Microsoft and OpenX?

Online advertising start-up OpenX and Microsoft Corp (MSFT.O) announced a partnership to promote each other’s Internet technologies to their respective customers.The deal will significantly expand the distribution of OpenX’s technology for serving ads on websites, as the company seeks to boost its roster of large Web publishers, said CEO Tim Cadogan.

OpenX will also make it easier for its Web publisher customers to use Microsoft technology that analyzes the content of a Web page and matches relevant ads to the page.

Microsoft and OpenX forge Web ad deal | Markets | Markets News | Reuters

What is never clear to me is how many of OpenX’s 50 million publishers are relevant. What is the proportion of these that runs local installations versus hosted/market ones? Or does the local installation now include a market component?

Kind of an odd announcement for Microsoft, isn’t it?

Is data ever going to change the way TV inventory is handled?

“Data is going to begin changing the way some television advertising is purchased or managed — finally — and “tune-in” is quite likely to be first in line. It certainly won’t happen overnight, but the multiples involved are clearly too great to be ignored. 2% improvements won’t move markets, but 20% or 2X improvements will. This is going to have a lot of impact in TV measurements, metrics, processes and, very likely, business models. It will certainly be disruptive to many of the incumbents — and will also present many of them with extraordinary new opportunities — but it will certainly be crazy getting there.”

MediaPost Publications Analyzing TV ‘On-Air’ Promos With Online Ad Metrics 10/08/2009

Dave Morgan of Tacoda fame is getting his hands dirty with TV data (with this new startup) and explains why he’s onto it.

NYT: a vision for agency demand platforms

“Demand side-networks move beyond the realm of performance marketing and begin to focus on delivering reach and frequency against a designated target, measured in GRPs (gross rating points). Clicks diminish in importance. The media plan matters a lot, because the affinity of audiences for specific websites deepens the impact of brand advertising. Marketers meaningfully shift their TV dollars online with greater confidence because online delivers something they understand and need to achieve their brand objectives. At long last, audience truly becomes the basis for both planning and buying online. This is the best outcome for publishers.”

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What The Rise Of Demand-Side Ad Networks Means For Publishers | paidContent

Very sensible post by NYT’s VP of R&D operations. The essence of agency demand platforms is extracting efficiency out of online by focusing on audiences, data and automation. It’s a good thing and this direction he imagines is where I would like to see it go. This is incredibly exciting as various ad serving systems finally get interconnected.  What is doubly interesting is that I predict publishers bypassing ad exchanges and plugging into agency demand platforms directly. Shameless plug: our platform for publishers, AdGear, is slowly but surely becoming more and more relevant as the market matures.

Online revenue-per-hour vs. internet revenue-per-hour

“The (non-search) time Americans spend online is actually monetized per user hour at a rate roughly equivalent to what television is, when you exclude search — and considering the interactive nature of the Web, this very parity means the online medium is far behind where it should be from an advertising and monetization perspective”

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Internet Evolution - Rob Leathern - Online Time Not Worth What It Should Be

“Trading traditional dollars for digital cents”, proven.

Quote from: Stackoverflow, Advertising and the Ethics of a Free Lunch ~ C for Coding

If the Internet has taught us nothing else, it has taught us that:

1. Advertising pays for otherwise free services;

2. People don’t like advertising; and

3. Advertising works. These conflicting forces always cause consternation and Stackoverflow is by no means immune.

Stackoverflow, Advertising and the Ethics of a Free Lunch ~ C for Coding

comScore and Starcom USA Release Updated “Natural Born Clickers” Study Showing 50 Percent Drop in Number of U.S. Internet Users Who Click on Display Ads - comScore, Inc

“The act of clicking on a display ad is experiencing rapid attrition in the current digital marketplace,” said Linda Anderson, comScore VP of marketing solutions and author of the study. “Today, marketers who attempt to optimize their advertising campaigns solely around the click are assigning no value to the 84 percent of Internet users who don’t click on an ad. That’s precisely the wrong thing to do, because other comScore research has shown that non-clicked ads can also have a significant impact. As a result, savvy marketers are moving to an evaluation of the impact that all ad impressions – whether clicked or not – have on consumer behavior, mirroring the manner in which traditional advertising has been measured for decades using reach and frequency metrics.”

From comscore

Nothing really new there. It would be interesting to consider the most active advertisers in 2007 vs. 2009. From a quick look at the TNS data in March 2007 and March 2009 it seems that the financial industry is spending more in 2009, but could also be that the proverbial long tail of advertisers is also getting longer. So, more small advertisers generate impressions no one cares about. Interesting stuff but the idea of “clickers” and “non-clickers” is kinda useless. Can we generally separate people interested in products/services/things and others who aren’t? Would that work in any other medium?

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. 

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)