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I came across a post by Brad Terrell talking about the Appnexus Innovation summit and he highlights the topic of targeting sites vs. targeting audiences.

He goes on to talk about two different ad networks, their differences and gives emerical evidence of his thoughts:

Adam also illustrated the value creation potential of the audience-driven approach to targeting by pointing out how the enterprise value of a representative “old school” ad network, Burst Media, paled in comparison to the much higher enterprise value of a newer “audience-driven” ad network, interCLICK

 - Please read the whole post as this could be considered out of context and its worth reading the whole post http://loca.ly/couk6j

So I think about this from a entrepreneur’s perspective and I completely agree.  Advertisers and Marketers cling to what is new and there is continual pressure to do a better job and take advantage of the newest technologies and methods possible.

That said, DON’T OVERLOOK SITE TARGETING.  Audience targeting if done properly with re-targeting or search keyword re-targeting such as with Magnetic.is can be very powerful and literally spin gold when it comes to bottom of the funnel and making sure you get in-market sales.  

Beyond this however lies the ocean of ad impressions that are still being boiled by the likes of the big ad networks and exchanges.  I recently had a conversation with the VP of Operations at one of the larges online ad agencies pitching my business and knowing that I used to sell to him I asked, well what do you think I should be buying.  He responded, that when you are doing direct response advertising where you need to hit a specific ROI to continue to invest, what you do is buy all of the ad networks and optimize the best you can.  He said DSP’s are great for getting that re-targeting audience and a couple other segments but largely a lot of the audiences do not work and there are so many of them that even if there is an optimal audience, you will waste a lot of money trying to find it.

From my experience on the sales side on any given campaign there were 2-3 audiences that really worked on any given campaign (one being re-targeting) and the rest of the heavy lifting was done by site optimization and frequency within site optimization.  In fact the most important driver is something that I rarely hear people selling on or creating business models on, which is site frequency and the fact that the first few impressions (1-3) are in fact the most valuable by a long shot.  Most publishers know this and technology lends to selling this easily but for some reason it is not sold out there on the open market.

Furthermore there is also a lot of evidence that brand name new sites and mail sites such as LA Times, NY Times, Yahoo Mail, AOL Mail and others similar create the most ROI impact if bought at the right frequency and attributed properly…..which leads to attribution modeling which is a whole other post which I probably need to write more on.  That said, if bought through an ad network or exchange often you get the higher site-frequency impressions and these sites don’t appear to work as well.  If bought directly, you have the burden of paperwork and exorbitantly high prices to get access to the right impressions of this media.

So because they have such a broad view of their buys I think a great new frontier for ad networks SSP’s, and DSP’s is to sell based on site-frequency.  They have this data and often know where they are in the publisher daisy chain and can aggregate supply across many sites and can efficiently convert this into a fluid buy.  

And, I would buy it…..

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Working at a big company you get very used to how things are done.  Data has a certain availability and you need to work around this and play within the confines you are given as any major infrastructure changes could take months or years and there is always the fear of killing the golden goose and switching costs from going to from one system to another.  Basic rule of thumb is use what is currently working and innovate within the confines of it unless there is a major loss or need to change things.

I’m specifically talking about adserving technology, the databases that store information that is gleaned out of adserving and then the structure of this data to query and report on.

I got in a discussion with the CEO of a emerging data company who I have a ton of respect for recently whom also has an extensive technology background.  Our discussion was around real-time data reporting and the feasibility thereof.  Typically most adservers dump logs into massive long-term storage databases using either hadoop, neteeza, or even oracle to store this.  There is definitely a maximum number of records you can insert per second, limitations on the structure of this data which could complicate how you pull it out later for reporting, and furthermore the more data you store in one place, the harder it is to pull out a tiny piece of it on a quick recall.

When talking about advertising, for an individual advertiser or marketer, you are talking about between 10 and 100 million display ad impressions per day along with tens or hundreds of thousands of clicks and tens or hundreds of thousands of page views on a daily basis so to break that down lets say you need to store:

100 mm impressions

300k clicks

20 k page view events

Per day totaling 100,316,000 event records

so that’s 4,179,833 events per hour

or 69,663 per minute

or  1,161 per second

Then you have to think about how that number will spike during certain hours of the day and then lets say you definitely want to design the system to handle a lot of advertisers so let’s say 1,000 advertisers….you are talking about being able to handle between 1 MM and 20 MM events inserted into the database per second.

