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

Brands on Sidelines as Disney, Google and MTV Charge Into Social Games

There’s a land grab in social gaming, but at this point, it doesn’t look like there’s much room for advertisers.   On Tuesday, Disney acquired top-three developer Playdom for $563 million plus $200 million in incentives. Google, meanwhile, is reportedly in talks with Playdom, Electronic Arts and Zynga in a social-gaming push. And MTV Networks this month acquired social-game developer Social Express and plans to launch games based on its TV shows later this year.  With the draw of their established storylines and characters in social games — not to mention well-oiled marketing machines — established media companies hope they can use casual gaming to grow and interact with their already massive audiences.  “When media companies integrate their brands, it’s going to be easier for people to get into the games because they are familiar and that will expand the market,” said Justin Smith, founder of social-game research firm Inside Network.

Johnson & Johnson is Holding a Roster Review of its Estimated $3bn Media Business.

On Tuesday, Disney acquired top-three developer Playdom for $563 million plus $200 million in incentives. Google, meanwhile, is reportedly in talks with Playdom, Electronic Arts and Zynga in a social-gaming push. And MTV Networks this month acquired social-game developer Social Express and plans to launch games based on its TV shows later this year.  With the draw of their established storylines and characters in social games — not to mention well-oiled marketing machines — established media companies hope they can use casual gaming to grow and interact with their already massive audiences.  “When media companies integrate their brands, it’s going to be easier for people to get into the games because they are familiar and that will expand the market,” said Justin Smith, founder of social-game research firm Inside Network.

Read More: AdAge

Mixed Ad Message From Newspapers

Online advertising has turned into a good-news story for newspapers. Will it have legs?   Several newspaper publishers have reported solid growth in digital advertising revenue for the second quarter in recent days, helping offset continuing declines in print advertising. The New York Times, for instance, reported 21% growth in digital-ad revenue against a 6% drop in print advertising, keeping total advertising “roughly flat” with the year-earlier quarter. Digital now accounts for 26% of its total ad revenue, up from 22%.  But that is mainly because print revenue has shrunk so much, rather than because digital has got so big. At the Times Co., print-ad revenue for the news group fell $15 million, to $232 million, while its digital-ad revenue rose $8.3 million. Growth at the About.com portal also boosted digital.

Industrywide, print-ad revenue fell by nearly half between 2000 and 2009, a loss of about $24 billion. But newspapers’ online revenue totaled only $2.7 billion last year.  That includes online classifieds, a segment that has been under pressure from free alternatives. Display advertising, including video, is where newspapers have the most opportunity. The market still is relatively small, just $8 billion in U.S. revenue last year, or 35% of total Internet revenue, according to the Interactive Advertising Bureau. And newspapers are competing for display dollars with major portals like Yahoo and Google as well as lots of smaller sites.  One bright spot for newspapers is that their sites draw higher ad rates than most other categories, at least as measured by cost per thousand impressions, or CPMs, according to comScore. Precise CPM numbers are hard to come by, but these estimates offer some indication of the differences between sites.

Newspaper sites’ CPMs in April were $6.99, while the rate for portals was $2.60 and 56 cents for social-networking sites, comScore estimates. Newspapers’ traffic isn’t high enough for those rates to translate into huge dollars: Newspapers drew only 8.5 billion impressions in April, translating into a revenue estimate of $59.4 million for the month. Impressions were 69.7 billion for portals and 98 billion for social-networking sites, comScore reported, for revenue of $181 million and $54.7 million, respectively.  Professionally produced content helps make newspaper sites, at least those of major titles like the New York Times, attractive outlets for advertisers. Many marketers are reluctant to have their ads appear on heavily trafficked social-networking sites because of the uncertainty of the kind of content that appears on those sites.  Longer term, video and mobile advertising also offer hope. For now, though, investors need to be wary in assuming that newspapers’ digital potential can outweigh the challenges in their legacy business.

Read More: WSJ (Entire Article Here)

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