessarily change on an exchange. If there are agencies out there today that pride themselves on the quality of their media buying team, they might want to start thinking about how to adjust their models to fit the changing marketplace. Would love some comments on this topic, as I’m really clueless here!

Lead Generators

The Lead Gen business bring a lot of money to the industry, and I don’t necessarily expect that to change. Think about LowerMyBills.com, a company that generates leads for various financial services. The reason the company is so successful is because it’s incredibly difficult for one financial services company to sell their services online. Think about selling a Mortgage — how many people a month are buying a new house? How many would respond to an online ad about mortgages — not very many. This is where lead generators provide an incredibly valuable service. They find a large number of individuals that may be interested in financial services, and then sell their contact information over to companies that provide services that match needs. The financial services firm can then focus on actually acquiring the customer instead of bumbling around the online advertising world. The lead-gen firms that survive will be the ones that create the best campaigns, and can generate the most leads. Again — Media Buying will become less of an advantage, but the companies themselves have the potential to thrive in the exchange environment. Think of the retargeting capabilities if every ad online was served through the same adserver?

Random aside — Personally I wish that every single “free ipod” ad would disappear off the face of this earth, but I’m guessing that’s not going to happen.

Ad Networks

I like to put ad networks in a couple different categories:

  1. Technology Networks — These networks have a certain ‘competitive advantage’ in their technology. Whether it’s their behavioral platform (e.g. Tacoda), their Contextual scraping technology (e.g. Adsense) or some other custom optimization.
  2. Data Driven — Although Behavioral could fall under technology I will put these guys separately. Example networks would be Tacoda and TribalFusion.
  3. Brand/Aggregators — These are networks that group together multiple sites within a certain category. For example, Tickle Grapevine reps a couple social networking type sites. Casale is also known for having ‘niche channels’
  4. Arbitrage — These are networks that thrive on the inefficiency of the market today. They price inventory better than others and manage to make a hefty chunk of money buy serving as a middle man.
  5. Performance — These are networks that know how to make campaigns work. Two great example are CPX Interactive and ValueClick/Fastclick. The real value these guys provide is by “doing all the work”, essentially allowing advertisers to focus on their core business while the performance network drives their online advertising.

Lets look at each of these:

Technology Networks

There is clearly a place for technology in the exchange model. Contextual works for many sites, and an exchange without a contextual provider would be a rather crappy exchange. The question is, how many different contextual engines do you need? One? Two? How many are there out in the market today, 10? 20? I don’t imagine that anybody will be able to compete with Adsense on the GoogleClick exchange. Similar goes for optimization technologies. I would imagine that there would only be a max of 2-3 on each exchange, with potentially a couple niche providers that focus on very specific segments of the market that are underserved by the leading technologies. If you’re technology can’t compete with the best of ‘em, you’re in trouble.

The good news here is that the exchange will most definitely foster technology. One of the biggest challenges today is getting access to inventory. You may have a great optimization model, but how do you actually bring it to market? Today companies have two choices — sell it to an established network, which poses rather large tech and integration challenges, or start their own ad-network. The exchange removes these barriers to entry as as soon as the tech is integrated with the exchange it can (theoretically) be used on all traffic that flows in!

Data Driven

There are two things to consider here — data providers, and data technologies. I would put the providers in the same bucket as the Publishers. They have goods to sell and the exchange will provide them with new and better mechanisms for selling this data. What will be done with the data is up for grabs — I can’t imagine more than a couple algorithms that will optimize campaigns based off of behavioral data, so just like the technology networks above I wouldn’t expect more than a handful of these companies to thrive in the exchange marketplace.

Brand Aggregators

These guys are really up in the air. Depending on how the exchange is setup, the services that these companies provide (consolidated sales, trafficking, etc.) might become redundant. I can easily see one company forming for each exchange that simply provides ‘management services’ forcing the aggregators to differentiate themselves somehow. This may be with a better sales force, better services or potentially enabling a new level of cross-property brand campaigns. It will be exciting to see what happens here.

Arbitrage

Arbitragers take advantage of inefficiencies. Exchanges bring efficiency. Nuff said.

Performance

This is really the brunt of the online ad-networks that are out there today. Each one has their own ‘special sauce’, whether it’s better media buying, campaign management, creative optimization, creative services, etc. etc. etc. If we assume that on the technology side there will be 2-3 solid models integrated with each exchange, the question arises as to how much value will these guys really provide? Every network on the exchange will have access to the same technology! There are plenty of small advertisers out there that will gladly give a network a 30% cut in exchange for managing their campaigns, but do we really need 100 networks out there that do this? I imagine we’ll see massive consolidation here, with the larger players (e.g. Ad.com, Valueclick, CPX, Remix), acquiring smaller players, or simply driving them out of business.

