Network Margins and Advertiser ROI

Ad networks play a critical role in delivering monumentally effective advertising.  Every day, I see smart and successful ad networks like Brand.net, Collective, and Media6Degrees delivering outstanding results with innovative technologies, quality service, and deep analysis that their clients deserve. (Disclosure: These are all clients of my company.) Ad networks were the early adopters of real-time bidding (a game-changer in display ad buying) and have developed cool concepts such as social targeting (e.g., if I buy an iPhone, marketers can rightfully assume my “friends” will too). Significantly, ad networks are the biggest users of the ad exchanges and their revolutionary auction-based marketplaces.  Despite these innovative approaches, unfortunately, ad networks still have gotten a bad rap because many in our industry have been focusing on the wrong things.  Much of the negative perception about ad networks stems from assumptions that they make high margins. Why is this bad? Think about grocery shopping. Did Whole Foods grow the squash and bananas behind the store in its own little urban farm? Of course not – it buys from rural farmers and charges margins on those products. I don’t have a relationship with the farmer in Honduras and don’t really have time to fly there for my daily banana, so I don’t worry about the margin Whole Foods has earned. It should be a pleasure to help good vendors make the margins they need to reinvest in their business.

Read More: ClickZ

An Amazon-Facebook Alliance to Make Shopping More Social

On Tuesday, Amazon.com took a step toward making the shopping experience on its Web site more social.  For many people, shopping is as much about socializing as it is about buying something — a chance to run into neighbors at the farmers’ market or spend time with a friend at the mall. And people who go shopping with a friend inevitably ask advice before buying. But it’s hard to do that when online shopping.  Now, Amazon shoppers who connect their Amazon and Facebook accounts transport their Facebook friends to Amazon — and can get recommendations from those friends on what to buy.  Amazon was an early leader in offering recommendations based on previous purchases and product searches, and in posting customer reviews on the site. But it has been slow to incorporate social features, while start-ups like Go Try It On, Polyvore and Swipely have been experimenting with ways to make online shopping more interactive.  Amazon’s new feature is the company’s small first step toward tapping into the world of social shopping.

Read More: Blogs.NYTimes.com

Disney Buys Playdom For Up To $763.2 Million

Walt Disney (NYSE: DIS) is making a big move into social games, with the purchase of fast-growing social game developer Playdom for up to $763.2 million. The deal includes a “total consideration” of $563.2 million, in addition to a performance-linked earn-out of up to $200 million.  In a release, which is included in full after the jump, Disney says that by buying Playdom it “will strengthen its already-robust digital gaming portfolio, acquire a first-rate management team and provide consumers new ways to interact with the company on popular social networks like Facebook and MySpace.” The company hints that it will now be bringing its “characters, stories and brands” to games on social networks.  By acquiring Playdom, Disney will also be getting an existing portfolio of popular social games, which includes Mobsters, the top title on MySpace (NSDQ: NWS). Over the last year, Playdom has been rapidly expanding its lineup of titles through the acquisition of eight gaming startups. It now ranks as the top social game developer on MySpace and the fourth largest on Facebook. The company, which is profitable, said late last year that its sales were near an annual run rate of $50 million.

Read More: PaidContent.org

Download the Ad Networks vs. Ad Exchanges Whitepaper

This whitepaper compares ad networks and ad exchanges from the perspective of web publishers looking to maximize their advertising revenue. It outlines the fundamentally different ways in which ad networks and ad exchanges sell publisher inventory, highlights the benefits of ad exchanges over ad networks in terms of driving up publisher revenue, and explains why an ad exchange is an essential component of every publishers’ monetization strategy.

Read More: OpenX.org

Right Media Exchange Update From Yahoo! VP McGrory

The following is an excerpted interview with Ramsey McGrory, Yahoo! VP and Head of Right Media Exchange.  McGrory discusses recently announced plans for Yahoo!’s display advertising exchange – Right Media Exchange.  Topics covered include:

The results of the Demand-Side Platform (DSP) Pilot Program…
A new Search Engine Marketing pilot on Right Media Exchange…
Demand Media, a publisher for RTB participants on Right Media Exchange…
On Right Media Open, an event produced this week by Yahoo! for its Right Media partners…

On the results of the Demand-Side Platform (DSP) Pilot Program…

RM: The specifics on DSPs are actually pretty good. We expected to see improvements in targeting. We expected to see, conversely, that would mean higher bidding, which is valuable to the publishers. And so I think we generally got what we bargained for. Which is the targeting efficiency, the control of frequency, the control of cost. The DSPs are, by and large, moving directionally on executing on that vision. That’s a good thing.

Read More: AdExchanger

The Career-Relevant Timeframe

I’m attending the Right Media Open in Chicago and, no surprise, change is in the air. Although there is a general consensus on where the industry is headed, I am seeing a healthy debate around the timeline for that change.  While discussing the importance of indirect, bid-based sales to publishers, Dave Zinnman from Yahoo pumped on the brakes, saying that if you believe exchange-based inventory will become dominant in a “career-relevant timeframe”, you need to “step back from the punch bowl.” For me, “career-relevant timeframe” is the most important phrase I’ve heard today.  No matter what your business, its important to have a realistic understanding of how fast your market is changing. Just today, VMM founder Darren Herman retweeted his 2008 post comparing the rate of innovation with the rate of adoption, and reminding entrepreneurs to build for today’s market. That’s the relevant timeframe for a venture backed startup between rounds.  Here in Chicago, the question of the day is: what is the relevant timeframe for advertising-related companies evaluating the momentous shift toward automation?  Up until now, I think media decisionmakers have been very confident in their ability to influence the rate and direction of change. At the 2009 24/7 Real Media Summit, I was struck by GroupM CEO Irwin Gotlieb’s remark that he felt it was, in some part, his responsibility to manage change in this new media landscape on behalf of various stakeholders. Consolidated media buying firms exist for the sake of exerting this type of influence and the comment made me think a lot about how and when the industry would change.

