Ad Networks - On The Verge of Extinction?

There has been a lot of conversation around ad networks since ESPN decided to pull inventory from Advertising.com. I've been reading the articles, listening to the comments and thinking about ad networks from a media strategy perspective. Conclusion....they are a "necessary evil" in order to run successful, scalable direct response campaigns. Let's take a look at some things:


Efficiency:

While one article I read touted that in a media-agency buying group each buyer is supporting as many as two publishers during the course of a year. I beg to differ on this one, or we here at MediaTwo are superhuman. It's not unlikely to work from 10-50 publishers at a time per campaign.

A recent study by Collective Media (a New York-based ad network) found that over 95% of media buyers said that they would be working with ad networks this year, while 75% said that they planned to increase their ad network spending from 2007. No surprise here - it's the easier route for a lot of advertisers new to the online space, thus will definitely catch the "new-comers" . However, ad networks are also needed for direct response online - which, in my opinion, is what we are going to (or should) see a majority of online advertisers migrate to during the "economic shakeup".

Mark-up:

It seems that one of the issues being talked about is margins that networks are adding to the cost of media. While from the outside it seems that this could cause the media to having a weaker chance of success - I think that depends on some factors. Many times going straight to a publisher instead of through a network causes the CPM to increase to a figure that kills the chances of the ROI working out. There's also instances where the sales reps at the individual sites aren't allowed to sell the remnant inventory at the same discount rate. So, when your held to certain metrics in order to obtain your goals, the network route is sometimes the best.

Technology:

Optimization can make or break a network. Let me rephrase that..technology AND account management can make or break an ad network in a Direct Response model). Too many times I've been promised that a network will optimize to the CPA, only to be 10x my CPA goal within days and then the account manager says they will begin optimizing. Well, 99.9% of the time the CPA is so deep in the abyss that there is not a rope (or optimization) long enough to pull the CPA goal out at that point. So, account management and optimizing before things get out of control are a must for ROI. So, what if the direct placements had the technology to optimize against the CPA goals? That would be wonderful, but I'm not finding that to be true. I can think of at least 5 publishers of great scale that I've spoken to in the past 2 weeks that cannot place a conversion pixel on my confirmation page and then tell me where exactly on their property my ROI needs are being met, let alone optimize the inventory to funnel the impressions toward those areas. Until this is established, it's going to be tough going on advertisers to carry this burden.


Wrap Up:

I wouldn't start building "ad network museums" or anything...they are evolving and will continue to evolve as online advertisers become smarter and expect more from the publishers. Hmmm...I did learn something from the 8 am Economics class I went to a couple of times -- it's a simple case of -- Supply and Demand



Reference Articles:

http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=82362&Nid=42581&p=106607

http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticle&art_aid=82353&art_type=13

http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=82262&Nid=42517&p=401699

http://www.clickz.com/showPage.html?page=3617001

http://www.imediaconnection.com/content/19337.asp

Funnel Your Consumers

A few years ago, I ran into an online buying cycle bullseye in an online newsletter, illustrating the 3 stages that people go through in order to purchase online. The graphic resonated with me and still shapes my thoughts about how every online tactic and strategy should not be pigeon-holed into producing the same goal and results. On the contrary, each type of media placement for an advertiser should be measured and held accountable toward different KPI (Key Performance Indicators) for success.

Similarly, I had the opportunity to work with a "traditional" direct response marketing group, who's main focus was to drive customer acquisition through a conversion funnel, touching the consumer with different pieces of direct response marketing material to the end-goal.

Merging those two ideas together and utilizing them online, I believe is a strategy that can produce long-term success results for some (not all) online advertisers.

Here's an example: The goal of the advertisers is to drive sales. The average consumer buying the average product online goes through a process before actually making the purchase...

1. Information Seeking/Research - What product do I need to accomplish my mission?

Message: Brand messages - get your brand in front of the consumer so they know that you are out there and that YOUR brand exists.

• KPIs - Page Views to your site, time spent on your site learning about the product/brand, interactive/assessment tools, whitepaper downloads, brand lift/awareness, etc.
  