It’s very likely that country-specific networks will remain. For example, doing business in France is rather difficult due to the massive bureaucracy that plagues the country. It makes total sense for a company to focus on buyer and selling French media.

Final Thoughts

The days in which two college kids could start their own ad-network in mom’s basement and easily make $20-30k profit per month are over. (Yes, there are PLENTY of examples of this out there, I’ve personally met several!) The larger and more powerful exchanges become, the more efficient and competitive the space will become. This will be great for those who either have the $s to spend (advertisers) and those with the impressions to sell (publishers). It will be fascinating to watch what will happen to the 100s of businesses that currently make a hefty chunk of money sitting in the middle.

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The REAL Right Media Contract http://www.mikeonads.com/2007/05/03/the-real-right-media-contract/ http://www.mikeonads.com/2007/05/03/the-real-right-media-contract/#comments Thu, 03 May 2007 16:45:04 +0000 Mike http://www.mikeonads.com/2007/05/03/the-real-right-media-contract/

Yes… that’s right, that’s crayon on a table-cloth. Read this article for details: Yahoo! Buyout A Trip For Workers

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The Ad-Exchange Model (Part II) http://www.mikeonads.com/2007/05/02/the-ad-exchange-model-part-ii/ http://www.mikeonads.com/2007/05/02/the-ad-exchange-model-part-ii/#comments Wed, 02 May 2007 13:54:49 +0000 Mike http://www.mikeonads.com/2007/05/02/the-ad-exchange-model-part-ii/ If you haven’t already, be sure to read The Ad-Exchange Model (Part I) first as this is a continuation of that post.

Technology Integration

I’m sure you’ve got a picture in your head by now that there’s an annoying manual process here. Well, the technology piece gets worse. Today, most technologies that companies will consider “competitive advantages” are either optimization/prediction algorithms, contextual engines or behavioral datasets. Say we have this company called Google that has a great technology that matches ads to page content. The payout on each click depends greatly on what the ad is for. Pages relevant to autos or medication will net far higher payments than pages about the local pizza joint. So how is the publisher to decide when to show ‘Adsense’ over the $1.00 CPM deal he just signed? There’s absolutely no way for the Publisher to know the effective CPM of the adsense ad before he shows it.

Currently there are two ways that publishers manage this problem. The first is to simply accept an inefficiency in pricing. He may prioritize Google Adsense at $0.95 CPM across all pages because on average that’s what he can expect to receive at the end of the month. The other option would be to setup tens or hundreds of different tags targeted to different types of pages and then setup different prices for each. Again, this would require setting up tens or hundreds of categories in Adsense and then trafficking tens or hundreds of different tags into the Publisher’s adserver. Not really the best solution.

What about a behavioral advertiser that wants to buy New York Times traffic because he thinks he has data on some of the users. Since the behavioral data is stored in his cookie (see my post here about behavioral advertisers) there is no way for the Publisher to know which of his users will be valuable to the advertiser! How is he supposed to price this? This one isn’t so easy. One way is for the advertiser to simply buy a flat rate for all New York Times users and then simply count the users for which he doesn’t have data as a loss. The other would be some sort of rudimentary integration where the advertiser drops a pixel for the Publisher’s cookie domain for his users. Again, not ideal, not simple and INEFFICIENT!

High Latency/Slow Adserving

Each call to a different adserver costs time. The more hops that a user’s browser has to go to to receive the actual ad, the more likely that he is to click-off to another page before he actually sees it. Try it, go to myspace.com and click through on a few links. How often did the actual ad finish loading? The higher the number of systems involved in an ad call, the higher the difference between how many impression the Advertiser and Publisher’s systems count. Last I heard, 5-10% of impressions are lost for each additional adserver that is added to an ad-chain.

The Exchange Model

Fundamentally I believe people don’t quite understand why Ad-Exchanges are key is because they don’t realize that an ad-exchange is simply a glorified adserver. Really… nothing special, just one centralized system instead of three or more. Take a look a the following diagram:


Exchange Model

Notice a difference? In this case, there’s only ONE request to ONE system, the ad-exchange. The exchange is the ecosystem through which advertisers, publishers and networks all manage their businesses. Some may integrate their contextual technologies, some may simply use the system to set prices. But it’s ONE ADSERVER! Lets revisit the three main challenges we listed before.

Pricing/Operational Inefficiency — On the Exchange

Now that the advertiser and the publisher are both on the same system the whole world changes. There is no longer a need to transfer “tags” back and forth, as all the data is in the same system. Pricing is also no longer an issue as the advertiser has integrated his technology solution with the exchange and can now bid a different price on each ad impression depending on the page the user is visiting.