So how do you do this while managing costs? And is it even doable?

One thing is for sure that you need to own the data source so importing data from third party adservers or publishers is off the table because the server to server transfer alone will add valuable seconds on to your process and if you ever plan to do calculations on that data like conversion rates, match processes, click thru rates, you are adding time on to process that, and we haven’t even gotten to querying that data out of the database yet…..we’re just inserting it.  That said querying it out if structured properly will be a lot quicker and easier because you just have one or two users querying at a time per advertiser’s data set.

Anyway…..just thinking out loud about the problem at hand and the gap between real-time bidding and actually pulling the data based on real-time bidding into a reporting interface so a human being can actually look at a marketing problem and address it or examine it.

As a business side person myself, would love to see anyone else’s commentary on what database structures they have used and the feasibility of a project like this.

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A year or two ago you started to see a lot of buzz in the marketplace about attribution modeling and analytics.  Atlas and Doubleclick started coming out with products they called “Engagement Mapping” and agencies and marketers dug in!  Finally someone would try to crack the nut of the age old question by John Wannamker:

“I know half the money I spend on advertising is wasted, but I can never find out which half. ”

So what ever happened with this?

You really don’t hear too much talk about Engagement Mapping anymore.  Everything is more about “Audiences on Demand” or “Reatlime Bidding” or owning your own data warehouse and retargeting audiences.

Is this because people did the Engagement Mapping and figured out their attribution model and found the ‘half’ that is not a waste and is trying to buy that at the cheapest rate possible?

I don’t think so.  What I think happened is that we started to dig into the Engagement Mapping  and Attribution model tools and first of all realized warehousing all of that data and keeping it and analyzing it over the long term proved to be incredibly expensive, incredibly cumbersome to compute and quickly access and the Engagement Mapping product could not be easily productized and made into a nimble nicely packaged tool where marketers and agencies could quickly make changes and show results, they bagged it and went for the next best thing.

Essentially they took the high road on Attribution Modeling.  Realtime Bidding and targeting audiences essentially productized and made Demand Side Platforms able to quickly and nimbly scale the ‘stuff that works’.

To better explain lets go back to John Wannamaker.  He said that he knows half of his ad spend doesn’t work.  Well we have come a long way and with technology now we are down to knowing that half of our ad spend doesn’t work, about 5-10% of our ad spend definitely does work and we can really do a lot of work and gain a lot of efficiencies in that 5-10% and I think that’s what DSP’s and a lot of the data targeting is doing.  

Retargeting we know is a gold mine and for large advertisers, it’s reasonably scaleable.  We also know that search data from companies like Magnetic.is is really valuable but we’re still finding out how to scale that and which keywords and from what sources will that work from.

These are great findings and our industry and marketers are much better served by knowing that these audiences are some new more robust pillars to stand on.

That said there is a whole lot more and I think we quit too early and there is a lot more innovation to do on Attribution Modeling.  The data is there, the capabilities are there, it just needs to be figured out and the technology needs to be optimized because right now even with hadoop, cassandra, cascading, and some of the methods the guys at Flightcaster are using, data is still not normalized enough and inexpensively scalable enough.  Also, the big dollars are being spent on the media company side (i.e. google, yahoo, AOL) and not on the advertiser or agency side because those dollars don’t exist.  

I think as agencies expand their margins and as the DSP and Data space starts to cool and consolidate the next frontier will be Demand Side Attribution Model Software or DSAS or DeSAMoS or DemSAMoSo or maybe someone else can work on a cool acronym while I work on the product…….

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So all of this buzz about DSP’s and Realtime Bidding has gotten me thinking.  Why exactly are we so obsessed with these standard IAB sizes?  What’s the deal with banners anyway?

Anyone who knows anything about programming, flash, html, and javascript knows that the size and shape of the banner really doesn’t matter when it comes to scheduling and the technology behind adserving.  It’s probably the business people and management that are so detached from the technology and mechanics of online advertising that have painted us into this corner.

Well Facebook is not so dumb.  I guess that’s one of the benefits of having a twenty something developer as a CEO.  For what they lack in big business management experience they sure are creating a massive revenue and profit machine.

