Vibrant Media Gears Up for Possible Public Stock Offering
Vibrant Media, purveyor of the once-confusing double-underlined hyperlinked ads in news articles, may be going for an IPO.
The New York-based internet company has hired a chief financial officer, Jeffrey Babka, who is known in the investor community as an IPO specialist.
“He fits into the business really well from a culture perspective,” said CEO Doug Stevenson. “He’s got a tremendous track record for success.”
Mr. Stevenson cited Mr. Babka’s previous role as CFO of NeuStar, a telecommunications company that launched an IPO in 2005 and raised over $700 million in the process.
“The markets were pretty difficult that year,” Mr. Stevenson said, “and that was one of the best new-tech IPOs of 2005.” More recently, Mr. Babka was chief financial officer at Sophos, a global IT security company based in Oxford, England, which was acquired by Apax Partners this past June at an $830 million valuation, according to the company.
It’s just the latest sign the digital media IPO market is heating up, though there are reasons companies considering the move should be cautious.
A host of internet companies have recently been touted as the next big digital IPO, but it was Demand Media that set the bar when it filed for public offering this past summer. The content company specializing in low-cost, how-to content is looking to raise $1.5 billion with its offering, which is being underwritten by Goldman Sachs. The company has yet to announce the actual offering date, but industry analysts said Demand’s announcement opened the gates for others to start looking at public offerings of their own. Some of the more high-profile companies that are reportedly ripe for an IPO are Yelp, LinkedIn and Hulu.
Read More: AdAge
Price Floors, Second Price Auctions and Market Dynamics
One of the things that is often discussed but not often written about are the market mechanics that surround the new RTB enabled exchanges & SSPs. From a design perspective most marketplaces these days have adopted some modified form of a second-price auction. The winner of the ad impression pays the seller not his actual bid, but the second highest bid.
Second price theory works as follows: Imagine that I’m selling a Monet painting. There are people that want to buy it and each has a maximum price he’s willing to pay but of course doesn’t want to pay a penny more than he has to to get the actual painting. If I tell my buyers that they’ll only pay the second highest price then each can safely give me their maximum price because they know they’ll only pay the amount they need to to beat the next highest guy. That sounds nice right? Second price auctions maximize revenue and make everyone’s life easier and create simple and efficient markets.
The problem is, reality doesn’t seem to quite follow the theory when we look at advertising today. Take a look at the below yield curves for two publishers coming in from two different exchanges. Both of these exchanges use a second price auction model.
Read More: MikeOnAds.com
Nielsen Testing a New Web-Ad Metric
Nielsen Co. is working on a service that would offer advertisers and Web publishers a new stream of data to improve audience measurement for online advertising, a move that may bring more ad dollars to the sector.
As with TV ratings, the new service requires the participation of media outlets, in this case Web portals and other sites.
So far, the media-measurement firm has lined up Facebook Inc. as a participant, according to people familiar with the matter. Other websites are expected to join as it moves out of the testing phase.
Nielsen is expected to unveil the new product next week at Advertising Week, and will conduct a test of the service shortly, according to people familiar with the matter.
The new stream of data would be an “online GRP,” these people say. A GRP, which is short for Gross Rating Points, is a formula that measures the reach and frequency of an ad, a method that has been used by the TV business for decades.
To get the new data, Nielsen will blend its demographic panel data with information from participating online companies about the people seeing a particular online ad, according to people involved in the research.
Information will vary from website to website, but in general it might indicate the age group and sex of a particular Web surfer and maybe even location, according to a person familiar with the process.
Only anonymous data will be given to Nielsen for the service, according to several people involved in the process.
Nielsen competitor comScore Inc. has been providing GRP data for online ads but advertisers say there is need for more competition in the area as it will drive improved measurement. ComScore tracks by age, sex and household income, among other things.
Nielsen already has lured marketers such as Procter & Gamble Co., the world’s biggest advertiser, and several big media-buying firms such as Publicis Groupe S.A.’s Starcom MediaVest to test the new research, say people familiar with the situation.
P&G declined to comment. Facebook and Starcom MediaVest referred calls to Nielsen.
Media buyers—executives who decide where and how marketers allocate their ad dollars—and advertisers have long complained they need an online measurement that is comparable to the way other media are measured.
