The TruEffect Blog

Display still healthy - but old approach needs to die

We’ve all seen a trend of positive indicators for the health of online display advertising over the last several months.Kantar Media predicts it will grow 5.0% in 2010, a number which normally would underwhelm, except that it follows a year in which display grew 7.3% while the industry saw overall ad spend drop a whopping 12.3%. Meanwhile, Yahoo! paid $100 million for media newbie Associated Content to bolster its inventory of traffic-generating material, and Facebook surpassed perennial leader Yahoo! to become the top US publisher of display ads on the web. And finally, this morning brought the announcement that GSI Commerce is acquiring specialty retargeting network Fetchback.com.

Display is not only alive and well, but it’s growing.But if display is going to continue to gain share of wallet from other channels, it’s entirely too inefficient. For what they’re worth, click through rates continue to remain below 1.0%. And while view-through has given display a tad more credit for performance, it fails to remove the waste. Digital display advertising is not like print or broadcast – so it’s time to stop simply throwing it out there to see what sticks (clicks).

At TruEffect, we work very hard to identify why our clients’ display campaigns deliver results, or not. If we focused only on the typical dimensions of performance like creative design, audience demographics, page position, interactivity or even copy, we’d miss the biggest part of the story.

Last week, TRA, a research firm devoted primarily to the cable set-top box, underscored our argument. According to President Bill Harvey, the gender and age of viewers has little correlation with the way they respond to ads. Yes, you may have a brand that is skewed heavily towards males with $100K+ incomes, but if the next affluent male you see in your campaign just bought your product, or a competitive product, that inventory is completely wasted. Some data we have assembled from recent campaigns tells the story better than words:

-A recent Telco client conducted an aggressive acquisition display campaign wherein 20% of the media was consumed by existing customers that could not make use of the offer and 42% was consumed by customers that were out-of-market and not eligible to buy.

-Despite frequency capping instructions provided to the publishers, a large direct response advertiser saw 42% of their display inventory consumed by 11.7% of their audience.

-And a large retail client saw 29% of all impressions consumed by users seeing a frequency of 30 ads or more!  (IOW – non-responders.)

These are just examples of why the industry feels that a 1% click-through rate and search-like CPCs are stretch goals. Display ads reach more consumers than any other online channel. If you can find out how to carve away even a small portion of the waste with a few simple techniques, it will easily become your most efficient channel.

– Scott Nelson

Ten years after

Instead of writing the typical January “how did I do with my predictions” post, I’ve waited until we’re back in the here and now.  Looking ahead, within the context of the progress we’ve made in the first decade of this medium, what we can expect?

February, 2000: Breathing a sigh of relief that we survived the Y2K conversion; a small group of men held a planning summit in Kuala Lumpur for a largely unknown consortium called al-Qaeda; Internet titan AOL had just entered into an agreement to “merge” with Time Warner and redefine the media landscape.  Internet advertising never heard of Google or Facebook, expandables and page peels were percolating in a lab, and the CPM was still king.

February, 2010: Breathing a sigh of relief that we’ve largely avoided a Swine Flu epidemic; airline travel is more time consuming than ever; and Time Warner just completed its spin-off of AOL after a painful marriage. 

A LOT has changed. But unfortunately, not enough.  We’re spending more than ever on interactive media, but the efficiency simply hasn’t scaled with that growth.  And when you look at the technology used today vs. ten years ago, very little has changed.  Sure, we’ve figured out some new economic models to buy and sell consumers’ attention, but the methods of delivery, measurement and targeting are basically the same as they were in 1997. 

Today, when we meet with clients and prospects, the triad of impression-click-conversion still rules decision-making.  Interactive advertisers have very few options other than massaging the same data with techniques such as path-to-conversion and weighted attribution.  The problem isn’t the math, it’s the data.

Ad serving, and soon thereafter bid-optimization, were both successful technologies because of the ability to consolidate both data and workflow.  Consolidating the data was thought to be the only way to effectively deliver meaningful performance.  But as the industry has matured, that couldn’t be further from the truth. 

A consumer’s perception of your brand and the interaction they’ve had with it (and I'm not just talking about purchases or customers – rather, any interaction) drives response more than any other variable.  This is further demonstrated when performing conversion attribution.  A recent study by a leading industry analyst recognized TruEffect™ in a wave study, as providing sophisticated attribution modeling worthy of recognition.  The difference is the data.  Not aggregated or consolidated data.  Discrete data owned and controlled by the advertiser. Data that describes the relationship an individual consumer has with their brand.

It’s this new approach to leveraging consolidated platforms with discrete data sources that will push interactive campaigns to new levels of performance.  Technology won’t be the foil, nor will new forms of content.  Treat each consumer appropriately based on what they’ve told you about themselves and their interest in your products or services.  And do so on an enterprise scale and in real time.  That’s what we can expect to be talking about ten years from now.

– Scott Nelson

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

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

FTC Okays Google/DoubleClick Deal: Early Holiday Gift or Lump of Coal?

Yesterday’s approval by the FTC of the Google DoubleClick merger lays down one more hurdle in the consolidation of the major interactive media delivery channels. Given the frenzy of interest from reporters earlier today, though expected, it was still somewhat of a surprise.

In parallel the FTC also released the discussion document – “Online behavioral advertising – Moving the discussion forward to possible self-regulatory principles”.

So how should we determine these portents as we end another year of hyper growth in the interactive media space? Is it an olive branch to the EU around the ruling that the US will start to take consumer privacy more seriously? Perhaps, though most of the EU focus has been on competitive aspects of the merger, not privacy. In fact both Google and DoubleClick have been involved in the debate (as indeed they should be given the legislative risk). Perhaps it’s just coincidence as folks clear their respective to-do piles before leaving for well-earned rests. Given it is an election year, next year the privacy football will likely get as much air as a Brett Favre touch-down pass, so they’re going to be super-busy.

So for the industry, is it a gift or a lump of coal? For the publishers, the consolidation of such data without a clearly articulated position continues to be concerning. Given sites focus on yield, how much inventory they can sell directly how much they divest to networks which now includes Google. If Google can leverage position through its use of data to improve yield and take more of the top, it is definitely coal.

So that makes it a gift for the advertiser right? Not necessarily. The recent acquisitions by both Google and Microsoft shifts the pendulum of media control into very few hands and potentially can restrict the effectiveness the advertiser can garner to the new and emerging technologies. Or it at least corrals the advertiser in a continual cycle of pay-as-you-go, not great for the advertiser. This problem will be fixed on January 29, but until then – coal!

And for the consumer? Sorry, coal again. But we can’t lay that puppy at the feet of just Google and DoubleClick. We all need to elevate the standards of notice, choice, and consent in the space.

With so much coal going around at least we’ll be warm, and I think we can look forward to next year when the gap created by the acquisitions will make way for new and exciting technologies that deal with some of these issues head on and invigorate the ad serving industry.

Best and seasonal greetings, especially to Hellman and Friedman, for whom the gifts may be a little late.

-Martin