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

New NBCU Ad Network Plans to Reach Beyond NBCU Properties

NBC Universal is getting into the ad network business, first selling inventory across a handful of its own properties, then possibly expanding into others.  The network, called Universal Audience Platform, launched today with 21 NBCU properties, including Bravotv.com, NBC.com, Oxygen.com and Syfy.com. While advertisers have previously had the ability to buy packages that spanned NBCU properties, this is the first time they can buy display inventory based on audience segment rather than brand.  Asked why NBCU had chosen now to launch an ad network, Peter Naylor, VP of digital sales, said the company “has the impressions and uniques” to form “a credible entrance to the market.” But that doesn’t mean it will limit itself to NBCU properties.  “This is phase one,” he said. “Phase two is going to be when we welcome in some other sites we don’t wholly own and operate.”  Just when – or if – that will come to pass isn’t yet clear, said Naylor. But he did confirm that discussions were under way to find other suitable properties to add to the network.  For now, the formation of UAP means that NBCU will be “dialing down” its dependence on third-party ad networks, said Naylor. The company has made deals with BlueKai, Nielsen and Quantcast to supply the demographic data that it will use to sell audience segments to advertisers.

Read More: ClickZ

Insights from OMMA Behavioral Conference on Display Marketing

Several members of the EF team attended the OMMA Behavioral Conference in San Francisco last week. The focus of the conference was to explore how behavioral targeting has changed from simply targeting audiences by the Web pages they have recently viewed to utilizing targeting data from multiple sources such as social networks, site and search re-targeting, and various third party data providers. Because there are so many targeting channels, attributing conversion to the appropriate source has become very difficult for advertisers. The difficulty of attribution modeling quickly became a hot topic at the conference.  Abhishek Pani, our Director of Research & Quantitative Marketing, discussed a new attribution framework in his presentation titled “Evaluating the Marginal Value of Display”.  Optimal budget allocation across channels is the fundamental problem that advertisers want to solve but given the lack of proper attribution models, they are forced to rely on simple heuristics to allocate revenues. Current attribution offerings in the industry ignore important variables such as the effect of time and cross channel demand elasticity (change in demand in channel A that results from a small change in spend in channel B). Incorrect attribution will result in sub-optimal budget allocation and lower the return on advertising investment. Because our platform manages across all channels of advertising (search, display, and soon social), we are able to measure, experiment, and build very accurate allocation models based on marginal contributions of each channel.  Abhishek discussed our modeling strategy in greater detail during his presentation.

Read More: blog.eFrontier.com

BuzzLogic to Announce New Social Media Ad Units

By combining ads with content BuzzLogic believes it can give consumers using social media a better ad experience and better integrate advertising with the content against which it is presented.   “We’ve been running all kinds of IAB sanctioned rich media for a while, but the BuzzRoll product is much more customized and gives marketers more options,” said Peter O’Sullivan, BuzzLogic’s VP of sales, in an interview with paidContent.  “BuzzRoll, as a social media ad unit, will drive greater engagement among blog readers, since it encourages them to share everything from a company’s blog content or a white paper, and Twitter feeds, to video and Facebook apps. This is just a simpler way for marketers to do it.  For example, if a product wanted to associate itself with a green image it could place an ad on a blog about green issues and, by careful keyword selection, program it to pull in content about the topic from around the Internet. That information is then scrolled along the bottom of the rich media ads.  According to ClickZ, the units can also host video and Facebook applications via Facebook’s APIs.

Read More: BizReport

Facebook Is to the Power Company as …

It was a typically vexing week for Facebook. On the one hand, the social-networking service signed up its 500 millionth active user. On the other hand, it was found to be one of the least popular private-sector companies in the United States by the American Customer Satisfaction Index. Apparently, Americans were more satisfied filing their taxes online than they were posting updates on their Facebook page.  It is a continuing contradiction: Facebook is widely criticized for shifting its terms of service and for disclosing private information — and yet millions of people start accounts each month.  Analysts always grasp for analogies to explain Facebook’s tortured relationship with its users. Facebook has been called the sterile suburbs to the gritty urban Internet; it is a “walled garden” in the organic messiness of the Web; it is Russia under Vladimir Putin; it is (and this one stings in tech circles) today’s AOL.  But perhaps the most telling metaphor compares Facebook to the other companies lurking at the bottom of the American Customer Satisfaction Index: cable companies, wireless telephone service providers. Utilities. Here are services everyone uses, no matter how much people dislike the companies that provide them.  Danah Boyd, a social media researcher at Microsoft and a fellow at Harvard University’s Berkman Center for Internet and Society, argues that Facebook fits that mold.  On her blog in May, she posted:  “I hate all of the utilities of my life. Venomous hatred. And because they’re monopolies, they feel no need to make me appreciate them. Cuz they know that I’m not going to give up water, power, sewage, or the Internet out of spite. Nor will most people give up Facebook, regardless of how much they grow to hate them.”

Read More: NYTimes.com

An Ad Model Poised For A Comeback

It’s challenging for media buyers to differentiate among ad networks. From the network side, it’s difficult to develop a product positioning that is truly ownable within the space. In an era where anyone can start an ad network, virtually overnight, any networks getting traction with ad buyers quickly find themselves swimming in a sea of “me too” imitators.  On the publisher’s side of the equation, it’s even more difficult to tell which networks to use. It’s one of the primary challenges of the chief revenue officer to balance direct sales forces, ad networks, exchanges, and new ad platforms in such a way as to deliver a maximum return from month to month on a site’s pool of available ad inventory.  There’s a check that comes in from each network partner each month. From a CPM standpoint, the price paid is abysmally low when compared to deals struck by the publisher’s direct sales force. But it’s a check nonetheless, and most publishers choose to get a check for the incremental sales, rather than rely completely on direct sales channels and risk lower overall returns.  Simply put, two ad revenue streams are better than one, even if one undercuts the pricing of the other one, and publishers are unsure what’s being done with data collected from network and exchange campaigns. Even though many would see it as short-sighted, short-term revenue, pressure usually makes the publisher take the check rather than cut the channel to support the direct sales channel.

Read More: iMediaConnection

Closing the Tech Divide

If there was a single familiar refrain from digital shops over the past decade, it was that their older, traditional-agency brethren “didn’t get it” when it came to digital. But lately, that widely acknowledged gap has begun to narrow to the point where “older” agencies can claim more success in some areas of digital marketing.  Take the recent Old Spice “The Man Your Man Could Smell Like” digital campaign, an effort that is already a textbook example of how an advertiser can make itself a vital part of digital culture. The campaign didn’t come from any of the digital-agency stalwarts like R/GA, AKQA or Razorfish. Instead, it came from Wieden + Kennedy, a shop not long ago often labeled as wedded to TV and print.  The Old Spice success followed a strong showing for non-digital specialists in this year’s awards shows. At Cannes, for example, top honors in the Cyber category went to Wieden for Nike Livestrong’s “Chalkbot” and DDB Sweden for Volkswagen’s “Fun Theory.” The Cyber Agency of the Year Award went to Crispin Porter + Bogusky.

Read More: AdWeek