The Archives

Browse the content below to find what you're looking for.

The PostView: The Race For “First Look” Access To Premium Publisher Inventory

Thursday, February 23rd, 2012

The PostView is a new column written by senior execs working in the European online advertising industry.

The supply chain has always been in a permanent state of disruption. From ad networks to retargeting networks to SSPs to the Trading Desks – there has always been demand for a publisher’s inventory. But now, fuelled by the growth of RTB, is it becoming even more competitive and territorial?

The battle lines are being drawn for “first look” at premium inventory, which is going to result in the major disruption of the existing publisher revenue monetisation model.

For those not in the know, the “first look” is effectively a process where publishers pass inventory to a buyer or set of buyers before the rest of the market. Retargeters have profited from this for a while now. Not necessarily in real time, but taking the first ad calls on a lot of premium publisher’s inventory. Ask yourself, when you leave a retailer’s site and continue surfing the web, how quickly do you see a personalised ad? Skip from a well-known ecom site without purchasing and there is a high chance you will see a personalised ad about a product on the first pages of a premium publisher.

The “first look” market is opening up. The SSPs have now enabled the trading desks to start getting a sniff of this first impression before anyone else.

The question of who should get the first is no doubt being heavily analysed and assessed within the big publishers. But why would a publisher even enable “first look” access? Well, it helps with automation. Publishers want to automate standard inventory selling. It makes sense for them to do so from a work flow efficiency perspective.

The question remains: are they leaving money on the table? Can RTB buyers sustain the fill rates required for these publishers? Are they able to fulfil this at the higher yields, making this supply channel more profitable for publishers than their direct sales channels? The jury is still out. Publishers want to work closer with the trading desks and agencies. And “first look” (particularly with the trading desks) facilitates and strengthens trading relationships and deals. Securing “first look” from key publishers could well be a key function of the agency side trading team going forward.

There’s an argument to be made though that looks at why a publisher wouldn’t give “first look”? The reality is if the inventory is looked at by an RTB bidder and passed back, then it can be monetised into an open exchange. No risk in that case (if the publisher already sells inventory on the exchange).

The only issues are whether a) the inventory that has been allocated on a “first look” basis could have been fulfilled at higher yield and/or revenue via a direct channel or b) whether other bidders would have helped inflate the price by stimulating more competition and demand on the auction. And this is a big point. Is “first look” limiting the yield publishers could be creating?

It’s about supply and demand and publishers need to be manipulating this in their favour. If they are reliant on one trading desk, they could be setting themselves up for failure.

Regardless of industry opinion on whether “first look” RTB access to publishers is a viable, sustainable model, there is a lot of momentum being built from the trading desks. Private Exchanges are popping everywhere up, giving trading desks with “first look” access, ahead of ad networks. With the emergence of this trend, some ad networks simply are no longer getting “first look” at premium publishers. But just because a handful of deals have been done by the trading desks doesn’t mean they have locked down the “first look” access. Retargeters armed with affiliate money and client direct relationships continue to sign some big deals with publishers.

Why are they able to do this? Retargeters are arguably in a stronger position than the trading desks to monetise inventory more effectively for a publisher. Depending on the margin they are making, they have the ability to drive eCPMs higher, purely based on the CTR performance they’re currently driving. They may also have more spend flowing through them than the trading desks. For these reasons alone, they could be a more lucrative partner for publishers looking to better monetise those first look impressions.

Publishers understand the opportunity available. But the trading desks have still to play their trump card: namely, brand spend. In addition to retargeting budget, trading desks are also in a position to leverage brand spend, which could ultimately outweigh the yields the retargeting networks can deliver and probably also top their scale too.

How important will the likes of Comscore be in this looming battle? New measurement metrics like the vCE could help demonstrate the value of a) premium publisher inventory but also b) ad calls further up the delivery chain. If these new metrics prove the value of premium inventory beyond what current click based performance metrics do, then we could see a real fight emerging. Xaxis, Audience on Demand, Accuen, Amnet, Cadreon will be looking to aggressively take on the likes Criteo, Struq, Next Performance, MyThings et al for that precious “first look” at premium publisher inventory. Things are going to get interesting.

Posted in Ad Network, Ad Trading, Agency, Agency Trading Desk, Online Advertising, Publisher, The PostView | No Comments »

The PostView: Is Cutting Supply Really The Answer To The Current Malaise In Display Advertising?

Thursday, February 9th, 2012

The PostView is a new column written by senior execs working in the European online advertising industry.