Marketers often use site traffic as a gauge when they decide to buy Internet display ads—the ads that include graphics and text and appear alongside the border of the page. But traffic alone isn’t a perfect indicator of an ad’s effectiveness.
When people click on the ads, their specific actions can be tracked. But display ads are clicked on just a fraction of the time. That leaves room for an additional layer of measurement.
Media buyers say having an online GRP has the potential to give marketers a way to do apple-to-apple comparisons of media.
Having the information, they say, could lead to advertisers shifting more of their ad budgets to the Internet from other media like television.
The service will give advertisers “better accountability from the publishers, right now we don’t know whether the right people saw the ads,” according to a person involved in the process.
Nielsen’s latest push comes as it faces increased pressure in the media research business. A host of new players have begun offering measurement services over the past few years.
Some of the country’s biggest media companies and advertisers have joined forces and formed a coalition that is trying to come up with new ways of measuring audiences.
Industry trade groups—including the Interactive Advertising Bureau, the Association of National Advertisers and the America Association of Advertising Agencies—have been working to create a governing body to help facilitate the online ad measurement business.
The soft economy has added more urgency to the call for better online measurement since marketers are under increasing pressure to prove their ad dollars are working.
Online advertising has enjoyed healthy growth rates but the business still trails other media such as television.
Last year, marketers spent $52.6 billion on TV ads in the U.S. and $20.3 billion on Internet advertising, according to ZenithOptimedia, a media buying firm owned by Publicis Groupe.
The money in the online-ad business is “still a drop in the bucket” compared with television, says Keith Richman, chief executive of Break.com, an online video site focused on the male market.
Break.com has itself been trying to figure out a way to give its advertisers some type of GRP measurement but says it believes a broader industry-wide movement is needed.
Read More: WSJ.com
Armstrong: We’re Trailing The Display Market Now, But Wait ‘Til 2011
Despite the recovery of display ad sales, AOL (NYSE: AOL) has found itself trailing the market, despite its vast reach. AOL CEO Tim Armstrong sought to explain the reasons for that and why he believes that next year, the company’s ad revenues will start to show some turnaround during a Q&A at the Goldman Sachs Communicopia conference. But first, he warned that there could still be more declines before the display picture improves completely. He indicated that taking down the European operations to rebuild them was part of the reason behind the lag, as well as the restructuring of its ad business in general.
“When I got here, AOL ad sales were run through Platform-A, which made it easy to sell but was mostly low-cost inventory,” he said. “We also had a user experience problem with ads and having so many impressions on every page—we stripped that out and that had an impact. We said to ourselves that in order to compete in advertising, we have to compete with Google (NSDQ: GOOG), Facebook and people who are very data-intensive. We needed to restructure the sales force and integrate the data systems together. That is a huge amount of work. But we made a decision to be public company and be transparent about our report card to be big in the future. Right now, the sales force is settled, we’re rolling out things like Project Devil, which is the new way we’re going to selling ads. And AOL is considered on every major ad buy right now. My calendar is booked with meetings with advertisers. So you’ll see a much more robust ad sales picture from us in 2011.”
Read More: PaidContent.org
BrightRoll Adds Mobile Inventory to Video Ad Network and Exchange
Online video ad network Brightroll has begun to include mobile inventory across its network and exchange, offering advertisers the ability to run 15- or 30-second video ads on mobile devices such as the iPhone, and handsets running Google’s Android platform.
Although the availability of mobile video inventory remains limited, the company says it no longer defines pre-roll as an ad before video content exclusively, which greatly expands the potential scale of its network. “We’ve moved past that definition, and transitioned from serving ads before video content to serving ads before free content,” said Tod Sacerdoti, BrightRoll CEO. “Advertisers care about buying an ad experience, not a content experience,” he added. That approach allows the company to sell into almost any form of mobile content, including games, productivity tools, and even simple text-based media.
According to Sacerdoti, mobile apps will contribute the vast majority of inventory to the network. “Many of the free app experiences for consumers are still poor… If there is an established monetization vehicle for developers, those apps will get better. For developers, ad rates in video are around ten times what they would probably get from display,” he said. Meanwhile for advertisers he suggests, “There’s no ad format other than television where you have the entire user experience consumed by the ad.”
