White Paper: Disintermediation of Online Display Advertising

I spent much of 2007/08 exploring the world of online ad exchanges and data.  If you are a regular follower of this blog, you were with me for much of the journey as I wrote quite a bit about it.  After digging deep in the industry, I wanted to put together a White Paper that outlines where we have come from, where we currently are, and where we are heading.

The first part of the paper is a primer (101) on online advertising and the rest of it talks about ad networks and exchanges.  I went through multiple titles for this paper but settled on “Disintermediation of Online Display Advertising.”  The “disintermediation” part comes from the power shifting from ad networks to the large ad agencies and brands themselves.    Why/how this happens is talked about in the document.

Link to PDF: Disintermediation of Online Display Advertising

A follow up to this post/document will be to talk about the data portion of this industry and the current differences in the providers.  Stay tuned.  I’ll be posting a bunch on Twitter (@dherman76) about this.

For those people who want to learn more about this industry, I have written quite a few of the names of companies participating in no particular order:

  • http://www.adventurista.com/ Sarah Tavel

    Thanks for posting this, Darren. A great and well argued overview of how the industry is changing.

  • http://www.2utube.com videos guy

    thank you for sharing your paper Darren. Services such as the Rubicon Project or Yieldbuild are taking everything to the next level I think. At the moment they are still in early childhoods and I hear from people that they make less money than they did before if they use them.

  • Sarah T

    Thanks for posting this, Darren. A great and well argued overview of how the industry is changing.

  • http://www.2utube.com videos guy

    thank you for sharing your paper Darren. Services such as the Rubicon Project or Yieldbuild are taking everything to the next level I think. At the moment they are still in early childhoods and I hear from people that they make less money than they did before if they use them.

  • http://www.ad-vocate.com Seni Thomas

    Good stuff man.

    There are a few points worth expanding on, but I wanted to focus on the false sense of effectiveness that 'targeting data' affords.

    Quite simply, if I went to network X and paid $15 CPMs for 5 targeted segments, but targeted them all with the same creative (non-unique message) there is really no reason why I shouldn't have just paid $3 CPMs for Run of Network as it would have included the “targeted segments”, which is much more cost effective and there is still usually a layer of optimization that occurs at the RON level. This is usually the case when it comes to digital media plans and is where the false sense of effectiveness creeps in for the following reasons:

    1. Showing the segments in a client presentation makes you look smarter
    2. Everyone is addicted the notion of targeting
    3. As a planner you need to prove performance and the CTR might be 0.7% in the targeted segments because the number of impressions served was lower, and .09% for the RON campaign even if the same people clicked on the ads. With RON you just get a ton of extra impressions that could be driving awareness, recall, etc.
    4. The CTR metric can be a tricky beast, as can all data, and can lead to many inaccurate conclusions

    Thus, I believe that the next generation of data based targeting must reside within a larger framework, where it is only a component of the solution, not the end game.

    A + B || C

    ( || means piped into… Geek reference back to Unix/Linux)

    Put another way,

    Targeting + Dynamic Creative || Dynamic Web Experience

    Note: I prefer the term Targeting as data is useless without an effective algorithm making sense of it

    This framework accounts for the full user experience with the brand and allows each component to self optimize, while simultaneously optimizing at an aggregate level . For example you can feed various targeting segments across your purchased inventory, feed hundreds of different iterations of creative to each segment through a dynamic unit, and optimize based on the clicks, engagement, etc.

    At this point you are creating a number of optimized pairs say A3 (for Targeting algorithm #3) and B4 (Creative iteration #4).

    These optimized pairs when piped into the dynamic web experience create customized sites for specific types of people that clicked on a particular ad.

    For example, if I'm an “In-Market TV Buyer”, you can deliver a number of banners that depict different TV models, features, calls to action, etc. so that when activate a given banner the landing page highlights the information displayed on the banner I clicked.

    It all sounds costly and time consuming, but many companies out there today provide these types of solutions for reasonable rates, and many times it takes less time than actually building traditional creative, as you only need to use a template and define the variables. For example, Adisn runs a dynamic solution for Buy.com that pipes in 150,000+ images and info from Buy.com's database. All it took was a template and an XML feed.

    This is still a work in progress as no one has figured it all out quite yet; however, I do advocate that we all take a step back and look at this problem from a higher level.

    Cheers all,

    Seni

  • Lee F

    Good stuff Darren. Exciting things ahead!

  • Lee F

    Good stuff Darren. Exciting things ahead!

  • http://www.adbuyer.com Tim Ogilvie

    Good stuff Darren. Thanks for posting – the coming years are going to be very interesting. Looking forward to seeing your follow-ups.

  • http://www.adbuyer.com Tim Ogilvie

    Good stuff Darren. Thanks for posting – the coming years are going to be very interesting. Looking forward to seeing your follow-ups.

  • http://www.pubmatic.com eric klotz

    Darren, just re-read this and I'm about to pass it down the line to others. Great thought piece. You've done a good job of capturing the rise of ad networks, the current balance of power / rising opportunities, and the direction this industry is likely going to go.

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  • http://www.contactpaper.org contact paper

    Good post overall. Enjoyed reading it.

  • http://www.contactpaper.org contact paper

    Good post overall. Enjoyed reading it.

  • http://www.linknami.com online advertising

    Well you can`t stop progress I guess.

  • http://www.linknami.com online advertising

    Well you can`t stop progress I guess.