Tag Archives: facebook

The Changing Face of Performance Display – the rise of Ad Exchanges

The digital media landscape is changing rapidly. “Why” I hear you ask? Well the short and simple answer is the economics of supply and demand, meets technical and mathematical innovation. Combined this with clients increasingly demanding more accountability out of their media spend, with increased knowledge about campaign performance metrics of post click and post view conversion attribution and we have a major force driving change.

The Industry’s answer to this is the advent of digital media exchanges which is in itself a major game changer, but more on that later.

Lets start of the supply side of the digital market. Anyone in the know, understands that the amount of amount of digital impressions available, is now almost infinite. This is due to a number of factors, but principally the explosion of social media where supply is endless and behavior is sticky. Think Facebook, Twitter, Blogs, Tweet image sites like YFrog .com, Flicker, YouTube etc etc the list is endless. Secondly the major publishers struggle to have 100% impression sell through rates via their traditional sales channels and you have a considerable amount of unsold remnant impression inventory. So in simple terms over supply.

With infinite inventory and limited demand, the value of an impression is fast approaching zero. Not a fact most major publishers generally want the industry to know.

Up until now most of this low value high volume inventory has been sold at next to nothing rates to the traditional Performance Networks, that package up “Performance Solutions” where they factor the amount of impressions required to hit a client performance guarantee like a CPC pr CPA. Most of the CPA deals though are heavily weighted towards post view conversion metrics somewhere between 95% to 99%, which in itself is questionable from a true DR perspective. These buys are also “Blind” where a client has little or no choice on the sites their ads appear on and there is no transparency across higher performing parts of a network, so effectively not allowing a client the opportunity to optimize and refine their performance media buy and minimize wastage and cookie spraying.

The unfortunate fact of the matter is most of these Performance Networks are firstly focused on maximizing their yield, where they mark up the remnant inventory they buy by a significant multiple. This allows publishers to monetize their unsold inventory at albeit a very low rate, they can hide behind a performance network and not devalue their otherwise premium inventory. Further this allows a traditional media agency the opportunity to blend performance metrics with low cost inventory, claim questionable conversions and support in some cases their otherwise ineffective digital media buys that support commissions and other high yield volume rebates.

All in all, not a very pretty picture for the advertiser.

Now the demand sides of the equation. Enter DME’s or Digital Media Exchanges. Globally we are seeing the rise and rise of the DME that allows a site owner or publisher to make freely available an amount of inventory to an ad exchange (think stock market here), where advertisers can compete and bid real time for the ability to serve an impression to a user. This can be behaviorally targeted as well (Site retargeting, Search Retargeting etc). This market mechanism allows an advertiser to rationally price the cost of digital media based on what conversion value it creates for them (CPA, ROI, ROAS, CPC etc). With the right technology, business rules of post click and impression attribution and performance conversion metrics reporting an advertiser can now maximize what parts of a network or what ad format works best for them on their terms due to complete network and performance transparency.

2010 looks like it will bring major change to the digital media landscape. In the USA, Google is starting to push their DoubleClick network heavily with real-time bidding and an API due for release we believe before June. Yahoo! is starting to push RMX (Right Media Exchange) a little harder too. Early indications are the exchange based media buys are resulting in a 50% cost reduction in the eCPM advertisers have been achieving, compared with the traditional blind Performance Network buy, with increased conversion based value metrics as well. The exchange mechanism is also starting to extend beyond the traditional IAB approved ad formats with reports of video ad exchanges also launching in the USA.

Now, I’m not pretending this is the total solution in the digital media landscape. There is still a roll for premium based CPM buys as part of a digital brand campaign. I see Ad Exchanges as an extra digital DR element to compliment premium buys, drive the economics of digital performance harder and gain incremental impressions and conversions for the advertiser in a transparent, rational, data driven way. It is the power of search maths applied to display markets.

Double Click

Yahoo!'s Right Media Exchange

A view of the Australian Ad Market..

AU accessible digital inventory

Any of you who know me, understand how passionate I am about this with my strongly held belief that this will be the dominant media buying mechanism across all media in the next 3 to 5 years, particularly around the burgeoning IP TV markets.