• Media Venues: top-tier sites, general search keywords, ad networks
  

2. Decision Making - Price comparison shopping.... i.e. where can I get my best deal?

Message: Product/Brand Differentiators - WHY you brand is better than the rest, sales, incentives, etc.

• KPIs - signing up for an account, email newsletter signups, etc.
• Media Venues- phrase/exact keywords, niche content sites, consumer review sites, shopping comparison sites

3.Time To Buy - credit card in hand and ready to tackle the shopping cart.

Message: Sales, Incentives, direct response - this is the time to "reel in the fishing line"

• KPIs - sales, leads, whatever your established ROI goal is for your online marketing
  
• Media Venues- product keywords, phrase/exact keywords, CPA networks, affiliate marketing.

The theory behind the conversion funnel is to start at the beginning of the process and establish your brand into the mind of consumer, so that by the time they are at the stage to perform your marketing goal, there is no question that your company will be the one they choose. Along the way, each stage is measured and optimized for success, using the KPI metrics.

Continually pushing people into the top of your funnel will build your marketing program and establish long-term success. The obstacle - having the patience to see it grow.

Are All 3rd Party Ad Servers Alike?

Recently our agency reviewed 3rd party ad servers. First of all, there is no question that it is essential for agencies and any advertisers placing any significant online media to use a 3rd party ad server. Online advertising is so packed full of data, that it can quickly become unmanageable and overwhelming without one central location to manage, report and optimize the campaign.

So - question is - are all 3rd party ad servers alike? At the very basic level, YES - all act as the mediator between publisher and advertisers, counting and consolidating counts on impressions, clicks and conversion data. It's the bells, whistles and "accessories" in today's ad servers that set them apart from each other.

It had been awhile since I've had the chance to "shop" ad serving technologies. It was nice to have a refresher on what was out there in the market. I have tried to organize my thoughts and share them w/ MediaTwo blog readers, so I've decided to use the list method - dividing into features that struck me as "must haves", the extras that have the potential to make the life of a media strategist a little easier, or were just plain advanced and TOO COOL:

Must Haves:

• Geo-targeting: Both targeting and reporting on your campaign by State, DMA, IP or zip code. This seems to be a pretty standard. The question is - Are marketers using this?
  
• Day-Parting/Time Targeting: Always makes me think of the breakfast ads before 10a, the Big Mac ad until 1p and then the images of a steak dinner tantalizing your tastebuds all afternoon. But, it's not just for restaurants, day-parting can be used in a variety of ways. For example, it can be used find out those peak hours when your target converts and then that data can be used to purchase your media smarter by only running banners during those prime times. Less waste = better ROI.
• Other targeting: Retargeting, storyboarding, Operating system and language targeting - the list goes on and on....my opinion, the more targeting the better!
• Video Ad Serving: With video advertising rising faster than a DiGiorno's pizza - being able to track the video in as many ways as possible is essential.
  

Make My Life Easier:

• Real-time trafficing: For those spur of the moment buys that need tags to be in the publisher's hands and live NOW!
• Real-time reporting: Doesn't all agencies check on their campaigns hourly or even more often than that throughout the day? There's nothing worse than launching a big campaign and waiting until the next day to see results and even worse to find out there were issues that could have been fixed if the stats were updated and available to raise a red flag
• Integrated Media Planning Tool: Call me cynical, but I haven't seen a planning tool that eliminates the need for sales reps to pick up the phone and/or email with a million questions. Cheers to a simple planning solution that seamlessly connects to the traffficing interface.
  
• Mega Universal Action Tag: A UAT (universal action tag) is helpful enough, but combine that with the intelligence to only fire the pixel and credit the publisher who created the conversion - it's the online Direct Response marketers equivalent of an Advil. This eliminates conversions being claimed by multiple publishers, which can cause quite a headache when buying on a CPA or CPL.
  
• Real-time Automated Optimization: While nothing can or should replace the intuition of an online marketing professional - having a tool that can analyze the data in real-time and weight creative based on ROI goals is nice to have in your arsenal.
  

TOO COOL:

• Dynamic Messaging: Having the message in your creative change based on content, location, etc. With all of the ad clutter out there, what better way to grab your viewer's attention than with a little dynamics? It sounds like a lot of front end scoping, but results should be worth the effort.
  
