Building Trust With Ad Verification Systems

When marketers buy television spots, they can turn on the tube and watch them run. Magazines and newspapers? Marketers can flip to their ads. But when it comes to online inventory, the questions still linger: Are my ads truly running where and when I want them to? Am I wasting impressions and ad dollars serving ads in front of the wrong audience, or are they subject to impression fraud? Are they running next to content that might be offensive to my audience or on the same page as one of my major competitors? Most of us may have chuckled over humorous examples of the wrong ad in the wrong place, but it isn’t that funny if it’s happened to you.

Most advertisers are already sold on the value of good online marketing and understand how leveraging the digital world for their end goals is an important part of their marketing mix. So why are we seeing consumer media time online rise to almost 40 percent but online budgets still only represent a portion of that ratio?

When asked why the big dollars aren’t yet flowing like they could into the channel, most decision makers seem to have an issue with trust — whether it be in brand safety concerns, unproven measurement, etc. Ultimately, the currency of choice is trust, and for some marketers, especially ones rooted in deep, traditional advertising familiarity, the online world is still a bit of a mystery. In the same vein, can you imagine if you went to buy a thousand shares of Apple and instead were given a thousand shares of a worthless penny stock? Would you continue to patronize a restaurant where you weren’t guaranteed to get the meal you ordered? Even hardcore digital advocates admit that there are still questions — and a few bugs left to exterminate –within virtual inventory.

Read More: iMediaConnection

Pushing Boundaries: Exploring the Evolving World of Display Media 

Digital media agency, FRWD, hosted digital event Pushing Boundaries: Exploring the Evolving World of Display Media yesterday at the Fine Line Music Café in Minneapolis. Industry leading publishers, demand side platforms, data aggregators, verification and survey tool providers gathered to help each other prepare for, and profit from, the fast-changing world of online advertising.  MediaMath, Simpli.fi, BlueKai, DataXu, Lucid Media, ADSDAQ Exchange, [x+1], and Rocket Fuel; among others exchanged ideas on the direction of the industry during 4 panels and 2 keynote presentations.

The transfer of data integration into ad exchanges and DSPs coupled with technology and real-time bidding (RTB) capabilities are increasing at a rapid rate, almost as rapidly as the industry is changing. Joe Zawadzki of MediaMath predicted that the industry transformation from “Mad Men to Math Men” will occur by 2012 at which point “Don Draper will be replaced by your high school Dungeon Master.” 

Panel speakers throughout the afternoon explained the details of successful ad exchanges and DSPs, specifically the capabilities of combining data and audience research targeting with the need to assure brand protection, transparency, and the unique market dynamics of RTB.  

Read More: FRWDCO.com

Google and the Search for the Future

To some, Google has been looking a bit sallow lately. The stock is down. Where once everything seemed to go the company’s way, along came Apple’s iPhone, launching a new wave of Web growth on a platform that largely bypassed the browser and Google’s search box. The “app” revolution was going to spell an end to Google’s dominance of Web advertising.

But that’s all so six-months-ago. When a group of Journal editors sat down with Eric Schmidt on a recent Friday, Google’s CEO sounded nothing like a man whose company was facing a midlife crisis, let alone intimations of mortality.

For one thing, just a couple days earlier, Google had publicly estimated that 200,000 Android smartphones were being activated daily by cell carriers on behalf of customers. That’s a doubling in just three months. Since the beginning of the year, Android phones have been outselling iPhones by an increasing clip and seem destined soon to outstrip Apple in global market share.

True, Apple sells its phones for luscious margins, while Google gives away Android to handset makers for free. But not to worry, says Mr. Schmidt: “You get a billion people doing something, there’s lots of ways to make money. Absolutely, trust me. We’ll get lots of money for it.”

“In general in technology,” he says, “if you own a platform that’s valuable, you can monetize it.” Example: Google is obliged to share with Apple search revenue generated by iPhone users. On Android, Google gets to keep 100%. That difference alone, says Mr. Schmidt, is more than enough to foot the bill for Android’s continued development.