Technology Integration

Although there is still a significant amount of work to be done to integrate an Advertiser’s technology solution with the exchange, it’s worth it since it’s work that only needs to be done once. Once done, this technology will work across any and all publishers. Imagine this, the New York Times starts using Googleclick as their adserver, which is, of course, fully integrated with adsense. The NYT no longer has to worry about inefficient pricing for Adsense as the technology will be integrated with exchange. On every ad-call, Adsense can check the page content and place and appropriate bid according to the types of ads that it would place. Genius right?

Now what about the Behavioral network? Of course it will integrate it’s data with the exchange, and again, on every ad call it can enter bids on the users that it has data on and even price differently based on the types of data. Of course it will be slightly more difficult to integrate technology with the exchange adserver as by nature it’s more complex than a basic adserver, but this doesn’t really matter. Since the Advertiser only has to integrate his technology once, with one adserver it’s worth the effort.

High Latency/Slow Adserving

This one should be pretty obvious. Since there is only one request, ads serve faster and fewer impressions are lost.

Final Thoughts

I realize this post is long, but I think it’s important that people realize the true value that Exchanges bring to the market. It’ll be fascinating to see how the market changes as Google and Yahoo each attempt to take control of the billions of dollars of advertising that flow through the internet every day. This new model will truly change the online advertising world for the better, except perhaps for those ad-networks out that there purely benefit from the pricing and operational inefficiencies that exist in todays world.

Stay tuned for more thoughts on the potential acquisition of 24/7 by Microsoft, securing an exchange, ‘broker networks’!

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The Ad-Exchange Model (Part I) http://www.mikeonads.com/2007/05/01/the-ad-exchange-model-part-i/ http://www.mikeonads.com/2007/05/01/the-ad-exchange-model-part-i/#comments Wed, 02 May 2007 03:56:08 +0000 Mike http://www.mikeonads.com/2007/05/01/the-ad-exchange-model-part-i/ Clearly the recent acquisitions of both Doubleclick and Right Media by Google and Yahoo respectively signal a strong vote of confidence in the ad-exchange model. Reading all the news coverage of these two acquisitions made me realize that very few people out there realize the true value proposition of a centralized exchange. Sure, “transparent marketplaces”, and “auction models” are great, but why is this better than any of the existing ad-networks — Google Adsense, Advertising.com, YPN, etc.?

The Basics — A simple publisher serving ads

First lets start with a really basic question — What is an adserver? Before we can talk about an exchange, you have to understand how adserving works today. In it’s most basic form an adserver serves ads on web pages, tracks clicks on those ads and then provides reporting on the ads served and the number of clicks received on those ads. In the online space today, the vast majority of publishers, networks and advertisers all have their own adservers.

Ok, so how does it really work? Well, the first thing you need to understand is how the ad-request actually happens. To request an ad from an adserver the publisher, or website, must place an ad-tag on their page. An ad-tag is simply a snippet of HTML, generally either some Javascript or an IFRAME that tells the browser to request some content from the adserver. Here’s an example tag:

<IFRAME FRAMEBORDER=0 MARGINWIDTH=0 MARGINHEIGHT=0 SCROLLING=NO WIDTH=468 HEIGHT=60 SRC=\"http://ad.yieldmanager.com/imp?Z=468x60&s=2948&t=3\"></IFRAME>

This little snipper of HTML, when placed on a web page, informs the browser to open a small window (460×60 pixels), and in that window place whatever content is returned from “http://ad.yieldmanager.com/imp?Z=468×60&s=2948&”. When I loaded this in a browser I got the following response (truncated for clarity):

<a target="_blank" href="http://ad.yieldmanager.com/click,AAAAAIQL[...]AOUINkYAAAAA,,,"><img border="0" alt=""height="60" width="468" src="http://content.yieldmanager.edgesuite.net/atoms/8c/21/8c21402b07a3ca60e6af42e48b09a3cc.gif"></a>

Which essentially tells the browser to load an image from content.yieldmanager.com (the ad), and then when the user clicks to send him to ad.yieldmanager.com/click. Here’s a basic little diagram that outlines this simple process:

one_adserver.GIF

Ok, so you understand the most basic implementation of a web-page with an adserver. Now lets look at reality.

Life gets complicated — the advertiser has his own adserver

In the example above, when an ad was requested the adserver immediately responded with an image. This implies that when it comes time to pay for the ads served that the advertiser is going to rely on the Publisher’s reporting system to determine how much money he owes. In reality the advertiser is interested in tracking information as well. What this means is that both the advertiser AND the publisher need to have their own adservers. Now, the publisher’s adserver can’t immediately return an ad, instead it returns a SECOND ad tag that points to the advertiser’s adserver. Here’s another pretty diagram:

Two Adservers

Now imagine that there’s an ad-network representing the advertiser that’s sitting in the middle, in which case what we get is:

Three Adservers

What’s wrong with this picture?

