Intent generation versus intent harvesting

A commenter on my blog the other day (Tim Ogilvie) mentioned a distinction that I found really interesting between intent generation and intent harvesting. This distinction is critical for understanding how internet advertising works and why it is broken. It also helps explain why sites like the newspapers, blogs, and social networks are getting unfairly low advertising revenues.

Why content sites are getting ripped off — cdixon.org – chris dixon’s blog

Clever way to express the inequality. The whole chain is more complicated since search engines also provide content sites with traffic but whatevz.

And I guess I can see how Hunch fits into this (since Chris is a co-founder)

Ad Network Differentiating Factors

Data is also improving. But because it is also becoming more of a commodity, the real question will be whether this data can be proprietary.

Where will the next ad network breakthrough come from? « Lightspeed Venture Partners Blog

The question asked by Jeremy Liew is a great one and the post is worth reading. I’d have to add that one of the things ad networks overlook is actual metadata on the sites, placements and pages that are part of the network. 

This data is hard to collect, it’s hard to categorize and it’s even harder to make use of given the legacy ad servers they all use (hello DoubleClick), but this would allow networks to create other, new vectors of targeting. 

Imagine the ability to target a campaign based on how many ads there are on the page? Or whether the placement is above or below the fold? Or based on how prominent the placement is on the page versus content? How much time on average people spend on that page? All these criteria warrant a premium that advertisers would gladly pay. 

Since inventory is abundant, you have to separate the good from the bad and treat is accordingly on the sell side. Ad exchanges don’t solve that problem, but ad networks are well positioned to differentiate themselves this way. The same goes for publishers too, of course. 

Is the DoubleClick Exchange a game-changer?

Yesterday Google announced the launch of DoubleClick exchange, sending ripples down the blogosphere and beyond. A good list of discussions is available at TechMeme, one of the best ones being Andrew Goodman’s at Traffick.

Reading the blog post alone can be confusing. The platform is positioned as DoubleClick Exchange, specifically, and not Google Exchange. DoubleClick is the enterprise brand that completely dominates the ad serving market and has reach over 80% of large publishers and probably just as much, if not more, large brand advertisers. Why, then, does Google talk about integrating this platform in Google AdWords, the openly accessible ad platform where you can open an account with 10$, and not DoubleClick for Advertisers which agencies use? All while maintaining that this initiative “helps large online publishers on one side; and ad networks and agency networks on the other”?

Large publishers, after having flirted with ad networks and ad exchanges such as Yahoo’s Right Media, are notoriously cautious of anything that can commoditize their inventory. The big concern, of course, is the notorious pork bellies problem which occurs when advertisers cherry-pick inventory and throw away impressions that don’t interest them. By far, that is the publishers’ highest priority given the rise in popularity of real-time bidding mechanics and the loss of ad budget commitments that comes with it. It just happens that this is also the exact value proposition of ad exchanges to advertisers and agencies.

There are two ways to make this viable for an exchange: 1) Try to fill all the inventory holes created by real-time bidding; and 2) Deal mostly with remnant inventory, creating little value compared to competitors.

The market is not nearly mature enough to make the first option happen anytime soon which will reduce the DoubleClick Exchange to a glorified AdSense for display, focusing mostly on the long tail and not making much of a splash in the brand advertising world.

There are some moves which may make this more interesting for advertisers, such as deep integration of the exchange in DoubleClick for Advertisers,  but Google may have to risk some of the handsome revenue they make on ad serving from the DoubleClick products somewhere along the line. Imagine a scenario where the publisher uses DFP, the advertiser uses DFA, and a third party network uses the exchange. That just seems like too much dipping.

Generally speaking, ad exchanges will become an important component in the creation of a global ad ecosystem where hyper-targeting is universally possible across multiple properties. A big part of this problem remains the legacy ad serving infrastructure used by large publishers and for which DoubleClick is largely responsible.  It really feels like it’s finally time for the next generation of ad serving platforms — a generation that plugs into exchanges and data sources alike in order to create actual competitive advantages for publishers and for advertisers.  From the technology standpoint, publishers don’t have to be part of marketplaces or put their inventory on the block to enable third-party targeting and truly leverage data.

It’s great to see at least some development in the market that is, as Andrew Goodman says, “in a frustrating state.” Too many are talking way too much science fiction and not doing enough problem solving.  We don’t need to do easier display advertising (as Google positions the exchange). We need to derive and show more value, which today means more integration on data and formats, and that definitely does not mean equating it to direct response.