And coming soon is Chrome OS, which Google hopes will do in tablets and netbooks what Android is doing in smartphones, i.e., give Google a commanding share of the future and leave, in this case, Microsoft in the dust.

Can it all be so easy? Google’s stock price has fallen nearly $150 since the beginning of the year. Financial pundits have started to ask skeptical questions, wondering why it doesn’t give more of its ample cash back to shareholders in the form of buybacks and dividends. Some suspect that all that temptation merely encourages Mr. Schmidt, along with founders Sergey Brin and Larry Page—the triumvirate running the company—to splurge on gimmicky ideas that never pay off. Fortune magazine recently called Google a “cash cow” and suggested more attention be paid to milking it rather than running off in search of the next big thing.

But to hear Mr. Schmidt tell it, the real challenge is one not yet on most investors’ minds: how to preserve Google’s franchise in Web advertising, the source of almost all its profits, when “search” is outmoded.

The day is coming when the Google search box—and the activity known as Googling—no longer will be at the center of our online lives. Then what? “We’re trying to figure out what the future of search is,” Mr. Schmidt acknowledges. “I mean that in a positive way. We’re still happy to be in search, believe me. But one idea is that more and more searches are done on your behalf without you needing to type.”

“I actually think most people don’t want Google to answer their questions,” he elaborates. “They want Google to tell them what they should be doing next.”

Let’s say you’re walking down the street. Because of the info Google has collected about you, “we know roughly who you are, roughly what you care about, roughly who your friends are.” Google also knows, to within a foot, where you are. Mr. Schmidt leaves it to a listener to imagine the possibilities: If you need milk and there’s a place nearby to get milk, Google will remind you to get milk. It will tell you a store ahead has a collection of horse-racing posters, that a 19th-century murder you’ve been reading about took place on the next block.

Says Mr. Schmidt, a generation of powerful handheld devices is just around the corner that will be adept at surprising you with information that you didn’t know you wanted to know. “The thing that makes newspapers so fundamentally fascinating—that serendipity—can be calculated now. We can actually produce it electronically,” Mr. Schmidt says.

Mr. Schmidt obviously has an eye to his audience, which this day consists of folks with an abiding devotion to the newspaper business. He speaks in sorrowful tones about the “economic disaster that is the American newspaper.” He assures us that in the coming deluge trusted “brands” will be more important than ever. Just as quickly, though, he adds that whether the winners will be new brands or existing brands remains to be seen. On one thing, however, Google is willing to bet: “The only way the problem [of insufficient revenue for news gathering] is going to be solved is by increasing monetization, and the only way I know of to increase monetization is through targeted ads. That’s our business.”

Mr. Schmidt is a believer in targeted advertising because, simply, he’s a believer in targeted everything: “The power of individual targeting—the technology will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them.”

That’s a bit scary when you think about it. But for investors and executives the big question, of course, is which companies will control these opportunities. Google may see itself as friend and helper to the media business, but it also clearly sees itself in control of the targeting information. Says Mr. Schmidt: “As you go from the search box [to the next phase of Google], you really want to go from syntax to semantics, from what you typed to what you meant. And that’s basically the role of [Artificial Intelligence]. I think we will be the world leader in that for a long time.”

Between here and there, though, the company faces ever-growing legal, political and regulatory obstacles. The net neutrality debate, which Google has led, has taken a sudden turn that has many of its former allies in the “public interest” sector shouting “treason.”

What was most striking about the set of net neut “principles” Google produced this week with former antagonist Verizon was that they didn’t apply to wireless. “The issues of wireless versus wireline gets very messy,” Mr. Schmidt told one news site. “And that’s really an FCC issue, not a Google issue.”

Wait. Isn’t the future of the Internet wireless these days? Isn’t wireless the very basis of the new partnership between Google and Verizon, built on promoting Google’s Android software? But Google has now broken ranks with its allies and dared to speak about the sheer impracticality of net neutrality on mobile networks where demand is likely to outstrip capacity for the foreseeable future.

