trueffect Weblog

The Good News and the Bad News

According to Emily Steel of the Wall Street Journal in her article “More Digital Ads are Produced Offshore”, Madison Avenue is jumping on the outsourcing bandwagon with its digital ad production. Agencies interviewed cite both cheaper labor AND the fact that “most ad agencies can't find enough talent in the U.S. to fill their needs.”  If you’re an out of work graphic designer, this might want to make you smash your new MacBook Air.  On the other hand, could this finally give advertisers access to the quick and affordable creative necessary to forge bravely (and profitably) ahead in the digital frontier?

Micro-versioning, micro-segmentation, micro-targeting, and personalization are no longer just the buzz words of the day. As online advertising technology advances, the idea of actually sending a customized creative/message to a known user in zero point seven seconds (OK, maybe not on dial up but do we really care about those people?) is not only possible, but even preferable (see Michael Estrin’s article “Are users lost in a sea of ad networks”)  Will cheaper ad production actually help me find relevance in a sea of online Karenia brevis algae? (red tide, yes, I Googled it)  If so, Costa Rican and Ukrainian labor is looking pretty good right about now. As long as it’s not my job, right?

- Layne Salter

Don't get stuck on the treadmill

It’s often too easy to get stuck on the treadmill of affiliates, search, comparison shopping, and network media buys to step back and think about how best to keep improving the value you deliver to clients. 

In the last few months as we prepared and launched DirectServe, we’ve been paying close attention to some of the issues facing interactive media planners and have come up with some interesting observations.

Of course we want to sell you something, but we also think there is value having some outside perspectives that may help your thoughts around how to reduce costs and improve the yield from media. An interesting article today to check out is from Tom Hespos, President of Underscore Marketing, "Is it time to reconsider first-party cookies?” 

Top 5 indicators you might be stuck on the treadmill:

1. You don't fully understand how your investments are truly performing  - you're stuck on a “Last click wins" mentality. 

2. You don’t have the tools to do anything about it, and will continue to waste acquisition dollars on people to which you've already sold.

3. You live with unattributed or wrongly attributed response rates of 40%+, when better methods exist.

4. Your strategies continue trying to sell to customers, instead of helping them to buy, by using data you already have at your disposal right now.

5. You continue to commit resources to address flaws in your vendors' system work flows that are eating up valuable margin dollars.

Join the unstuck, and enjoy more success. :-)

- Martin Smith

Targeted ads to counter the recession?

Recessions sure aren’t what they used to be. Not only do prices go up, as consumers’ resources dwindle, but now, according to this article in the San Jose Mercury News “No Economic Slowdown on the Internet,” consumer spending is still strong – on the internet. Ed Garrubbo, chairman of the Electronic Retailing Association, says online sales have jumped 17 percent in the first quarter of this year! So where are our recession laden consumers, burdened by near $4.00/gal. gas prices, getting all this online spending cash? Perhaps online gambling, but that’s a story for another day.

Robert Atkinson, president of the tech think tank Information Technology and Innovation Foundation, not only predicts continued growth for online commerce but also says that personalized online ads are the “economic rocket fuel” stoking the fires of this growth. The interesting thing is that he goes on to warn that efforts of Congress and the FTC to protect consumer privacy could have the unintended consequence of throwing water on the flames.

Hmmm. My privacy or the US economy? Regardless of which camp you reside in regarding online targeting and consumer privacy, there’s little doubt that improved technologies for targeting and optimization provide better ROI for advertisers, increase revenues,  and, yes, perhaps even provide a more personalized and meaningful consumer experience. OK, I admit it.  I really would like to know when that bed I’ve been eying at Overstock goes on sale. And if that news came in the form of a banner ad on my Yahoo! Home page that said “Hey Layne, your platform bed is on sale!”, I might even be OK with that. But that’s just me.

-- Layne Salter

Ain't it the truth?

Points to Steve Hall of AdRANTS for pointing out the obvious in his post Media Optimization has Trumped Creative Optimization.  For 10 years online ad serving has provided the technology to truly get the most bang for your media buck by testing and optimizing multiple creative units within your banner campaigns. This technology has gone from being misunderstood and underutilized in the late 90’s, to virtually disappearing during the dot com bust, to enjoying mild utilization by the smartest advertisers, to once again falling into disuse.  Steve sites creative production cost as the possible culprit, but can that really compare to all those wasted media dollars?

Media giants and networks have created their own proprietary technology to automatically optimize your media and creative so you don’t have to worry about it. But where does this leave the advertiser? Steve’s right that direct marketers won’t sleep until they find the right message and creative to bring about the desired response. And let’s face it, the internet IS a direct marketing medium.

Current technology is ready to dynamically generate a customized message within Flash to the person it knows is helming the computer keyboard. But will advertisers be fully prepared to take advantage of this advanced technology if they’re not even currently doing creative optimization? Is testing and analysis doomed to go the way of the Sony Betamax video standard, defeated by runaway market conditions that don’t necessarily have the customers’ best interest at heart?

- Layne Salter

Being Independent Means Squat

Now that the Google DoubleClick merger is going ahead, we can expect a raft of cute positioning from folks claiming they are truly the independent choice for ad-serving or the real alternative to the dominant monopolies.

That is, of course, until they get acquired or subsumed into one of the aforementioned dominant groups – and frankly, who cares? Having made a career of taking the road less traveled and enjoying every minute of it, I’ve learned that independence of thinking is different to independence of affiliation.

The independent thinkers deal with the why – not questions, not the fast-follower positions. I’m blessed to be surrounded by people that are transacting in that way right now and creating something that delivers to what advertisers know they want, but didn’t know they could have. And that’s the ability to control media operations from their platform, or develop new media metaphors quickly and effectively without paying gobs of margin on media services.