• Conversion Path Analysis: Being able to quantify and present how a mix of publishers work together within an online media plan to deliver bottom line results, I feel is one of the next big steps in the evolution of online as an advertising medium.
  
• Cross-Channel: Feeding in the data from "traditional" marketing efforts (tv, radio, print, DM, etc.) into one platform and analyzing how they are working together to achieving marketing goals would (or should) definitely be a CMO's dream.
• Eye-Candy: Agencies should and I think increasing will be expected to load their campaigns post-mortems with charts, graphs and maps to visually demonstrate the effectiveness of your online campaign to the client's marketing goals. Having these at your fingertips vs. spending time pivoting tables and feeling your way around Office 2007, sounds like a stellar idea to me.
  
• The Whole Picture: Does your conversion funnel begin virtually, but then continue into the "real world"? How invaluable would it be to pull that data into your ad server and be able to not only see the whole picture, but to make decisions and optimize based on those metrics?
  

Just like the rest of the interactive industry, 3rd party ad serving is continually developing and evolving to meet the measurement needs of advertisers. Taking the time out of the hustle and bustle of everyday agency life and getting to peak at what was out there and what was important measurement for other online marketers was a good job "tune-up."

What was also nice was to affirm that MediaTwo is not only providing clients with the "Must Haves", but also the "Too Cools". Every day Media Two is delving deeper into the forward thinking analytics that today's marketers need to achieve their ROI goals - third party ad serving is just one of the tools that can help along the way.

Ad Networks a Thing of the Past?

Today I read with one part joy and one part sadness the MediaWeek article titled “ESPN Turns Off Ad Nets to Protect Brand, Content”. The joy is very obvious here at Media Two: Stripping the ad networks of some of the larger sites will now “un-muddy” the waters with the placements and only interactive firms with the best capabilities and know-how will now be equipped to handle strategic online media buys (that was a much longer sentence than what I saw in my mind). Some of the advantages that come from bypassing networks include:

• Knowing that your ads aren’t appearing repeatedly on the same site when you buy more than one ad network. The top two networks make up something like 170% market penetration, and yes, we currently buy on both of them – and no, we don’t ALWAYS know if our ads are appearing on the same page at the same time.
• Traditional agencies that are trying to make a splash into interactive will now have to completely jump in instead of just dipping their toes in the water. Part of the problem we have right now is trying to explain interactive to new clients who have had other agencies do a half-ass job with their campaign.
• Optimization can be brought back in house instead of waiting for the networks “super secret optimization tools”.
• Buying direct always gives you better placements and rapport with the publishers themselves, therefore, hopefully allowing for better brand and position control – and always opening the door for more creative placements that can help advance the industry.
• If a network lowers your campaign exposure because a larger opportunity comes along, it doesn’t force you to frantically find replacement buys.

But with the good, comes the bad…

• Large sites like ESPN are probably going to ask for top dollar, when the networks have already proved we shouldn’t pay that much for them on a straight banner placement.
• Your buying clout and testing capabilities pretty much goes out the door. Has anyone else noticed that there’s no such thing as buying clout online anymore? Not to date myself too much, but I remember the days of placing ads in traditional mediums and the sales reps were willing to give me better rates for my Joe Blow client because they knew that we also worked with Gateway, Bose and others… But I digress.
• If we do want to ramp up our buys in categories we’ve found successful, we can no longer do it as quickly as the one call to the networks.
• More paperwork! You now have to contact 500 sites with orders that you could have gotten previously with just one IO.

Trust me, there’s a lot of good and bad to both routes, but I really think that the more the publishers take back control of their “A” Inventory, the more it will help interactive shops such as ourselves differentiate from the newbies in the industry.

'Fitty' cents equals 'Fitty' dollars

We have all taken the call, where an online publisher calls you out of the blue, or worse, calls your client and then they call you, selling their services and the benefits of their site. If they are really good at their job, everything sounds great…quality traffic, attractive demographic profile, targeting capabilities, Web 2.0 functionality…and that it makes “too much sense to ignore”. Then comes the punchline, “depending on the budget levels, I can talk to my manager about discounting our rate card and offer a onetime CPM of $20, but don’t tell anyone else I gave you this rate.” I knew you had heard that before.