There have been a lot of pieces recently putting forward the argument that reducing the volume of ads on a page could help salvage/preserve the growth of the online display advertising industry. While it would seem the most logical strategy, the issue might actually be more deep-rooted than that.

We exist in a digital world now where the overwhelming volume of ads are directly proportional to the overwhelming volume of content being created. In 2010, Eric Schmidt stated that we create as much information in two days as we have done since the dawn of man through to 2003. Schmidt might have been throwing another baseless fact out to the digieratti, but he was making an interesting point about the current content overload.

We Are Becoming Overwhelmed By Content, Not Ads

The stats coming from the web’s biggest publisher are pointing to a serious content glut. Huffington Post is now publishing over 1,000 stories per day, and Tumblr creates 15 billion impressions per month (source: gigaom).

Not all of these impression-generating machines are monetised with standard advertising, but that’s not the point. They are creating an incredible amount of content that users feel compelled to consume. Like most ExchangeWire readers, I would not consider myself the average consumer or user of the internet. My line of work means I have to be immersed in every new piece of information that is produced from the Ad Tech information channel.

Due to the amount of information we are trying to consume on a daily basis, we are now getting into a habit of just scanning content. And not even scanning pages anymore but literally squarely focused on scanning the actual content. Consumption habits have changed to the extent that we now need sophisticated news aggregators and algo-powered content curation. Feed readers apps, like Pulse, now enable us to literally get snippets of information all day every day.

Advertising Created This Problem

The ad-funded model has meant that publishers were remunerated on the basis of how many impressions and eyeballs they could sell. More eyeballs meant more cash. More content meant more eyeballs and so it continued. All the while, across certain content owners, eCPMs are falling. So we feel inclined to create even more content in the hope it will create another page view, perhaps even adding another ad format for good measure.

As consumers, the problem we have now is an addiction to digital news and information presented by the web (across different devices and screens). This proliferation of content means advertising becomes less effective. We become less receptive to it – to the point where our engagement with individual pieces of content is declining.

Kill The CPM

What would happen if we killed the CPM model and didn’t trade impressions anymore – but traded user sessions?

What if we start placing more emphasis on creating deeper user engagement? Publishers would then focus less on the volume of eyeballs being created or the link-bait worthy content headlines that seems to infect the social media channels. Creating deeper user engagement would place more strategic focus on user understanding and user acquisition – and ultimately place less importance on the one hit wonders from social referrals.

The cost of a user sessions would depend on session length, but would enable marketers to start telling stories, using creative sequencing more intelligently. We might even get advertising back to what it should be about.

This doesn’t mean we have to take a departure from leveraging the innovations within data and technology that are available to all of us. We can still ensure we are engaging with our desired audience. Content overload is not healthy and perhaps even damaging to display advertising’s long-term future.

So to answer the recent question posed by senior industry observers: will cutting supply solve the inherent problems with display? The answer is no. We need to cut content, and look at the fundamentals of how we price display. Only then will publishers and advertisers be able to reap the true benefits.

Posted in Ad Exchange, Ad Network, Ad Trading, Agency, Marketer, Online Advertising, Publisher, RTB, The PostView | No Comments »

The PostView: The Last Hurrah For The Horizontal DR Ad Network

Thursday, February 2nd, 2012

The PostView is a new coulmn written by senior execs working in the European online advertising industry.

They used to be the kings and queens of media arbitrage. The ad tech watering holes of Goodge street and Dusseldorf would only mention their names in hushed tones. Nobody could beat them on margins. Nobody. Not even Google. But times have changed. The business model of the typical horizontal DR ad network is in real trouble – and it is going to have to battle hard for survival in a landscape that’s been radically altered by the emergence of automated ad trading and the arrival of buy-side/sell-side technology.

About twelve months ago, ExchangeWire published a piece on the future of the ad net model, entitled “The Life And Death Of The Ad Network”. It still remains to this day one of the more controversial posts on ExchangeWire. The post detailed why existing ad net models were doomed, and why they would have to pivot in order to survive. It would seem much of what was predicated has already come to pass. But how did we get here, and what now for the DR ad net market?