If that weren’t about to become a sticky political wicket for the company, it also faces growing antitrust, privacy and patent scrutiny, fanned by a growing phalanx of Beltway opponents, the latest being Larry Ellison and Oracle. “There’s a set of people who are intrinsic oppositionists to everything Google does,” Mr. Schmidt acknowledges resignedly. “The first opponent will be Microsoft.”

Mr. Schmidt is familiar with the game—as chief technology officer of Sun Microsystems in the 1990s, he was a chief fomenter of the antitrust assault on Bill Gates & Co. Now that the tables are turned, he says, Google will persevere and prevail by doing what he says Microsoft failed to do—make sure its every move is “good for consumers” and “fair” to competitors.

Uh huh. Google takes a similarly generous view of its own motives on the politically vexed issue of privacy. Mr. Schmidt says regulation is unnecessary because Google faces such strong incentives to treat its users right, since they will walk away the minute Google does anything with their personal information they find “creepy.”

Really? Some might be skeptical that a user with, say, a thousand photos on Picasa would find it so easy to walk away. Or a guy with 10 years of emails on Gmail. Or a small business owner who has come to rely on Google Docs as an alternative to Microsoft Office. Isn’t stickiness—even slightly extortionate stickiness—what these Google services aim for?

Mr. Schmidt is surely right, though, that the questions go far beyond Google. “I don’t believe society understands what happens when everything is available, knowable and recorded by everyone all the time,” he says. He predicts, apparently seriously, that every young person one day will be entitled automatically to change his or her name on reaching adulthood in order to disown youthful hijinks stored on their friends’ social media sites.

“I mean we really have to think about these things as a society,” he adds. “I’m not even talking about the really terrible stuff, terrorism and access to evil things,” he says.

Not that Google is a doubter of the value of social media. Mr. Schmidt awards Facebook his highest accolade, calling it a “company of consequence.” And though “there is a lot of hot air, a lot of venture money” in the sector right now, he predicts that one or two more “companies of consequence” will be born among the horde of new players just coming to life now.

A skeptic might wonder whether, despite present glory, Google itself might yet prove a flash in the pan. The company has enormous technological confidence. Mr. Schmidt describes how YouTube, its video-serving site, almost “took down” the company in its early days, thanks to the swelling outflow of video dispatched from its servers to users around the globe. Salvation was the “proxy cache”—lots of local servers around the world holding the most popular videos. “The technology that Google invented allows us to put those things very close to you,” says Mr. Schmidt. “It was a tremendous technological achievement.”

But with YouTube, as with lots of Google projects, there remains the question of how to make money. Google captured the search wave and shows every sign of positioning itself successfully for the mobile wave. As for the waves after that, your guess may be as good as Mr. Schmidt’s.

Read More: WSJ.com (entire article here)

interCLICK Prez Katz On Strong Q2 Results

Online advertising network InterCLICK announced its second quarter 2010 earnings on Wednesday. According to the release, “Revenue was $21.7 million in Q2 2010, a 103% year-over-year increase. (…) Gross profit was $9.6 million in Q2 2010, up 102% year-over-year.” Read more.

AdExchanger.com: Looking at InterCLICK’s 100% year-over-year Q2 growth and projected 2010 revenues of $90 million + , are there any observations you can share about how clients are spending?

MK: Delivering the most effective audience-centric campaigns is dependent on our ability to properly value targeting data and solving the operational challenges associated with running data enabled campaigns. We won a record amount of new business this past quarter and client retention reached a new high watermark. This is a hyper competitive space and I believe that our investment in our technology and our team has paid off tremendously, as evident in our results.

What about data? Has using data exchanges and other third-party providers been a key part of your offering? How do you see this playing out for InterCLICK?

The challenges in display advertising require effective supply chain management. The goal is to find the optimal alignment among data, inventory, and creative. Quality inventory has been accessible for quite some time, and through data exchanges like BlueKai, rich targeting data has been made quite accessible. So data exchanges allow for easy access and implementation. The real challenge is in the execution, which is what we have invested significant capital and resources in addressing.