A range of mobile ad networks currently offer similar video solutions including click-to-video and video interstitials, and networks such as iVdopia have specialized in selling pre-app video ads to brands including Coca-Cola and Miller Light.
Read More: ClickZ
VideoEgg to Buy Six Apart, Rebrand as Say Media
Ad network VideoEgg will acquire Six Apart, owner of the MovableType and TypePad publishing platforms as well as a sizable social media ad network, and rebrand as Say Media. The combined company will boast 345 million monthly global unique users.
For VideoEgg, the new company name will emphasize its focus on social media and will dissociate it from the video ad space in the minds of media buyers.
“It pigeonholed us,” said VideoEgg President Troy Young. “People thought we were a streaming media network, which we weren’t. And VideoEgg, while a spirited name, didn’t feel like the mature media company we wanted to be.”
Six Apart CEO Chris Alden will step down when the transaction is completed in approximately 60 days, but most of the firm’s other senior management will transition to roles at Say Media. Say Media’s total headcount after the sale will be over 200, and its base of operations will be in San Francisco. Financial terms were not disclosed.
The main driver of the acquisition was scale in social media. Six Apart’s ad network reached approximately 90 million U.S. unique users on thousands of sites in April, according to comScore. In May the company unveiled an ad product, TypePad Conversations, that uses sponsored questions to help brands leverage that audience in meaningful ways.
Read More: ClickZ
Digital Ad Agencies Attract Interest of Would-Be Buyers
The deal-making in online advertising continues, as talks over the sale of two ad firms heat up.
Private-equity firm General Atlantic LLC has held preliminary talks with several companies over a possible sale of AKQA Inc., one of the U.S.’s largest digital ad shops, according to people familiar with the matter.
Meanwhile, New Jersey-based Rosetta LLC, another large digital ad firm, is in talks to buy Level Studios, a 15-year-old interactive marketing firm, according to a person familiar with the matter. Terms of the deal could not be determined.
General Atlantic, which took a majority stake in AKQA in 2007, hired Morgan Stanley to explore a possible sale after it received an unsolicited bid for the San Francisco-based agency, according to one of the people familiar with the matter. One company Morgan Stanley has approached is Dentsu Inc., Japan’s largest ad company, the people familiar with the matter said.
Dentsu hasn’t made a formal bid for AKQA but has made an “expression of interest” and suggested AKQA is valued at about $500 million, one of these people said. Two people familiar with the matter say that General Atlantic is seeking at least $600 million for AKQA.
AKQA, which has more than 800 employees, has long been an attractive acquisition target because of its ability to attract big brand advertisers, including Coca-Cola Co., Microsoft Corp. and Unilever PLC. A person familiar with the matter says early financials on AKQA shows the firm had about $120 million in revenue last year and is expected to have $150 million in revenue this year.
Tom Bedecarre, AKQA’s chief executive, has long wanted to take AKQA public. Mr. Bedecarre declined to comment.
A U.K. blog reported Dentsu’s interest in AKQA. A spokeswoman for Morgan Stanley declined to comment.
Dentsu has been on an aggressive buying spree, snapping up ad firms such as McGarry Bowen in New York, as it seeks to become less-dependent on its homeland for revenue.
Chris Kuenne, chief executive of Rosetta declined to comment on talks to buy Level Studios, except to say, “We are always looking at possible acquisitions.” Executives at Level couldn’t immediately be reached for comment. Level Studios, which is based in San Luis Obispo, Calif., has worked on half of marketers such as Hewlett-Packard Co. and Research in Motion Ltd.
Digital ad firms—which help companies pitch their products on the Internet and through mobile devices—are of particular interest to ad and media companies as online ad spending continues to grow and other mediums struggle. ZenithOptimedia, a media-buying firm owned by Publicis Groupe SA, predicts global online ad spending will rise 13% next year to $61 billion while global ad outlays in newspapers is expected to decline about 3% next year to $95 billion.
The pace of deal-making on Madison Avenue is accelerating as the recession begins to lift, ad executives say. Indeed, earlier this year newspaper and magazine publisher Hearst Corp. acquired iCrossing, a digital ad firm that specializes in search ads.
Read More: WSJ.com (Full Article Here)
Shaping Ads for Web-Connected TV
Technology companies racing to deliver video to the living room over the Web are exploring the idea of offering ads on their services, seeking to capture some of the billions of ad dollars that flow to television.