Let’s concentrate on that, shall we?

Quote from Masters of illusion: The great management consultancy swindle

But consultants also know that an outrageously unjustified level of self-confidence can add several points to one’s perceived expertise quotient.

The most important of the all-too-human functions of shaman-consultants is to sanctify and communicate opinion. Like ministers of information, consultants condense the message, smooth out the dissonances, unify the rhetoric, and then repeat and amplify it ad nauseam through the client’s rank and file. The chief message to be communicated is that you will be expected to work much harder than you ever have before and your chances of losing your job are infinitely greater than you ever imagined.

So good. Perfectly describes some of the consultants I have come across.

Quote from Harvard Business: Who Are Mass Media’s True Customers? - Peter Merholz - HarvardBusiness.org

If you don’t work in mass media, you might be forgiven if you think that you — the reader, the watcher, the audience member — are the customer. When you work in mass media, you know that readers, watchers, and audience members are really the products, being served up to mass media’s actual customers, the advertisers.

Learning From Craigslist: Who Are Mass Media’s True Customers? - Peter Merholz - HarvardBusiness.org

This is true, but given that the context of this quote is a discussion about Craigslist (specifically, Wired article about it) the big difference is that Craigslist does not make most of its money from advertising, while big media publishers do.

Therefore, at least in theory, Craigslist’s interests are aligned with that of the audience, while big publishers only align their interests with advertisers.

The reality is much more complex, because what advertisers have so far demanded from “mass media” is just a specific audience. Not an advertising product, an audience. And mass media optimized their model mostly around that — coming up with content that attracts a specific audience, leaving the rest of the work to ad agencies who in turn filled out native ad formats for any specific media channel. Those formats include things like 30 second spots on TV, highway billboards or full-page ads in newspapers.

It is VideoEgg’s Troy Young that coined the term “native ad format” (I think), but this really does explain quite a lot. All the other native ad formats work because they are conducive to the context in which that media is being consumed.

With digital media things are more complex in every possible way. People spend little time on any given page. There is no native ad format. There is no established way to reach a specific audience since search engines fragment audiences by keywords, making the groupings less relevant (ex. I can search for “tomato” and land on an auto site, this doesn’t qualify me as an 18-34 male with X income). And so on.

All this means that delivering advertisers the same thing, a specific, hopefully captive (”engaged”) audience, is harder than ever. I guess that’s something the author of this story and I can agree on.

(link via chartreuse, and I oh so wish Tumblr imported posts properly)

Quote from Things Seen and Unseen: Toothpaste and the paradox of choice

Coleman’s mustard made their money from the mustard that stayed on the plate, not the mustard you put on your meat

Things Seen and Unseen: Toothpaste and the paradox of choice

This is an astute metaphor for a lot of other things. The selling party needs to either sell more "stuff" or increase the margin on the existing stuff they sell. Sometimes the first option is easier because the buyer gets a sense of getting value for their money, even if the stuff bought ends up being wasted.

There must be some economic theory that explains and rationalizes this. 

Best display ad dimensions - study by Dynamic Logic

New York, August 20, 2009 – Research released today by Dynamic Logic, the leaders in measuring digital advertising effectiveness, reveals ads that are integrated into the content of the page, such as half banners and rectangles, are the most effective in driving online ad awareness and purchase intent. The research, based on 2,390 online display campaigns that took place over the past three years, is from Dynamic Logic’s MarketNorms® database, the largest in the industry. It found that half banners (234 x 60) and rectangles (180 x 150) were more effective than ads that frame the page such as leaderboards and skyscrapers.

Dynamic Logic Press Room

I can’t help but frown when I see reseach of this sort.

There does not seem to be a definitive conclusion to the study, but basically smaller dimensions around content as well as rich media and video are better.

Here are some of the potential problems here. 

• The data for the study spans over 3 years.  That is a long time in the internet ad world. It’s an even longer time for video.
• The small units mentioned, 234×60 and 180×150, immediately make me think Yahoo Finance with its online brokerage ads. Where else are units like this used? Chances are the data for these guys comes straight from there where there is a definitive skew since that specific context for online brokerage ads is probably the best there is
• Everytime I’ve done quantitative research like this, it always came up that the smaller volume sample has better performance. For example, take a normal bigbox, 300×250.  Comparing the same creative’s CTR for a high volume placement versus a low volume placement will always show that the low volume placement performs better. This is why it is not surprising that this study’s conclusion on small units, rich media and video have "won" — they have the smallest volume compared to, say, bigboxes.