Don’t get me wrong, I am not trash-talking publishers...I started my career on the publisher side. A big part of our business, or any business for that matter, is fostering strong working relationships with your vendors. To that point, it is extremely important to test new publishers to see if you may find your next 'Behavioral Targeted Yahoo Mail at a $1 CPM'. That said, do they really think that a CPM at that level is going to work from a direct response standpoint? (Do I even have to say the objective is direct response? The online channel is direct response by nature as results are immediate and measureable)…but I digress. Politely explain to your cold caller that in order to meet your $50 Cost Per Action, you need to be at a $.50 CPM. Maybe your Cost Per Action is higher at $100. Well then at that CPA level, we have to be in the ballpark at that CPM level, right? Ahhh….not even close. The CPM would need to be at $1 to hit a CPA of $100 (just double the $.50 CPM). $150 CPA = $1.50 CPM, $200 CPA = $2 CPM, so on and so forth. You get the idea. At this point, two things will happen. Either, your perfect opportunity will know the jig is up and end the call, or they will get defensive and start spouting @plan composition percentages of their user profile. “70%+ of our audience is 25-54”…oh yeah, so is the general online universe.

I know what you are asking yourself, how do you possibly know what the rate needs to be to reach my client's CPA levels? You have no idea what my business is or what our current metrics are. I don’t need to know. The answers are in these two numbers - .1 and 1. You only need these two numbers to determine what you have to pay for your online inventory to meet a certain CPA level.

• The first number is the click-through rate, the rate at which users responding to your ads after being exposed. A click-through rate of .1% is a good benchmark to shoot for judging creative and using within your projections to forecast performance. What about the use of Rich Media, you say? “We did a campaign in Qwhenever and we saw a 2% CTR, so take that!” (Let’s be clear, flash is not Rich Media. It’s far too common to be considered Rich Media anymore. We are talking about the 3rd party technologies of the world - Pointroll, Eyeblasters, DART Motif). Ok, I’ll bite. How much did your CPM and serving cost go up by running this type of technology? Also, what was the effect on the conversion rate? You have to be careful with Rich Media and focusing too much on increasing front-end response. Majority of the time, your campaign will not achieve a 2% CTR to make up for the added cost associated with the technology, and historically, they have an adverse effect on the conversion rate. In the end, an advertiser pays these additional fees with no return on their investment, and this aesthetically pleasing ad is used only once and forgotten. So, I think it is fair to use the aforementioned .1% in our calculation, don’t you? Sure, sometimes an ad may experience a higher rate, but majority of the time, most flash ads are not cutting through the clutter and not even reaching a .1% CTR.

• The second number is the conversion rate, the rate at which a user clicks on one of your ads and completes the conversion process, whatever that may be. Let me explain why I am using 1%. For far too long lately, I have seen extremely low conversions rates, and it is not just the Health industry. I have seen 1% or less conversion rates for some very well-known clients in the Financial Services and Telco industries as well, meaning this is a trend across the board, not an isolated incidence. I get asked a lot to explain the reasons why users in the online medium are just not converting and dropping off at such an alarming rate. This conversation always leads to “how are you, our interactive agency, going to fix this problem?”. We, as online marketers, can lead them to water, but we can’t make them drink…at least not by ourselves. Both are blog entries for another time, because there isn't a simple answer…again, I digress. The numbers do not lie, and historically, the online click-to-conversion rate is on average around 1%. I stand behind my number. Yes Michael, I feel a case study coming…

As you can see, .1 and 1 are the magic numbers. Obviously, there are more calculations that go into it and you may even have historical data that is different from these. But if you don’t, these two will work for you. Are you coming to the realization that we, at Media Two, have known all along? I know, pretty daunting isn’t it…but if you can’t beat’em, join’em. So, have no fear, there are online marketing tactics and strategies that can make those numbers work for any business to enjoy success in achieving your or your client’s acquisition goals. So next time you receive a call from a prospective online partner, remember this simple calculation, and save yourself the trouble of having to explain to your client why they are in market with a $1,000 CPA. Then, take the conversation to that place where content publishers want to avoid like the plague – PPP (Pay Per Performance). Say that three times fast…