Read More: AdExchanger.com

Inside the Numbers: How Demand Media Will Pitch a Billion Dollar IPO

Demand Media is a money-losing company. How will it convince Wall Street to value it at a billion dollars or more?   By directing investors’ attention to a set of numbers which say it’s a very profitable company.  The official term for these numbers are “non-GAAP financial measures”. In English, that translates into “accounting you can’t try at home, but which shows off our company in the best possible light.”  And it does! Depending on which set of numbers you want to look at, Demand lost either $4.3 million or $22.3 million on revenues of $114 million in the first half of this year. But Demand’s “Adjusted OIBDA” numbers show a company that made $25.6 million on revenue of $108 million. Much better!  Some investors may balk at these non-GAAP numbers, but Demand, Goldman Sachs (GS) and its other underwriters clearly think there’s a market for them. And there’s certainly a hunger in the tech world for a big, brand name IPO to break the dry spell. You can feel people willing this thing to work.  If Demand did, say, $55 million in OIBDA this year, it would need a multiple of 18 times trailing 12 months earnings to get to a $1 billion valuation. It would need 27x to get the $1.5 billion number that people are whispering to reporters.  Another way to get to $1.5 billion: Project OIBDA of $100 million for 2011, and ask for 15 x on that number. Reminder: $1.5 billion would make Demand worth more than the New York Times (NYT).

Read More: AllThingsD.com

Adapt.ly to Manage Ads Across Multiple Social Networks

As advertisers begin to run ads across an increasing number of social networks and sites, startup firm Adapt.ly has developed technology to help manage those campaigns from a single platform, and to help digest and evaluate the resulting performance data more easily.  As Adapt.ly co-founder Nikhil Sethi points out, most social networks offer self-service ad platforms, which exist in complete isolation of their competitors’. As a result, advertisers are forced to manually construct individual campaigns on each, despite the fact they’re attempting to reach essentially the same audience. “Managing all these campaigns by hand is a pain in the ass, and analyzing the data from all the different platforms becomes a nightmare,” Sethi said.  It’s that heavy lifting that Adapt.ly is attempting to relieve, providing a service that will handle campaign creation, targeting, and optimization automatically, and from a single point of entry. “We’ve built a system that allows us to take creative and to normalize it across a range of networks. We ask advertisers two simple questions: What are you advertising, and who are you trying to reach? The system will then optimize targeting across the networks,” said Sethi, adding that users are given the option to specify creative for individual platforms if they wish, or to simply let Adapt.ly take care of it.

Read More: ClickZ

Are Marketers Really Spying On You Online?

The ongoing “What They Know” series in The Wall Street Journal is drawing needed attention to some of the ways web analysts and marketers gather and track information about people online. As part of the series, they visualized the types of cookies and tracking files used by 50 top websites, including their own. However, the WSJ failed to fully explain what type of information is being collected about visitors and what marketers do with the data. Rather, they left the public to wonder if online marketers are actually spies.   I don’t deny that I use cookies and tracking pixels to gather a variety of details about you if you visit my site. However, most of the data I have is anonymous and the details exist across multiple systems, not aggregated in one tidy personal profile. Rarely do I feel like I have pieced together enough details to be considered a spy. But with all that data, what do I really know about you?

Read More: AdAge

Armstrong: Mission Is To Make A Sick Company Healthy

AOL (NYSE: AOL) CEO Tim Armstrong knew he would have to do a lot of investor soothing given that it posted another tough earnings report for Q2. He described the mission before him as very simple: making a sick company a healthy one. Invoking Warren Buffett’s “snowball” metaphor for the growth of his portfolio depending on finding a wet snowball and a steep hill to roll it down. “We’ve got a tightly packed snowball” at AOL, Armstrong said. He also described a “platform war” currently going on in Silicon Valley and how “content is the ammunition” and AOL will be a central supplier of that firepower. In explaining the dismal ad prospects, despite the recovery, Armstrong said advertisers continue to lag consumers in adopting online media.  Video is going to be a focus for AOL and Armstrong noted that there will be some branded entertainment partnerships announced shortly. StudioNow, which it bought last winter, grew 25 percent in terms of video output from the last quarter. “You will see a new home page that is targeted heavily around video this quarter,” Armstrong said.  On the local front, AOL’s hyperlocal play Patch added 39 new towns for a total of 83 localities in its network.  “Nobody likes to show up to these calls and report down numbers,” but Armstrong wanted investors to known that he has his own money tied up in AOL as well and asked for continued patience as he attempts to turn it around.  Meanwhile, Q3’s results is looking “choppy.” In terms of products he is happy about, Armstrong again focused on the homepage—which attracts about 15 million uniques—and Patch and Mapquest.

