Advertising is going through a significant innovation period right now and it’s fascinating to take part in it. Online advertising (strictly online) was established and tested in the 90s and now has billions of dollars being spent. Brands are spending increasing amounts of money to engage with their audiences in the digital world.
The Internet is really the first medium that is enabled by technology, potential for mass reach, and the ability for anyone to aggregate audiences (niche or mass). Television, print, radio, and OOH (out of home) all have significant barriers to entry in terms of both human and capital resource. Because of the lower barriers to entry and the adoption of billions of people worldwide, the Internet has become one of the most fertile feeding grounds for technology geeks and media mavens to innovate within and to make a difference in a short amount of time.
With all of the properties that exist online (web only or hybrid), a common theme for many of them has been monetization by advertising revenue. Over the past decade, companies like Poindexter, Atlas, Overture, DoubleClick, Google, Burst, Sonar, Tribal Fusion, and a whole slew of others have helped brands reach their audiences either through technology or advertising sales (enabled by technology).
Up until very recent years (and in many cases, even today), when you advertise online, you are reaching the audience of a particular website. For instance, if you are advertising on FerrariChat.com, you are going to reach the affluent crowd that visits that particular site. To put this in context, you would advertise (place your media) on sites/properties that have a high composition of your target audience. If a sites composition is 92% (of your audience), it means that for every $10,000 of media dollars spent, you are wasting $800.
Of course, we all like to create efficiencies and limit our wastage. Advertising technologies are in a high-growth phase where audience data is becoming highly sought after and important. Most brands and companies have tons of audience data but generally, it’s always existed in many different silos (divisions of companies) or the technical (or operational) infrastructure was never in place to crunch the data. Now that entrepreneurial visions and technical infrastructure are on the same wavelength, advertising is becoming increasingly technical.
Lets throw away our old models of buying mass audiences.
Lets look at new models of buying single people and I’m sure you see the benefits of this. This isn’t revolutionary but it’s becoming mainstream. Some smart people have been thinking about this for quite some time but there are finally enough media dollars behind this to move everything forward and validation is occuring.
Separate audiences from the page and on top of that, fragment the audiences into singular conversations (impressions).
In order to buy single targeted impressions, you must have data on the impression. Data is key. Dare I say, data is the new king (content)? If you have data and aren’t afraid to roll up your sleeves and analyze it, you can do some really interesting things today. Just having data however does not mean a thing…. quantitative analysis and modeling abilities will allow everyone from agencies to technology companies create unique audience segments and add color to single impressions.
Whether your a venture capitalist looking for your next investment, a media planner/strategist looking to figure out where to spend your ad dollars, or a brand manager looking to grow your P&L, there are no shortage of companies emerging (or have emerged recently) that could provide this data. Just look at the behavioral targeting networks that emerged such as Tacoda, Revenue Science, and Specific Media. Not only do these networks allow you to target based on behavior, but they provide added value in the sense that they show you who your audience really is by analyzing the data they have on the audiences who react to your brand messaging. This data is turned into reports that are given during and after the campaign has run for your brand. Of course, this is very interesting.
Look at Lotame, 33Across, Datran, Media6 and others that have quite a bit of data about users that can be leveraged for reaching audience segments. Matching an impression with a chunk of relevant data can be extremely interesting.
Who will win the near/mid-term advertising game?
This is a very interesting question. I think that there are quite a few players in the market who have quite a bit of data and also have an ad-sales team. Many times, these companies keep the garden walls “up” with this data and you can only receive minor parts of it through your ad buys. I think there are ways to monetize that data individually aside (but maybe not mutually exclusive) from having to buy media. I’d like to see companies leverage all of their data together to make impressions more valuable, whether they are bought from the respective company or a 3rd party.
Where does this play out? In the exchanges, networks, and sometimes, site buys.
Food for thought: While most of this conversation was centered around the Online Advertising world… it’s safe to assume that this will take place for all media channels in the next few years. As we’re one power outlet away from being a fully digital society, we’re going to be able to buy single impressions across television, radio, print, OOH, etc. Data will make this infinintly more valuable. Get excited… I know I am.