 Read More: GregHills.com

RockYou Strikes Virtual Currency Deal With Facebook

RockYou has entered into a five-year agreement to make Facebook Credits the exclusive payment option in its social games and applications on the social network. The deal, unveiled Thursday, is a boon for Facebook, as RockYou is one of the largest developers on the site, with about 34.6 million monthly active users and 2.7 million daily active users, according to Inside Network’s AppData.  The move helps ensure that Facebook’s virtual currency will gain wider distribution across the site. Until recently, Facebook Credits, which cost 10 cents each and allow users to buy virtual goods in games and apps, had only been available in a limited number of apps for testing.  But Facebook has lately been trying to build the user base for Credits through deals with significant developers, who get a 70% cut of revenue from sales suing the virtual currency. Some developers, principally game maker Zynga, have resisted offering Credits because of the 30% cut Facebook takes.  In a five-year deal announced in May, however, Zynga broadly pledged to expand the use of Credits in its games, which include wildly popular titles like “FarmVille” and “Mafia Wars.” Separately, smaller developers including CrowdStar and Lolapps have also signed exclusive five-year deals to use Facebook Credits exclusively.

Read More: MediaPost

iPad As A Business Tool? Probably Not Yet

AT&T’s activation of 3.2 million iPhones in the second quarter got the attention of the tech media Thursday, highlighting the Apple device’s continued importance to the company’s wireless business.  But during its earnings conference call, AT&T also shed some light on that hot-selling Apple product, the iPad. The carrier said it activated 400,000 to 500,000 iPad 3Gs in the quarter, with usage about as expected — higher than a typical iPhone user, but less than someone using a laptop. Apple said last week that 3 million of the Apple tablets had been sold since its April 3 launch.  Tim Cook, Apple’s chief operating officer, said during the company’s conference call this week that it is selling iPads and iPhone 4s as fast as it can make them. And apparently the iPad doesn’t appeal only to consumers. AT&T’s Chief Financial Officer Rick Lindner said Thursday the company has been surprised by the level of interest among business users.  When the iPhone was first launched, he noted that businesses, and especially chief information officers, were reluctant to adopt the phone as a business tool. “Over time that’s changed dramatically,” he said. But “right from the beginning with the iPad, we’ve had a number of business customers express interest.” Lindner also suggested some companies might even use iPads to replace laptops.

Read More: MediaPost

The Inside Story: An Anonymous Ex-AOL Exec Tells All

When AOL CEO Tim Armstrong joined the company in spring 2009, he announced he’d take just 100 days to figure out what to do to turn around the one-time tech industry leader.  In about a week, it will be a year since AOL celebrated the end of those 100 days with a big party in Dulles, Virginia on July 24, 2009.  It’s been a huge 12 months for AOL since. There were layoffs, a massive voluntary-buyout program, a re-branding, major product-rollouts, and of course, AOL’s December 2009 spin-off from Time Warner.  Also during that time: just about every corporate-level executive left the company – usually to be replaced with an ex-Googler.  Recently, we spoke with one of these former AOL executives to find out what it was really like when Tim Armstrong came to save AOL.  Here’s that inside story.

SAI: How did word break in February 2009 that CEO Randy Falco and president Ron Grant were out?

Former AOL exec: As soon as it happened Ron started calling his team. Word obviously spread incredibly quickly. Rumors started to break that afternoon because [Time Warner CEO] Jeff Bewkes made a surprise visit actually to the AOL headquarters downtown. For Jeff Bewkes to come out of the Time Warner building on the Upper West Side was highly unusual. So I think people were extremely sensitive to what was going on when he was spotted in the building — it’s a very open layout, the office space, so everything’s pretty visible.   Upon Jeff leaving people started twittering and everything else and I think that’s why Ron started picked up the phone so quickly and just started dialing.

Read More: BusinessInsider.com

DoubleClick White Paper: The Value of Dynamic Pricing & Auction Pricing

We’re often asked to quantify the incremental value DoubleClick Ad Exchange can provide compared with publishers’ existing yield management techniques. According to proprietary research conducted in the first half of 2010, the combined effects of auction pressure and Dynamic Allocation in DoubleClick Ad Exchange resulted in an average CPM lift of 136% compared with fixed, upfront, pre-negotiated sales of non-guaranteed inventory.   In a new white paper, we take a step back to explain how publishers are managing yield across their pool of non-guaranteed inventory today, and what steps they can take to create efficiencies and boost overall revenue. Key elements of the white paper include:

• How publishers segment and sell ad inventory. How manual optimization processes often fail to capture all available revenue opportunities
• Dynamic Allocation explained. What it is, how it works, and what it means for publishers’ bottom lines.
• Auction pricing mechanics. Real-time pricing’s core advantages over the use of historical CPMs for non-guaranteed ad space.
• A brief look forward. The potential for DoubleClick Ad Exchange and its ecosystem of publishers, technology providers, advertisers and agencies.

Read More: DoubleClickPublishers.blogspot.com