Marketing Brainstorms, trickles and drizzles

The War between the States

Another contribution in the ongoing War Between Ad Nets and Online Publishers. I like Michael's history of media (and agree) and his example of the music business - but I think there are two points missing.

Point 1. No content = no publishers = no ad network. The ad networks are completely dependent on the existance of content sites that attract audiences. Interclick is a fine ad network but they only exist if their publishers do, which leads me to ...

Point 2. The problem publishers have is that the cost of content exceeds the margin left after the cost of direct sales plus the trickle provided by ad nets. They are wrongly focused outwards to ad nets, search engines and the NY Yankees. They should be looking inward about how to drive down their costs of quality content by employing prosumers (content creator/consumer combinations via umair haque) like www.brighthub.com.

Oh, and how in the world does he make the statement that total online inventory is fixed?

How do I grow my website?

In the past couple of months, through no effort on my own, several people have asked me about building their part-time or small websites into larger efforts. Maybe our conversations might be helpful to a broader audience - so here we go.....

You want your site to grow? I think there are three fundamental areas where you have to stay focused - within each of them, there are many details - but the basic, distilled idea is a list of three.

First, "SPEED".  Your site has to be fast - responsive - no waiting. Page load times on your site are the single most important contributor to your success. By itself, its nothing - but without it, you'll likely fail. I like great designs as much as the next person but let's face it - some of the most widely-used sites online are Google, Craigslist, eBay and Amazon. I imagine that, as senior design projects at the Miami School of Art, they fail. But, as sites that prove useful for visitors - they succeed. Of course, each has a fundamental value proposition they are delivering to people - best search, best shopping, best classifieds - but part of the delivery of the proposition ONLINE has to include speed. You load the page on your browser, you want to see it immediately. Anything different and visitors move on. So, as you consider your site re-design or launch - ignore this advice at your peril. A site may have the best content/commentary/proposition/product - but if it takes too long to see it - who really cares?

Second, "Driving Traffic" or "How do I get people to my site?" In my opinion, there are four progressive steps you need to consider. They are, in order, Social Marketing/Viral Marketing, Search Engine Optimization, Search Engine Marketing and Other Online Advertising. If you have any offline business (event, store, magazine, etc.) then a fifth is Leverage Offline Channels.

Third, "Retain Traffic" or "Its cheaper to keep an existing customer than acquire a new one." On this subject, I have 2 questions to ask you that you should know the answers - "What are people searching for on your site once they get there?" and "What are people searching for that lead them to your site?"

Just because I have time on my hands, I'm going to provide more details to each of these ideas over the next couple of days/weeks.

There was general agreement all around ...

Yes. I agree with you, with others and with myself. You know, King John didn't sign the Magna Carta willingly, he understood the realities of his situation -  and media companies will not willingly release their imaginary lock on customers - only the raw shock of reality can set them free.

Fact Discovery and Secrets Revealed

I know I haven't posted in awhile. I've been working on getting free from some prior engagements. But today I want to talk about some secrets not widely known in the relationship between publishers and ad networks. Well, one secret for today and I'll save some for later.

The first secret is this - if you are a publisher and you offer some of your inventory through ad networks, they are probably playing an arbitrage with your inventory. In other words, you think they place ad campaigns they've sold in the inventory you provide. And they do, sometimes. But, sometimes, they just shovel your impression off to another network - who may also shovel your impression to yet another network. This misdirection may occur three or four networks deep.

How do they do it? Well, usually they use some kind of ad exchange - like AdECN or the Rubicon Project or Right Media Exchange or the DoubleClick Exchange. Sometimes, they just traffic unsold inventory to partners using their ad servers - just like you as a publisher might try to use your ad server to rotate between several ad networks you've done deals with.

Want to see an example? Look at this (you may need to click on the picture to actually read some of the text) ...

So this is a screen capture of one of my clients pages who is part of the Glam Network of publishers along with the actual html code being rendered in the page. Yes, this code is complicated and technical - but we're on the Web, just deal with it. The first highlight shows the Doubleclick ad server call made by Glam (I'm guessing Glam uses DFP). The second highlight shows that Glam has, in fact, called Lucid Media. The third highlight shows that Lucid has, in fact, called Google AdSense!

Imagine how the money flow works in this case. RefluxRemedy (the advertiser) pays Google (if I click on the ad), who pays Lucid (the actual AdSense account being used in this case is not my clients but Lucid's) who pays Glam who pay my client. Everyone's hand is out but my client (and Google, in this case, who brings the paying advertiser) is the only one in the chain really providing value.

