The Magic of Machine Learning in Real Time

Part of the magic of real-time bidding is found within machine learning. This involves using sophisticated algorithms to “learn” complex patterns based on large amounts of data in order to make optimal advertising decisions. The importance of machine learning is cost avoidance and value creation. Cost avoidance is simple to understand: data-driven optimization strategies help reduce waste by identifying the most relevant impressions while selecting the best ads (better creative message, better offer, etc.), which in turn improves performance and ROI (define). Value creation, on the other hand, happens when buyers and sellers of commoditized offerings are more efficiently brought together for a transaction.  To create machine learning magic, two ingredients are required: scale and prediction. Scale speaks to the need to make more users/impressions available through the auction marketplaces, and increase the number of advertisers bidding on these users. The bigger the scale, the more sophisticated the data-driven prediction can be. The second ingredient refers to the idea that prediction needs to be “accurate enough.” Amazon and Netflix have demonstrated that when you provide an accurate prediction of what consumers want, the business grows in two ways:

1. Better inventory control and more purchases/utilization.
2. Better targeting becomes a custom delight feature when it’s perceived to be quite accurate by average consumers.

The ability to deliver relevant choices in real time based on what consumers reveal about themselves creates a virtuous cycle: 

Ads/recommendations become more accurate → consumers are willing to share additional information about themselves → the machine learning algorithm for ads/recommendations becomes even smarter

In digital advertising, the machine learning prediction ultimately boils down to two parts: identifying your target audience and reaching them efficiently. The first part requires machine learning at the user level to learn the most optimal audience segments to target; the second requires machine learning to drive real-time bidding strategy with precision. For instance, demand side platform technology allows advertisers to have global control over how many times each user sees the ads (i.e., frequency capping) and how they see them. This begs the obvious question, “what is the optimal number of ad repetitions?” The answer might be an average of five times over a period of seven days. Problem solved? Not quite.

Read More: ClickZ

BrightRoll Launches Video Ad Exchange

Earlier this year, video ad company Adap.tv launched a video ad exchange in partnership with Gannett Co. and Publicis Groupe’s VivaKi digital unit. Now, its OneSource platform will have some competition from a rival video ad marketplace started by video ad network BrightRoll.  As with the online exchanges that have emerged in recent years for display and other types of advertising, the goal is to bring increased efficiency to the video sector by giving publishers a way to unload unsold inventory and media buyers an automated system for reaching particular audiences across a wide range of sites.  “What we’re essentially releasing is a video advertising business in a box for buyers of online advertising,” said BrightRoll CEO Tod Sacerdoti, who added that the new exchange dubbed BRX is an outgrowth of the company’s efforts to further automate its own ad network over the last 18 months. BrightRoll is the third-largest U.S. video ad network based on streaming video ads viewed — at 333,492 in June, according to comScore.  “We realized everything we were building was applicable to other media buyers and sellers,” said Sacerdoti. A BrightRoll study earlier this year found that half of publishers surveyed reported that at least 20% of their online video advertising inventory is never sold, suggesting the potential for an automated, auction-based marketplace for pre-roll ads.

Read More: MediaPost

Forbes Sells Investopedia To ValueClick For $42 Million

After less than two months on the block, Forbes Media has sold financial education site Investopedia to lead gen provider ValueClick (NSDQ: VCLK) for $42 million. In June, Forbes retained the Jordan, Edmiston Group, Inc. three years after it bought the Canadian-based site.  The announcement comes a few weeks after Forbes purchased freelance journalism site True/Slant, which was shut down last week and will remain live as an archive site only.  Forbes had been an investor in True/Slant and before the purchase, it had hired site’s founder, Lewis DVorkin, as consultant to help restructure its digital offerings. The quick sale of Investopedia is a the first step in the struggling publisher’s latest digital reinvention. Despite the fact that Forbes was eager to sell the Edmonton, Alberta-based Investopedia, the company claimed that the site’s profits and users have grown in the past three years since it was acquired.  In a release, ValueClick CEO Jim Zarley said that Investopedia gives the company “great content, organic traffic and established advertiser relationships in the important financial services advertising vertical.” He also believes that the addition of Investopedia will be able to help build up its ValueClick Brands and ValueClick Media offerings.

Read More: PaidContent.org

Google’s Three Screen Ad Strategy Heralds Its Second Act

Many pundits have criticized Google as a one-trick pony that makes money from one thing – search on the desktop. There’s certainly some truth to that, but Google’s moves over the last few years foreshadow an audacious three screen advertising strategy that, if properly executed, would represent a ground-breaking second act for the company. By aggressively pursuing platforms on mobile and TV in addition to their traditional perch on the desktop, Google is positioning itself to deliver ads across all three screens and trump the capabilities of both Apple and Microsoft, who have made far less inspiring moves in the advertising world.