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June 17th, 2008 at 10:37 am
I agree high composition % can help to minimize waste. But Hyper-targeting technologies can enable advertisers to reach just the right audience they are targeting. The impressions are only delivered to that hyper-targeted audience, so the waste of ad $$ can be minimized.
I’m interested to see data such as who clicked on my ad impression or have taken an action, what else are they interested in. These data can help me optimize for my next campaign.
June 17th, 2008 at 5:50 pm
The current state of the market would seem to present very lucrative opportunities for the right team who can execute. I’ve had an idea along these lines tickling the back of my brain for a few days. Offer bloggers and such a free hosted web analytics service like Google/Gum/Mint, with a javascript snippet that includes a pixel as well. Cookies + pixel = global web behavior. The value proposition for the bloggers is that lots of services give you anonymous behavior data for your own site, and show you the referral info, but why not see what your audience is doing beyond your site and the page that came before it? The blogger gets help tuning his site, you add another user access point to your network. From there you can go in multiple directions, but it’s a from a theoretically boot-strappable starting point.
June 17th, 2008 at 10:43 pm
As a publisher, data has always been a tool for us to improve our visitor experience and to add and create values across our sites.
Whats really interesting is that we are seeing the requests for that data trickling down to our small business advertisers. In other words the late majority (mainstream) is now trying to peek into that “walled garden” of data. Which in turn is driving demand for more data on our part. Very exciting indeed.
June 18th, 2008 at 10:45 am
Really interesting post! Two questions / thoughts for you:
1) Is it important to segment audience data & behavior data. Demographic and browsing behavior while available will probably always have limitations. However, if you track the right behavior - optimization can be appropriate. Obviously for lead generation, click or some other action works well. For brand / awareness building, I’m pretty sure it isn’t a click - but equally sure it isn’t an impression. I talk about this a little here - http://profitablesignals.com/blog/?p=169 .. Any reaction?
2) Since you sit on the agency side of the table … is part of the issue creating enough different types of creative that the message can be targeted to a specific audience? It seems like the message needs to be hyper-targeted as well the audience it is delivered to. Obviously that is part of the genius of text ads, you can pay copywriters to create hundreds or even thousands of ads for a single client instead of orders of magnitude less when talking about display ads.
June 18th, 2008 at 12:40 pm
Darren - One of your best posts yet. Sites that are fortunate enough to already have data on users (subscription, etc) ought to realize they have a head start and companies you mention like Lotame should be working with them to (at least) perfectly target the ads served while those users are logged in. You’d think Facebook would have this perfected, given you have to be logged in (and they have access to so much of what you like via your profile) and then serve up an appropriate ad. But they don’t at all. All their ads are served based on what you’re viewing not who you are. Once again you get it before everyone else.
June 18th, 2008 at 10:03 pm
Thank you all for the great comments. Everyone brings up some really interesting points.
Sean, I’d love to speak to your questions….
1) Is it important to segment audience and behavior data? Yes and no. Data works nicely in aggregate for overall trends, but when you start slicing it, it becomes extremely interesting. Since there are two main types of campaigns you can run (brand vs. conversion), you may use different audiences/data to optimize and target.
2) Creative certainly plays into a restriction here. Ideally, you’d have a different creative message for each placement (site/placement level) but most of the time it doesn’t happen due to many constrictions. We don’t live in a perfect world
June 19th, 2008 at 3:17 pm
Great post. As you get more efficient with your targeting, the industry will require a very different method of pricing these opportunities. CPMs will either be tremendously high - what is the CPM on 1000 people with net worth of $10mm? or will some other pricing fromat take hold?
Also wonder about the relationship between context and audience. Golf tournaments on TV are sponsored by people looking to reach executives and high net worth individuals. Golf sites typically carry ads for golf equipment. TV and some network/behavioral firms seem to focus on audience with many web properties (and google ad sense and ad words) focus on context. You can target the right audience but is that message effective when the context is wrong?
Very exciting times.
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August 5th, 2008 at 12:43 pm
Great read. I agree that data is invaluable in our industry, especially when considering ROI and general accountability. I’ve been working with Buy Safe Media (www.buysafemedia.com), a campaign that promotes print media circulation audits. It represents another way to reach your target audience. Check it out and let me know what you think.