How does this happen? Publishers have a lot on their colective plates. They need to drive traffic to their site, they need to focus on increasing user engagement (through content or features or both), and they need to focus on direct sales (advertising sales by their own staff). To spend a lot of time figuring out how to best yield money from their unsold ad inventory in the midst of a bewildering number of exchanges/auctions (what, exactly, is the difference between Turn, Right Media EXchange, Rubicon Project, AdMeld, Pubmatic, ADSDAQ, etc.), behavioral networks (acerno vs Tacoda vs c'mon pullleeeeaasssee) and ad networks (Burst, Collective, Specific, Casale, Xtend, AdSense, Platform A, Interclick, Tribal Fusion, and on and on and on and on...) - well, its just too much.

So Publishers go for the easy solution - they pick one to ten networks (most of which approach them anyway), try to rotate them within some ad server and hope for the best.

Ok - enough for today. We'll come back to this later.

 

 

More clarity and agreement

The below excerpt from this interview states my pov on the future of online display advertising very clearly.

>>>>>>

Let's talk about overall targeting. It used to be people bought media with a site-centric mentality. It was a legacy of the print planning and buying business. You looked at what sites indexed or reached your target. Today that site-centric mentality probably represents about 70% of the overall display media spending. But there really is a shift going towards this audience-centric buying methodology. Marketers and largely brand advertisers are recognizing that there are alternative ways to reach target audiences.

We believe that no matter what the overall demand for display media, there is a shift happening from site-centric buying, which is usually more expensive and the softest area of the display market. It is going from 70% to 50% very fast. A lot of that is reliable behavioral targeting, not absolutely dependent on what site you are running on.

<<<<

He calls it "site-centric mentality", I've called it "content as a proxy" but either way, the world of online display advertising is changing.

Clear reason amidst hysteria

I can't believe I found someone to agree with. Value means targeting, finding people for marketers - not hiding behind content-as-a-proxy. And a "here here" to "More of everything will be required."

Post script. More ideas about ad networks. I agree with him about brand (or demand generation) marketing being in its infancy. I don't agree with him that ad networks are a "small" part of the solution. I also think that today "Brand marketers pay a premium to be associated with premium content" (his quote) but that will change as online media figures out more how to deliver specific people (the ultimate goal of any marketing) better. But, hey - he's John Battelle and I'm, well, just some person.

Now they tell you

now that we're in the middle of it.

Fundamental Law of Economics v1.0

Yeah! Let's just stop selling our placements at low prices! How about if we just hire Henry Paulson and nationalize online display ad sales and then get Barney Frank and Chris Dodd to regulate them so that we can remove the riff-raff sellers from the process!

Or, its possible that online display ads are following the natural course of economics - namely that the price of a good (in a relatively free market) tends towards its incremental cost of delivery. For a "premium" publisher (read lots of fixed monthly investments in infrastructure like content, web service, sales, billing/receiving, management, etc), that incremental cost tends to be higher - so the price has to be higher. But, in the ocean of supply from the long tail (alexa rank less than 2,000 say) - the incremental price keeps going down until you get, mostly, to just the cost of electronic delivery of bits to your browser. And I guess that's around $0.23 or so.

I think the music business is also struggling with this concept too.

One more P.S. - Display ad market contracting?

More expert analysis, of course now we're getting into November, it was October then and July before that.

CPMs are dead, long live CPMs

Someone forwarded this post to me, which, in turn, was reflection on this.

Ok, ok - no question that marketers interested in demand generation are flailing a bit with the media - but I think the reasons have only longer-term solutions. And both Jitendra and Dave seem to be part of the new generation that understands and is talking about how to start the process.

But is the rate card really the problem? Marketers- whether generating demand or fulfilling it - are basically interested in reaching their (potential or exsiting) customers with advertising (v2.0 or higher notwithstanding). And to someone doing that, either by improving the quality of the supply or offering new types or something else, they'll pay - CPM, CPC, CPA, CPZ, AAA, OMG, whatever - they'll pay.

Post Script Edit - Recent article on ad clutter

Has the following quote

>>>>

Last year, a study conducted with Dynamic Logic, Starcom and DoubleClick found that a 15% increase in ads on a page results in about a 10% decline in click-through rate.

<<<<<<

Listen, if one of the top marketing trade magazines positions the advantage of lower ad clutter as higher CTR, I can probably guess where the vast majority of established marketing minds are focused relative to measuring success of online media advertising - and its not in new demand generation models that leverage conversations. My point again is that a little maturing should fix the problem.