In essence the power is shifting from media and network owner to advertiser with the benefit of:

  • Complete transparency across network performace
  • Complete transparency across post click and post view conversion
  • Rationally priced media, based on the value it actually creates – not how it supports commission deals, incentives etc
  • Performance based media buys with prime media cost savings in the vicinity of 50%+

Downstream Marketing in Australia is launching the country’s first biddable display capability in conjunction with Efficient Frontier in California, using their seats on the ad exchanges to access the available inventory targeting AU based eyeballs across sites globally including AU based site inventory.

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Economics of the Future of Mobile

Recently I was asked to write an opinion piece for the magazine Marketing, capturing my thoughts on the future of mobile marketing which has always been touted as a large and emerging opportunity, but has yet failed to gain critical mass and more importantly material advertiser support.  Below is an extract of the article.

Marketing Magazine - The Future of Mobile isn't Mobile

THE FUTURE OF MOBILE ISN’T MOBILE

Mobile Marketing has been the long-held, future of advertising. A promise that everyone has got excited about, but few delivered on. I’ve seen numerous reports from industry experts and market analysts, who’ve produced endless business cases and revenue models that never seem to gain any traction anywhere but in a spreadsheet.

Many mobile-based businesses start and fail even before they’ve worked out who they are, where they fit and more importantly what the consumer need and engagement point is. The promise of mobile has been built on a nascent industry that hasn’t really found its feet so far. It begs the question, why have so many people been so wrong for so long? In my humble opinion we’ve all been considering the problem, or opportunity in the wrong context.

The future of mobile isn’t “mobile”. Building yet another disconnected platform, which operates singularly, is the problem. The real question isn’t about what is mobile, it is more about what connectivity and ubiquitous consumer centric computing experiences hold.

The Black Swan of the mobile industry came from an outlier that radically changed the face of what we understood the market to be, Apple. Like it or not Steve Jobs and the Apple crew decided to rewrite the rulebook, grounded in a consumer truth & desire for simplicity when they launched the iPhone.

iPhone

iPhone

The iPhone was one simple device that allowed consumers to do almost everything they could on a desktop or laptop, with the benefits of a compact device that had GPS functionality that could fit perfectly into your pocket at the cost of a normal mobile contract. The iPhone ran basically the same operating system as a Mac, it synced seamlessly with all your business and personal applications wirelessly and it was just easy. Combine this with creating a relatively open software platform that developers could deploy a range of consumer centric applications on, with an open software market place where developers could reach a global audience and monetize their ideas rapidly. Hey presto the face and future of mobile changed irreversibly.

The biggest change Apple brought to the mobile industry was they established and built sustainable consumer behaviour, where for the first time consumers could use mobile devices in an entertaining and meaningful way.  Almost everyone I know now uses the SAME applications and services on their desktop as they do on their mobile. Tweeting, Facebooking, Googleing, blogging, emailing, taking and sharing photos, reading PDF’s, listening to and downloading music have all become a ubiquitous experience, regardless of the device or location. The iPhone really enabled the “Social Web”, combine this with location-based mobile applications, and the face of the mobile game has changed forever, why? Because Apple rewrote the rulebook.

Apple changed the clunky face of mobile marketing and e-commerce. They did what Microsoft, Symbian, Blackberry, Nokia, Sony Ericsson, HTC et al couldn’t do. All of the previous industry incumbents were all operating based on a set of rules designed by engineers and analysts that had a vested interest in developing a disparate market, not a connected market. Apple innovated that last 10% of the mobile market and that innovation has had a 200% impact on the mobile industry as we know it.

Before you start to think this is a plug for Apple, have a look at the ripple effect across the entire mobile industry. Nokia has launched “me too” devices with their own music store, HTC have launched devices with similar interfaces and capabilities, Blackberry has started to support their developer community with a “me too” application store. The rate of change in mobile is increasing exponentially, all because an outlier rewrote the rules.