Creative IS Media

Lately I’ve been reading articles about media firms that are starting to break into the creative ranks, but are getting push back from their parent companies or holding companies as they don’t want the media group to compete with their other brand agencies. I “get” that from a holding company strategy. They want to make sure they’re not stepping on each other’s toes, and strategically it opens doors for them if they have a wider array of specialties. However, if I’m the media shops client – I’d be damn sure to push back on them, and here’s why.

For years we have been saying give us more solid clients that understand marketing principles, and we’ll deliver them results – whether it’s brand exposure or ROI – we’re going to produce IF… If the Media Buy is flexible, can be tracked and has good creative execution. Notice I didn’t say “great” creative execution – I only said “good”. If you give us “great” that’s a whole new meaning that we can deliver the world on your doorstep.

To prove our point, we have a client who we had been begging for some brand identity guidelines from. This is not a small client, they just happened to be evolving their brand to keep pace with the fast moving interactive audiences. But when it never came, it was misconstrued by them as saying Media Two didn’t want to create their ads. On the contrary – we were creating very good ads, but our objectives were direct response and that meant there was not a lot of consistency from ad to ad or from site to site. So when the brand guidelines came, they turned the creative chores over to another agency to produce. We immediately saw a negative impact of the new ads and asked for new ones. Three to Four weeks later we had more underperforming ads to the tune of a 150% increase on our CPA. This is not the fault of this new agency, instead it was the result of removing creative from the hands of the media department. With media sitting next to creative on a day-to-day basis and sharing in the experience, you get the benefits of:

• Hearing what new sites are working from media allows design to customize banners (for example – if it’s a sporty site, make an athletic image/message).
• If the media buyer is on the phone and has a value-added opportunity in a new ad size format, the creative group can have that format done in minutes so as to not miss the opportunity.
• If messaging completely bombs – the media buyer will be the first one asking for new ads from creative before the client has even reviewed the end of day numbers.
• Media can keep in check design… By that I mean, every designer wants to create the coolest ads in the world – but when running ads on Yahoo.com or other large sites, you’re limited to 25k file sizes and 15 seconds of animation. If design understands media’s pain – it’s a much happier relationship.

Again – there are a lot of reasons to keep media and design together, and there are a lot of best practices, but I think the biggest reason any of our clients could ever see is that 150% increase on our CPA. As a side note – we have received those creative duties back from the client and are awaiting approval on our first batch of banners under the new brand guidelines. Anyone else smell a case study coming?

The Tangled "Web" We Weave...

I was going to call this blog ”How Uncreative and NOT Fun Writing Can Be When Prompted Repeatedly", but as I was getting ready to start my day this morning, a different topic entered my mind. How my interactive career has become entangled with my personal life.

Not to say that it's a bad thing...it's just hard to explain some times. Over my years in the media side of the biz, I've met and done business with countless people in this industry and overall I have to say, what a great group of peeps! I've worked both traditional and internet-side...no offense traditional, but the internet profs are way more fun to work with. Maybe it's because we're all relatively young and learning the ever-changing landscape of the big WWW daily. Maybe it's because it takes a certain personality to want to dig in the trenches to build out this new medium.
Maybe everyone has "been there, done that" on the stuffy side of advertising and marketing and is set to do the complete opposite. Whatever the reason, it fills your life with very unique and interesting relationships.

And sometimes those relationships, turn into friendships....crossing into your personal life.....

I was attending my friend's wedding over the weekend, she was one of my first clients, a co-worker and a "help guide" for motherhood. At the same wedding were....1 old boss, 3 more former co-workers, the admin for the Oldtimers Group and 3 former sales reps. Together, however, they are also known as my friends.

I've felt for years that this industry is just one big happy family and watching the NY sales reps' toddler dancing with my flower girls, somehow solidified my feelings.

The moral of this story? My writing is just not very creative when prompted repeatedly.