Read More: PaidContent.org

Google CEO Schmidt: “People Aren’t Ready for the Technology Revolution”

Eric Schmidt spoke at the Techonomy conference in Lake Tahoe today and dropped some serious rhetorical bombs. “There was 5 exabytes of information created between the dawn of civilization through 2003,” Schmidt said, “but that much information is now created every 2 days, and the pace is increasing…People aren’t ready for the technology revolution that’s going to happen to them.”   The Techonomy conference is a gathering of people from around the globe seeking to use technology to solve the world’s big problems. Schmidt spoke there today and said that people need to get ready for major technology disruption, fast.  The bulk of what’s contributing to this explosion of data, Schmidt says, is user generated content. From that content, far more prediction than we’ve seen today is possible and will be a factor in the future.  “If I look at enough of your messaging and your location, and use Artificial Intelligence,” Schmidt said, “we can predict where you are going to go.”   “Show us 14 photos of yourself and we can identify who you are. You think you don’t have 14 photos of yourself on the internet? You’ve got Facebook photos! People will find it’s very useful to have devices that remember what you want to do, because you forgot…But society isn’t ready for questions that will be raised as result of user-generated content.”

Read More: ReadWriteWeb.com

Demand Media Extends Content Model To Other Publishers, Hearst And Gannett First To Sign Up

Demand Media on Thursday debuted a new service for publishers to pad their online offerings with the work of independent freelancers. Two of the first properties to employ Content Channels, so-called, include Hearst Corp.’s SFGate.com and Chron.com.  “Hearst is the second major publisher to select our product for their sites,” said Steve Semelsberger, SVP and general manager of the Business Solutions Group for Demand Media. (The first major publisher was Gannett’s USA Today, which recently employed Demand to power its “TravelTips” section.) Semelsberger said Demand Media’s studio team worked closely with the editorial teams of both SFGate.com and Chron.com to make sure the Content Channels met their editorial standards.  In the case of the Houston Chronicle’s Chron.com, the team worked with Demand Media to create a “Small Business Resource Center” to complement its existing business news coverage by incorporating thousands of business-related articles and videos. Content Channels also went live this week on San Francisco Chronicle’s SFGate.com for its “Home Guides” section.

Read More: MediaPost

IAB Report Slams Most Online Research Methods

Watch out, research firms! The Interactive Advertising Bureau has embarked on a broad initiative to improve online brand effectiveness research, and its initial findings aren’t pretty.  What’s wrong with most research that attempts to measure ad effectiveness? Small respondent size and low response rates for starters, according to an initial report from the IAB.  Above all else, the validity of such research is threatened “by the extremely low response rates achieved in most IAE studies,” according to Paul Lavrakas, Ph.D., the report’s author, and former chief research methodologist for the Nielsen Company.  Average research is also “threatened by the near-exclusive use of quasi-experimental research designs rather than classic experimental designs,” in the words of Lavrakas, author of “Telephone Survey Methods: Sampling, Selection, and Supervision.”  Worse still, industry research is often compromised by “a lack of valid empirical evidence that the statistical weighting adjustments … adequately correct for the biasing effects,” Lavrakas attests.  “In instances where the sample size is at the lower end of this range [less than 800 participants] and the clients want subsample analyses to be conducted … these subsamples may not have enough members in them to provide precise analyses,” Lavrakas concludes. “Thus, subsample analyses based on small sized subsamples [fewer than 100 participants in the subsample] will have relative large sampling errors.”

Read More: MediaPost