Apple's App Store

Apple's App Store

So where is the advertising world in all of this though? The advertising community both creative and media is still way behind. Ad Networks are still trying to sell on a silly impression based model (CPM) through serving non-targeted, dumb ad’s that have little relevance to a consumers experience that are at best annoying. Creative agencies and their digital heads have not yet woken up to the fact that it would be a better use of clients funds to build a simple mobile site, designed for a handheld device that delivers consumer utility rather than fight for a full flash and video site that can’t be viewed on a mobile device or indexed in a search engine. It is time to catch up people, understand the consumer and find the right intersection point.

The future isn’t mobile; it is ubiquity of experience across any device that delivers consumer utility and meaningful brand engagement.

The Economics of Online Music

Short & sweet today. I’ve been talking with a new on-line music portal www.bandit.fm being pioneered by Sony BMG here in Australia. Downstream are looking at potentially partnering with Sony to help build an audience for their new service.

Now anyone that knows me, knows how much of an Apple fan I am. I think anything Apple touches, generally turns to gold. Apple have successfully become the trail blazer in almost every product category (think iMac, iPhone, iPod, Mac Books of all types and descriptions). They’ve also revolutionised the consumer software market with easy to use intuitive applications (think iPhoto, iMovie, iDVD and before anyone cans me the whole iWork suite, awesome productivity suite for $99! Let’s also not forget iPhone apps – just brilliant way to build and scale your mobile platform).To date no brand really comes close to Apple’s innovation and foresight.

But when it comes to music, I think there is a true challenger that could really take it to them. Sony have developed what I believe is the BEST music site / portal on the market today.

New iTunes killer

New iTunes killer

I think it is the best for the following reasons:

  1. Great content – they’ve developed the site intuitively with a mixture of channels, artist specific pages, video, news feeds etc. You can engage in specific genres like R&B, Hip-Hop, Rock, Pop or you can navigate to specific content rich artist pages like N.E.R.D, John Legend, Duffy etc etc.
  2. Great site build – mixture of indexable HTML & interactive flash elements, URL structures, title tages, H1 tags etc
  3. Downloads are easy after simple registration process
  4. Music & videos are DRM free
  5. Great experience – you can listen to a whole song or view a video in high quality full screen mode vs. Apple’s 30 second preview function
  6. Not constrained by an app like iTunes – you can access it from any browse
  7. Easy content network integration (PPC) into YouTube & Myspace. They are “THE PLACE” to view music related content.
Specific Music Genre Channels

Specific Music Genre Channels

Usher on Bandit.fm

Usher on Bandit.fm

The site will work very, very well for Paid Search / PPC campaigns, the site structure allows you to deep link to exact content as well as being able to achieve great quality scores which impacts highly on economical bid prices and as content is more compelling than iTunes, I believe with a much higher conversion process too.

The site also has very high potential to work very very well for Social Media, as the site structure let’s consumers be very specific about their Tweets, blog postings etc and create specific interest in genre based content communities. One area they could approve is allowing their content to be aggregated and syndicated on other sites, think embedding audio files or video files to MySpace or Facebook profile pages with pre & post roll Bandit.fm ads promoting their service – very economical way to drive new subscriptions, downloads or cross sell new artists / releases / albums.

So the product I think is truely world class, if this is release 1.0 I can’t wait for new versions updates. Bandit.FM can successfully take on iTunes and Apple in the market they really pioneered and commercialised (on-line music), and hopefully give consumers a compelling reason (safety – no viruses / Trojans, reliability ets) to BUY music rather that steal it from sites like Limewire.com. They only have to carve out small incremental percentages of the on-line global market to create real value & high return for their pioneering investment in on-line music. Congrats to the whole team at Sony BMG!

If you are into music give it a go.

The Economics of a click vs. impression

Today no one can run from the economic downturn we are all facing. As the credit crunch continues to tighten its grip on the economy we are seeing advertisers demand more from every dollar they invest. In recent years we’ve seen the rise and rise of digital marketing as an effective way for brands to invest their dollars due to two key factors; the channel is the fastest growing on the planet and perceived level of accountability it offers. What is beyond me though is the lack of transparency and understanding most clients have around their digital investments and the blind faith they place in the reports they get from their media agencies. Without wanting to be alarmist most acquisition and engagement focused clients could save upwards of 30% of their digital display budgets with little or no impact what so ever on their campaigns performance. Even worse they can in most cases reinvest this wastage into performance based media and Search for a 50% – 200% increase in campaign performance.