A few companies, including TiVo Inc. and Microsoft Corp., have released ad products tied to broadband-video services designed to be accessed on television sets, not computers. They include ads that can take a viewer to a movie trailer on YouTube when the viewer pauses a TiVo-recorded TV program, as well as ads that can be accessed by clicking a tile on the navigation menu of Xbox Live, the online gaming and video service for Microsoft’s Xbox game console.
Other efforts are also afoot. Google Inc. has been meeting with some of Madison Avenue’s biggest media-buying firms, exploring ways to sell ads through its Google TV software due out this fall. Sony Corp. and other hardware makers are launching TVs and set-top boxes equipped with the software, which allows users to search and watch Internet programming.
The Internet giant has told ad executives that it eventually plans to sell ads that appear in search results when consumers search for what they want to watch, some of those ad executives say. But those spots won’t interrupt the ad stream that appears during a program.
The company has told media-buying executives that it doesn’t plan to put ads on its service for at least a year. A Google spokeswoman says the company has been approached by advertisers about Google TV, but it is “solely focused on launching a quality experience for users, and does not have any specific plans for advertising” at this time.
Sony, meanwhile, is considering selling video ads that play before premium programming that consumers can access through its Internet-connected TVs, Blu-ray players and PlayStation 3 video consoles, says one person familiar with the matter. The person says these ads could be available in coming months. Sony declined to comment.
At the same time, traditional online-ad companies like Yahoo Inc. are adapting their Internet-ad technology to display ads that run alongside Web video displayed on TV screens.
This isn’t the first time that tech companies have sought a foothold in the TV-ad market. In recent years, Google and Microsoft launched television-ad services seeking to sell commercials targeted to specific kinds of consumers and measure those ads’ performance based on data from set-top boxes. But analysts say those businesses have remained modest, in terms of revenue, constrained by the type and amount of inventory TV networks and satellite companies have given them to sell.
A Google spokeswoman its TV-ad business has grown “significantly.”
This time around, tech companies are looking for new ad possibilities created by delivering video directly to TV sets over the Web. The software for doing so offers them new screen real estate for showing ads and the ability to target ads based on what viewers watch and the Internet services they access. Analysts say such ads could chip away at the market for conventional commercials over time.
TV ads are a massive business. Last year, TV accounted for nearly 36% of the $148.3 billion U.S. advertising market, according to ZenithOptimedia, a media-buying firm owned by Publicis Groupe. The firm predicts the U.S. TV-ad market will grow 3.8% to $55.8 billion in 2010.
Cable and satellite companies, too, have been testing new technology to target ads more precisely, along with new ad formats that let consumers respond to an ad through their remotes.
TiVo Chief Executive Tom Rogers says that since cable operators use differing set-top-box technology, the cable industry doesn’t have the ability to sell targeted ads on a mass scale, leaving an opening for tech companies. Cable and TV networks haven’t moved fast enough to promote new formats, he says. “The old models, with the amount of commercial avoidance, just aren’t going to hold up.”
This summer, PepsiCo‘s Mountain Dew brand launched its first campaign with Xbox Live. Unlike traditional TV commercials, the ads, which prompted Xbox users to vote for a new flavor of the soft drink, allowed users to engage with it when they were interested, Brett O’Brien, director of marketing for Mountain Dew.
But many advertisers remain skeptical. For one thing, it isn’t clear which ad formats will work best on broadband-connected TVs, says Tracey Scheppach, senior vice president and video-innovations director at Publicis’s Starcom MediaVest Group.
Tech companies not only have to win over advertisers, but also those who create video programming. While a growing number of TV and movie studios are offering content through new Internet-video services designed to be accessed directly from TVs, many are doing so on a paid basis. That approach is less likely to upset partners like cable operators who pay networks to carry their programming.
“In order For there to be a viable alternative model for distribution, a majority of media companies are going to have to be in a place where they can stomach the shift from subscription to advertising,” says Scott Ferris, general manager of Microsoft’s TV media advertising business group. He says that in the short term he thinks ads on broadband-video services will be confined largely to inside software applications on the services.
But, Mr. Ferris adds that, over time, a broadband-based video services target at TVs will gain national scale and “an advertising model will creep in there.”
Read More: WSJ.com (Entire Article Here)