So by looking at the diagrams above I hope you get a sense that this isn’t the most efficient of ways to buy and sell media. Think about it, for each individual ad we have to request content from three different systems! This means three times too much work is being done. So lets dig a little deeper. Essentially, the traditional adserving model has three key problems:

  1. Pricing/Operational Inefficiency
  2. Technology Integration
  3. High latency / Slow Adserving


Lets dig into these three.

Pricing/Operational Inefficiency

One of the things I forgot to mention above is that each point of integration between two adservers is manual work. If the Advertiser wants to buy 10 million impressions at $1.00 CPM from a Publisher the following process generally happens:

  1. Publisher sales rep contacts advertiser
  2. Publisher and advertiser negotiate contract terms (e.g. 10M @ $1.00)
  3. Publisher and advertiser sign a contract
  4. Advertiser sets up the ads in his adserver and sends over the “ad-tags” for the media buy
  5. Publisher has trouble trafficking ad-tags into his system and contacts his support department
  6. 5 days later, Publisher finally manages to get the ad-tags live and the campaign starts

So what’s wrong here? First off, there’s a certain inefficiency here. When the advertiser decides he wants 10 million impressions he probably specifies a certain set of targeting parameters to ensure that the Publisher sends him users that will be likely to be interested in his offer. For example, he may want over 18 males with a maximum of 4 ads shown to each user every day. Clearly there is a problem here. Depending on the offer, 18-25 males might be far more valuable than 50-85 year old males. Also, the first ad the user sees is far more likely to elicit a response than the second or third. So what do people do? Well, instead of setting one fixed price for all over 18 users he could setup 20 difference prices. Ten different age buckets (e.g. 18-25, 25-30, 30-35, 35-40) and two different frequency buckets (e.g. first ad, second through third ads). Well, this makes life a little bit better but there are still some problems here. First off, the higher the number of pricing points, the longer the entire process outlined above takes. 20 price points means 20 different tags in the Advertiser’s adserver, and 20 tags to upload into the Publisher’s adserver, and 20 different tags for which the Publisher may need to contact his support department for help. Here’s a nice little diagram –

Many Lines

In this new digital age of APIs and digital systems, why the hell does this take so much work? Can’t we do this in a better way? Well, at some point people realized that pricing flat CPM rates for inventory wasn’t the most efficient way to do things and came up with Cost Per Click (CPC) and Cost Per Acquisition (CPA) pricing models. In these systems the advertiser simply specifies how much he’s willing to pay per Click or Acquisition (generally a purchase, or lead form) and lets the publisher’s system determine the best users to deliver ads. Although this system is better than the above it introduces another set of problems. The advertiser now becomes wholly dependent on the Publisher’s optimization/prediction algorithms, which may or may not be any good! I can continue here for ages, but I’m pretty sure you are getting a sense of how inefficient the current system is.

Enough for one post. Stay tuned tomorrow for Part II — Tech issues and how the exchange model helps.

Update: Part II is ready, read on here: The Ad-Exchange Model (Part II)

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Yahoo to acquire Right Media http://www.mikeonads.com/2007/04/29/yahoo-to-acquire-right-media/ http://www.mikeonads.com/2007/04/29/yahoo-to-acquire-right-media/#comments Mon, 30 Apr 2007 04:56:27 +0000 Mike http://www.mikeonads.com/2007/04/29/yahoo-to-acquire-right-media/ Hopefully this explains my ‘absence’ in posting a bit, but Yahoo has just announced that they will be acquiring my employer ‘Right Media’. Congratulations to the executive team for doing a great job in building a great company. Clearly a new online battle has emerged, Googleclick versus Yamedia! I’ll write some more thoughts on this later.

Press Coverage:
Yahoo Press Release
New York Times Article
The Financial Times

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Balance between corporate intellectual property and blogging http://www.mikeonads.com/2007/03/28/balance-between-corporate-intellectual-property-and-blogging/ http://www.mikeonads.com/2007/03/28/balance-between-corporate-intellectual-property-and-blogging/#comments Thu, 29 Mar 2007 03:35:13 +0000 Mike http://www.mikeonads.com/2007/03/28/balance-between-corporate-intellectual-property-and-blogging/ This is less of an opinion post and more of a poll. Ever since I’ve started blogging there’s one thing that’s been bugging me — the # of things in my head that I CAN’T blog about because the information is either confidential or simply because it’s a business idea that I think my employer needs to pursue.

Obviously I CAN blog that “Ad Exchanges should do X,Y & Z”, but at what point do you cross the lines of your ‘intellectual property’ clause? I’m sure “exchanges should be open” is a totally fine statement to make, but “dynamic pricing is essential for an auction model” would probably be totally unacceptable were Right Media in the process of developing this new concept.

My limited google searches turned up very little on the topic except some legal advice that bloggers should follow the ‘corporate blog policy’, and blah blah blah. So realistically — for those of you that blog — am I alone in worrying about this? Has anybody ever heard of any troubles around private company information ending up on a blog? Best practices?

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