Those Pesky DSPs/ATDs Stole My Business

It was inevitable that some bright spark in New York would come up with a way of disintermediating the ad networks. For years the ad nets acted as the go-to aggregation and optimisation layer for all of the top agencies. They delivered on that CPA target but made sure it was optimised at the lowest CPM possible. The ad network became very big. Large amounts of VC money was thrown at the new ad “middle man”. Some were acquired. Some IPO’d. And most built very healthy businesses. ExchangeWire estimated that around £260 million of display spend in the UK was going through the ad net channel. There was a slight flaw in their lucrative model though: it was almost totally reliant on the agencies. Getting on the agency media plan was the nexus of their business. So when the agencies starting using DSPs to aggregate and optimise, it was always going to be difficult for ad nets to hold on to that kind of margin in the market.

No… The Automated Channel Is Killing My Business

For DSPs to work they needed dynamic supply. The Yield Optimizers (later to pivot to SSPs) – who were essentially managing the yield of unsold inventory on behalf of publishers – were about to offer the agencies the supply they needed to compete with the ad networks. It was at the time that the concept of RTB appeared. Buying at the impression-level, offered the agencies the type of transparency their clients craved – kicking traditional media-buying on its proverbial arse. While RTB has had its teething problems, its growth in the market has been phenomenal.

Despite the obvious protestations form current incumbents, it’s hard to deny we are now in the automated age. Automated trading – whether at the impression level or at a pre-agreed price with agency trading desk/ marketers – is the way publishers are going to trade their unsold – and possibly premium – inventory. That is a fact. Where this leaves the traditional DR ad net is open to debate. But anybody can see that its traditional brokering role in the market is no longer required by publisher or agency. Ad nets have been forced to buy inventory from same dynamic sources. All well and good. But where’s the differentiator from the agency trading desks.

The Inevitable Ad Tech Pivot

Ad nets are not clueless. They saw this coming and the pivots have been coming thick and fast. The most notable has been Specific Media. Cursed by countless agency execs over the years for the eye-watering margins they were making in the European display market, Specific was clearly going to be the biggest casualty of the move to automated buying – especially when you consider they have no prop inventory and data as well as an ageing ad server stack.

While Specific has been ridiculed for its celebrity hookup with Justin Timberlake on the MySpace acquisition, I think it could end up being quite an astute move. MySpace has 30-40 million uniques globally. If Specific succeeds in turning this into a a proper distribution channel, and can execute on its plan to produce ad-funded video content, it could move the company away from DR and into the lucrative brand budget. I have to admit I like it. It doesn’t seem as flimsy as its under-threat DR model. With brands looking to produce their own content and requiring go-to distribution platforms, Specific could easily leapfrog agencies to service advertisers direct.

The same logic could be applied to the thinking behind AOL’s recent GoViral acquisition, and why its abandoning Ad.com. Is abandoning a tad extreme in the case of AOL? Arguably. But then if you let all your talented people move to competitors then I think you are entitled to be accused of neglect.

Pivot Number Two… Moving Closer To Publisher And Agency

It’s interesting to see how many middle men DR networks have moved either closer to the agency or publisher. On the publisher side you now have some ad nets claiming to have SSP capabilities. While white-labelling the AppNexus platform for the purpose of managing publisher inventory in the real-time channel would seem like a smart move, it is a tough market. Lots of well-funded players play in the space and given the small margins you have to have serious scale to make this work. And on the demand-side you have ad nets working closer with just the advertiser. Smart. Until you realise you are competing directly with the agency trading desk. Incidentally, whatever happened to going direct to the client? The agency relationship could work of course if all re-targeting was in-housed and the ad nets on the plan were left to prospect…

Enter The Direct Response Prospectors (DRP)

While it’s probably the last bloody thing we need in this industry, this TLA will be popping up with some regularity over the coming twelve months. It is fact that re-targeting will be internalised by the agency. Anybody moaning about the situation needs to go and get their own clients. If you don’t like it, then you need to go client direct. If you don’t want play the agency’s game, go client direct. It’s that simple. As long as the agency controls the relationship you must play by their rules. And most DR networks will be forced into a new prospecting rule. Now it will be interesting to see how these ad nets survive without the re-targeting pixel. Is prospecting really for them? I can only count two or three pure prospecting networks doing this at the minute, MediaIQ and CPX spring to mind. But then bigger players, like Tribal and Unanimis, could also pivot. There might even be a big opportunity for some pure play CPA affiliates to capture DR budget too.

Whatever happens next, the DR landscape in Europe has utterly changed. Things will never be the same. So lets bid a last hurrah to the traditional DR network. Long live the arb!

Posted in Ad Exchange, Ad Network, Ad Server, Ad Trading, Demand Side Platform, Marketer, Online Advertising, Publisher, RTB, The PostView, Yield Optimisation | No Comments »