Read More: JackMyers.com

John Mayer’s LeBron Spoof Satisfies Fans’ Growing Content Cravings

Since Monday a new video featuring musician John Mayer’s spoof of LeBron James’s ubiquitous “decision” TV special has collected an additional 30,000 views. That brings views of the parody video – which doubles as a summer tour promo – to over 192,000 as of noon today.  “After giving it a lot of thought and careful consideration I have decided that I’m going to play for Cleveland,” says Mayer in the video in a deadpan monotone. “So as not to offend my fans in South Beach, I’d also like to announce that I’ll be playing for Miami,” he continues, adding, “I’m also going to be playing for New York City.”  Those three cities, as anyone who’s glanced at sports coverage recently knows, were among the likely locations for former Cleveland Cavaliers offensive powerhouse LeBron James to choose as his new home as he made his much-hyped decision as a free agent. James chose to play for The Miami Heat starting next season, though the New York Knicks were also reportedly in consideration.  “The John Mayer bit works because it’s timely, clever, and reflects his personality,” said Edith Bellinghausen, SVP digital business at entertainment firm Razor & Tie, which puts out bands and artists including Day of Fire, Matisyahu, and Natalie Grant.

Read More: ClickZ

Online Video Ad Segment Poised to Explode

The online video advertising market is poised for rapid growth over the next few years, according to eMarketer.  The research firm estimates online video advertising spending will grow more than 48 percent this year, reaching $1.5 billion. By 2014, it expects the video ad market will top $5.5 billion.  ”Video fulfills branding objectives better than any other current online ad Format — with the sound, motion and emotion of TV, but with better measurability and targeting,” said David Hallerman, a senior analyst at eMarketer. “The continued development of more professional-quality video on the Web makes the target audience more receptive to advertiser messages and thereby encourages advertisers to spend more for video ads.”  Still, spending growth does not necessarily correlate with current market importance. While video ad spending growth will far outpace that of any other online ad format from 2009 to 2014, it will still represent only 6 percent of all Internet advertising expenditures in 2010.

Read More: AdWeek

Social Networks Sink Online-Ad Pricing

Social networks and their endlessly growing page views have dominated every sphere of the web — from audiences to ad impressions. But there’s one area where they still can’t seem to catch up: ad prices.  A recent analysis by ComScore shows social networks, primarily Facebook and MySpace, have over the last year drawn an average CPM of only 56 cents, compared to the $2.43 average for the internet at large. Looking more closely, the ComScore data show that the average pricing for online ads exclusive of social-networking sites, namely Facebook and MySpace, would be much higher, about $2.99 for every 1,000 views; social sites dragged down the average online CPM by as much as 18% over the last year.   Some industry executives are concerned that Facebook and its ilk may in fact be reducing the overall pricing of CPMs, or the cost-per-thousand impressions, that are the basis for online ad pricing.  “Social networks are going to be a challenge for everybody, as the sheer dominance of the impressions they’re making flood the marketplace with inventory,” said Keith Lorizio, Microsoft’s newly installed head of U.S. sales. “And it’s especially a challenge for every publisher, as they drive down CPMs.”  The low-cost rates on social sites don’t necessarily mean they’re driving down the pricing for other publishers. In fact, much of the collective downward pressure on ad prices could be attributed to the mass of inventory altogether — it’s supply simply outstripping demand.

Read More: AdAge

TwitVid Launches Video Ad Network

Twitter video hosting service TwitVid today launched SocialAds, a standalone video advertising network designed to help businesses connect directly with their audience by collecting followers and retweets for their advertising campaigns.  “Traditional means of monetizing video has heavily relied on pre-roll ads, which work great for premium content but can be quite suffocating for an end user who may only be trying to watch a short video,” said Mo Al Adham, co-founder of TwitVid, in a statement. “SocialAds offers an alternative advertising solution, which provides measurable value to both advertisers and viewers. Through SocialAds’ proprietary technology, media viewers are exposed to social media accounts targeted to be of high interest to them. In turn, advertisers are exposed to and gain engaged customers whom, once acquired, can be communicated with as a trusted brand.”   Advertisers and agencies are shifting some of their spending to online from TV, according to an April 2010 study of digital media and marketing pros by DM2PRO and Tremor Media. In fact, 94% of those polled expect to increase online ad spending this year, with almost 45% shifting those dollars from TV, the study reported.   In a private beta test, participating brands generated more than 400 new followers in less than one hour, TwitVid said. As a result of seeing the commercials, 2% of viewers began following a brand, according to the video hosting service.

Read More: InformationWeek.com

Foursquare Frenzy

Dennis Crowley, co-founder of hot location-based social service Foursquare, addressed a roomful of marketers in June. He asked for a show of hands of how many had tried to work with the company but didn’t hear back. A lot of hands went up. The simple message: the still-small company is struggling to further develop its service while responding to the avalanche of requests.  Now, with $20 million in new funding, agencies are hopeful the digital world’s new belle of the ball will build tools to help them use the service in deeper ways.  Adweek spoke with several agencies that report frustrating experiences with Foursquare. Some have found it both hard to contact and unwilling to come up with marketing ideas. One agency representing a major package-goods client said the company put the onus on the brand and agency to find the best way to use the service.  “They’re not responsive and extremely hard to work with,” said a digital agency exec who asked not to be named. “It’s hard to bring campaigns to life. Nobody knows how to create a badge or ask [Foursquare how] to enable behavior. It’s black magic.” In general, he said, “it’s pretty much unworkable.”   One sticking point is Foursquare’s strategy of initially limiting advertiser participation. Pepsi, for instance, has an exclusive lock on the soft drinks category. Additionally, Foursquare has identified one “charter advertiser” for some major categories, which it then works with to better understand what works before taking on other advertisers. While less formal than exclusive contracts, it nonetheless leaves some competitors out in the cold, if only temporarily.

Read More: AdAge