“The biggest income stream seems to have been performance advertising, which likely accounted for more than half of Facebook’s 2009 revenues at $350 million. Next was brand-based advertising, which accounted for an estimated $225 million in revenue. Microsoft advertising came in at $50 million and virtual good income was only $10 million according to these numbers.”

From Mashable Article - Facebook Could Surpass $1B… http://loca.ly/bfA3ho

So why are all of these data companies like Blue Kai, eXelate, and DSP companies like Invite Media, MediaMath, Turn, Triggit so obsessed with the banner?

It sounds like the real value is outside the banner!

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So last week I attended the Admeld RTB conference along with a lot of former co-workers who have gone on to many different segments of the industry.  It was good to catch up with old friends and also good to see what a lot of exciting startups are doing in the space.

The ad network space is evolving and what used to be contained in one company or one ‘stack’ is now being unbundled and the innovation that is going on on each level of the stack are opening up a world of debate and excitement.

This is maybe my current best guess as to what the stack looks like right now:

Publisher -> SSP -> Data Segmentation Engine/Provider -> DSP -> Agency -> Advertiser

This could probably look a thousand different ways and there are many different types of each  and larger media companies and agencies are bundling some of these pieces together but at the end of the day there are 4 value components that technology can benefit.  For those marketing majors, you can think of this as the 4 P’s of display advertising.

• The Media - content in which everything shows up on
• The Data - attributes of the site, content, user, history, frequency
• The Ad - the actual piece of creative
• The Sale - the product being sold to the consumer, how much it’s worth, how much the advertiser can afford to pay to achieve the sale of their product or the brand value and equity of that product.

At the end of the day this stack right now is most focused on trading of The Data and The Media.  Why is that?  Well because there is more money to be made in an efficient, scalable manner on trading media and data than on any other piece of the marketing mix.

The ability to show up on the right piece of media is the pinnacle of importance and the power of The Media!  That’s why media companies are worth billions of dollars.  If you can’t reach consumers and have your product show up to them…..you could have the best data in the world, the best ad in the world, and the best product but if you can’t get it in front of the consumer’s face, all is lost.  And it’s massivly scalable.  The more we make the more consumers consume and the more ads we can show.

Next in line I think is The Data.  Showing up is the most important thing but showing up to the wrong user is a waste of money.  So having data attributes on that user is probably the next most valuable thing…….at least that’s what we think right now because data can be sold in a scalable manner like media.  The scale here is more limited than media as there are only so many users and the only way to scale is to further segement those users and increase the value as the segment gets more granular.

The Ad is a place where the advertising industry has placed a lot of value in the past with high priced creative consultants and creative agencies but this has taken a back seat in the online space.  It could be argued that the industry is peaking it’s interest with the acquisition by Google of Teracent and the current buzz in the industry of companies like Dapper and Tumri.  But the creative and the ad itself cannot be scaled as easily as media or data.

Finally there is The Sale.  The Advertiser or the CMO, or the agency still really owns this process which limits scale value and innovation in the space.  Only with Landing Page Optimization and deals like Accenture/Adchemy to really understand The Sale side of the equation and plug that back into the rest of the online marketing mix can you use technology to improve this piece of the equation….at least so far.

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Previously I wrote about adservers touching on Full Service options and open source options on the publisher side.

One trend I would like to highlight is manipulating Adserver arrangements to put together a Demand Side Optimization Platform (DSP).  This seems to be a trend with smaller networks setting up “private networks”.

An interesting way I’m seeing this done is by using both an advertiser and publisher Adserver solution in tandem.  For example taking an application of DFA for the Agency planning tools and matching it with an application of DFP with Adapt.  Adapt is Dart’s solution for optimization to offer cpa pricing but if it’s only used for inventory sources for one advertiser it can be manipulated to be a performance buying platform.  I’m not sure exactly how this is set up and what DART’s fees are for this (whether they charge you for both solutions and double dip on CPM’s) but Collective Media used to source Dart Adapt on their website (which they now call their proprietary AMP).

That said, I don’t think might be a sound solution for an agency trying to set up their own DSP platform without hiring on a technology department.  Not sure what the costs are and how much you could customize it either.