So, if it’s true independence you want, you need to go a little deeper than the veneer and work with people who live it.

- Martin Smith

Microsoft Yahoo Google - and so it begins

My new favorite DirectTV program to watch as I traverse the country on Frontier Airlines is the World Poker Tour. It’s somewhat addictive to watch the drama unfold as a cast of characters work their opponents, bluffing with outrageous showmanship or mature guile. Not unlike the drama we are starting to see unfold as Microsoft squares up to Google with the proposed acquisition of Yahoo! – “And so it begins.”

Microsoft is one of those companies that you never really root for but would be foolish to bet against. Microsoft understands distribution better than anyone. They also understand how to leverage their distribution and create participation and partnerships. Google paradoxically is less participative and more utilitarian. You use their services. Microsoft’s moves are generally substantive and focused on revenue rather than traffic and audience.  They are able to execute with a single point of focus, which is amazing for a company their size.

That is not to minimize Google’s tremendous growth. However, a lot of their recent announcements have been more about the company’s aspirations, than substance. This creates pressure on their core revenues, which the last reported earnings show are having to work a lot harder because Google has hired ahead of its growth. Microsoft has significant diversification across its lines. It also has more key opportunities in the larger convergence pie than just the media revenue element of the web – Xbox, Uverse, In-car mobile and .NET. This pie is substantially larger than just media revenue. For a good in depth analysis look at:

http://www.pwc.com/extweb/pwcpublications.nsf/docid/5AC172F2C9DED8F5852570210044EEA7.

What Microsoft understands is how to leverage the extensibility through its architecture. Our own Truadvertiser.xls is a very good example of how this works, with a seamless integration between the desktop and the delivery architecture that works beautifully. This will challenge the regulators looking at the deal, as Google has not been slow to point out. However, application extensibility is the same between the desktop as it is to the mobile device. Google has a great little mobile GPS product to the handset – are they leveraging their web presence in the same way? The Yahoo! deal will grease the skids of this distribution and give them parity in the media side of the space.

On the other hand, Google understands data like no one else in the space. They know the value of utilizing data to create relevance in advertising thereby creating the efficiencies. Their Achilles is the same as AOL’s was ten years ago – they are a walled garden. When the next killer app(s) comes along (and it will) the lack of diversification and partnerships could be crippling. At that point they’ll have to bluff really well to win a pot with 10 high!

- Martin

VC claims naming rights to toilet

This one has been amusing and intriguing me all week when I read in the local paper (how antiquated of me!) that local VC luminary Brad Feld had invested $25,000 to have naming rights to a bathroom at CU. http://dailycamera.com/news/2008/jan/25/cu-bathroom-gets-a-namesake/ . As he comments "Sometimes my best ideas have come to me while I'm in the bathroom, sitting on the toilet or taking a shower," Feld said. "It's a good time to reflect. It's a quiet moment."

It's also a good repository for the not so good ideas presented, plans submitted, and the 9 out of 10 that don’t make it post investment. Then I got wise to Mr. Feld’s ruse — VC’s like to get in early on things, they want new ideas that can scale. There is also a trend in web circles to re-position or recapitalize terms — a widget used to be mechanical device, now it’s a little screen item. Is Mr. Feld trying to take stake in Mr. Crapper's domain? Will my children’s children say to each that they have to take a "brad" or someone had the “brad kicked out of them”. Of course not. They’ll use IM where BR is Bathroom and AD is Another Day (Short for ADAD — Another Day Another Dollar). Kind of appropriate really.

Do check out Brad's blog, its pretty good.  http://www.feld.com/blog/

- Martin

Online spending catching up with internet use

There’s good news from the Yankee Group for online advertisers. According to a report released this week, spending on online advertising is slated to double between now and 2011, from $21.7 billion to $50.3 billion. 

The report notes that this is merely Internet advertising catching up with Internet use. Right now, Internet accounts for 20% of all media consumption but only 7.5% of the U.S. ad spend.

So what does this mean for consumers? According to the report, new inventory will begin to open up and we’ll start to see ads more frequently on different online mediums such as video, gaming and virtual worlds. 

For more on the study and the anticipated changes see the full article below. 

Study: Internet Ads Will More Than Double By 2011

-Martin

Google and DoubleClick - It's not over 'till it's over.

An interesting article today in MediaPost EU Continues to Scrutinize Google-DoubleClick Deal, with Consumer Privacy concerns continuing to drive the debate.

- Scott

Reactions to Proposed FTC Regs Run the Gamut

Here's an interesting article that ran recently in DM News this week. Response to FTC Proposed Principles The reporter, Ellen Keohane, gathered a variety of perspectives on the FTC'€™s proposed self-regulatory principles for the online behavioral advertising industry. Although not entirely surprising, the responses to the proposed regulations varied greatly: The advertisers interviewed stated that these standards were already being followed by all of the major players, while the Executive Director for the Center for Digital Democracy said that the guidelines were far too vague and depended on the goodwill of an industry whose first priority is to collect and harvest as much user data [as possible]

This dichotomy of perspectives is just another example of how complex it will be to find a balance between consumer privacy and access to content supported by online advertising.  In a series of forums recently, one very clear point of agreement resonated with me.  Some people may use the technology in an unscrupulous and harmful way and both sides of the debate agree to a great extent what many of those practices include.  Profiling based upon personal health conditions, religious affiliation and sexual preference to name a few, is not acceptable to the vast majority of consumers. Let'€™s look for those areas of agreement and start developing ways to address the truly egregious practices first. In securing some "€œeasy wins"€, we can learn more about how to tackle the gray areas of behavioral targeting more productively.

- Scott