The problem…

The primary problem is most (not all) campaign performance reports delivered by media agencies use blended metrics of post impression vs. post click success events (CPA etc). In some cases I’ve seen this blended metric as high as 95% post impression and 5% post click. With cookie windows of up to 60 days this introduces a high level of bias into reports. But today the problem goes deeper, some digital media plans are unethically designed to introduce a cookie spraying methodology into the media plan. Cookie spraying is a deliberate tactic to buy as much low performing, low placement, cheap remnant digital inventory  as possible. This type of media strategy can ensure upwards of 70% of an available Internet population ( e.g. Australian internet users) ALWAYS have a cookie on their machine.  In some instances I’ve seen a single client drop 4 billion post impression cookies in a 12 month period, with only 13 million active  Internet users in Australia you do the math. So a user may never ever click, engage or even see a brands ad, navigate to the brands site either by direct entry of another medium ( e.g. Search) and the value is attributed on a post impression basis to an advertising / media plan that had little or no effect on consumer behavior. Think how many times a consumer may visit a social networking site (www.facebook.com and www.myspace.com), use an IM program ( Microsoft Messenger, AOL Chat etc), use a free email service ( sponsored ad email) (Yahoo mail, Hotmail etc), or check the news or stocks from their favorite site. Every time they do this a cookie is dropped on a users machine.

The economic impact:

  1. Clients are relying on false or skewed data to make digital media investment decisions
  2. Clients are double paying for performance in some instances ( i.e. paying an affiliate commission, the cost of an impression or a Search click) – lack of ability to de-dupe
  3. Clients are missing their true value creation opportunity as their campaigns are being optimized and planned on fictitious data sets and not investing in high yielding digital media
  4. Some media agencies are falsely claiming media rebates and commissions they are not morally entitled to
  5. Some media agencies are doing this by deliberate design to meet their contract commitments to networks and publishers to gain OMI (other media income) and discounted wholesale rates that they mark up due to a group buy – all in the face of not operating in a clients best interest and not disclosing this as part of their strategy ( why would they?)

The impact on performance numbers

The impact on this practice on a clients performance numbers is significant. In some cases I’ve seen digital success metrics overstated by by to a factor of up to 20 times.

Example

Industry                              Blended Metric                                Post Click Metric(actual CPA)

Telco                                    $86 CPA                                             $679 CPA

Credit Card                         $54  CPA                                            $1894 CPA

Homeloan                          $205 CPA                                            $29,452 CPA

The Solution

  1. Base all value attribution ONLY to last cookie (last cookie should win in all circumstances)
  2. Understand the difference both post click & post impression metrics. A post click engagement is worth SIGNIFICANTLY more than an impression.
  3. Have a common cookie window policy across all digital mediums (display, affiliate networks, search etc)
  4. Understand conversion latency (time from click to conversion – they differ greatly between digital mediums)
  5. De dupe conversions / cookie pools etc
  6. Understand the consumer journey and what exposure a consumer has had to all digital advertising (what has lead to what)
  7. In the case of post impression metrics attribute value only within a very finite window ( i.e. 6, 12, 24 hrs from LAST impression)
  8. Apply a universal set of data business rules to digital value attribution
  9. Break down your media buy in transparent terms. Understand what components of the digital media buy is CPM, ROS (run of site) CPC, Remnant inventory etc.  This will allow you to understand cookie spraying if it is going on. Also get all performance reports broken down on the same basis, the results may shock you.
  10. Optimize a campaign investment on your value creation terms, not the agencies hidden objectives of OMI, media commissions, groups deals etc.


Examples of Cookie Spraying – you placement / low yield inventory

Woolworths Everyday Money - Ad at bottom of page below the fold, little or no post click value

Woolworths Everyday Money - Ad at bottom of page below the fold, little or no post click value

Low yielding HSBC ad - significantly below the fold, little or chance of engagement or a click

Low yielding HSBC ad - significantly below the fold, little or chance of engagement or a click

Europcar - Display ad at bottom of page significantly below the fold

Europcar - Display ad at bottom of page significantly below the fold