Data Driven Platforms: Search & Display

Posted by Darren on Aug 2, 2010 • (Comments)

Using data to make better business decisions is nothing new but since 2008, it’s been a very hot topic.  It’s been covered in almost every issue of Advertising Age, a whole new web destination now exists: AdExchanger, and agencies spun up new trading desks that are essentially high powered SWAT teams that combine rich data-sets with media for exceptional results.

Google has built a $154 billion company based on the use of lots of data to make the right decisions for it’s advertisers.  The data sets that Google are using are based off of search queries, which one can argue is one of the most powerful data sets that exist as it’s pure “hand raising.”  Over the past ten years, the big search engines have integrated with search engine marketing platforms such as Marin and Kenshoo to provide access to that marketers and agencies can use these tools to make better decisions which should improve performance and create workflow efficiencies (amongst many other reasons).

The trend we are going to see in 2H2010 and certainly in FY2011 is the emergence of these tools within the display, video, and mobile world and combining SEM with them.  While I can’t speak for any one tool directly due to confidentiality reasons, we are going to see many of these once SEM-only players move upstream to capture additional ad dollars and to use all-data (search+display+video+mobile, etc) to make better decisions.

As illustrated below, agencies such as Efficient Frontier are moving into this space as well, as well as, tools/platforms are integrating into biddable display sources.  These are not the only companies moving into the space but are illustrative of the trend.

What does this mean for the standalone display side platforms?  For the standalone SEM platforms?

An operational hurdle that will have to be addressed within the media agency world is that search and display is generally bought from two separate groups so either a) these groups will need to be combined or b) we need to provide clear roles and rules for each group.  I think option (a) is a much better choice as I’m all for integration.

SEM Platforms

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  • Justin Merickel
    Nice post, Darren. I think you are absolutely right that the market is quickly moving toward integrated platforms that address the primary digital channels. And while many clients and agencies continue to place search and display in silos, forward looking organizations are now aligning biddable display with search.

    Standardizing on one platform will be valuable for a host of reasons. Accurate attribution that seamlessly ties into bid optimization is clearly the biggest advantage. Standard work-flow and integrated insights are also important and introduce efficiencies to organizations.

    To respond to Pete, I believe platforms will ultimately succeed or fail on an ability to differentiate in optimization. Work-flow and inventory hooks spanning search/display/social/mobile/video, including real-time bidding, will be (and arguably are today in search and display) cost-of-entry features for platforms. Those that can't prove they can deliver superior performance either won't survive or won't be able to create a scalable business.

    Clearly I'm biased as we've built the first integrated search+display+social platform at Efficient Frontier. But given how fast this market is moving it won't take long to see the migration play-out. And with things moving fast and furious, it is important for marketers to truly understand the capabilities and processes of platforms. There's a lot of noise to sort through right now.
  • Albert Azout
    Great post!

  • Great post!

    Another way to think about it: migration/convergence/unification of lower and upper funnel marketing. This reference frame allows you to think holistically about the entire marketing cycle without being tied to particular implementation details (search vs display vs traditional). Once this foundation has been laid, it's straightforward to snap the various pieces into place.

    Extreme lower funnel: site retargeting
    Lower funnel: SEM / SEO / search retargeting
    Mid funnel: behavioral targeting
    Upper funnel: brand awareness, reach / demo targeting etc

    (I've refrained from slotting traditional media into the above buckets, but it's not hard to place tv/radio/direct mail/etc.)

    And to your point, yes, data makes things better at every level.

    From there, it becomes interesting to cast our thoughts forward. In this new ecosystem, who will have market power? Advertisers, the source of revenue, should maintain their pole position. But things get more interesting elsewhere. Publishers? Data exchanges? Data sources? Those who use data on behalf of advertisers? Where is the "real money" long term?

    Like you, I've reviewed (under various forms of NDA) dozens of different data platforms that do this and that. One of the more subtle themes that has emerged for me: nobody has really done any groundbreaking optimization and machine learning work. For the most part, these companies have (to quote Newton, Hawking, or Jurassic Park) "stood on the shoulders of giants" and implemented standard machine learning and statistical optimization methodologies - Bayesian blah-blah-blah, Taguchi this, Genetic Algorithm that - all stuff that been well understood for decades. This is not to take anything away from the engineering and user interface achievement, which are significant, but unfortunately these do not represent sustainable competitive advantage.

    In short, competent engineering and beautiful UI are lousy sources of long term market power. They're just too easy to copy once the business community realizes that there's a there there.

    Barring any (entirely possible) changes, it seems to me that over the medium to long term (3-10 years), these services become increasingly commoditized, competing on margin (not performance) with each other and ultimately yielding increasing value to the other participants of the value chain / ecosystem - to advertisers certainly and potentially publishers and the denizens of the data sourcing and distribution mechanisms as well. (I'm also bearish on the data exchange market - if history is any guide, there will be constant and unrelenting pressure on these companies to lower the "distribution tax" they levy on all data transactions - see NYSE vs NASDAQ.)

    And, though people have been talking about it a little too much of late, 'commoditizing the complement' is a perfectly reasonable ecosystem strategy here. Reduce switching costs, encourage (or create) competition among the adjacent segments of the value chain, etc, etc, lather, rinse, repeat - it's all been done before in other industries and will be fascinating to watch as it occurs in ours.

    Which is not to say that entrepreneurs shouldn't be excited about this stuff. There's definitely dough to be had. But unless they have the goods (genuine improvement in underlying science) for a true long term run, the goal should be to sell their companies while things are still exciting.

    Hope you had a great weekend!
  • Pete, this is why I love it when you stop bye! Great thoughts.

    The person holding the dollars will always be in the poll position. They will dictate the rules.

    Check out the quote on this page:
    http://www.darrenherman.com/20...

    Makes sense, right?
  • Adam
    Interesting post. Definitely on to something here. Agreed that agencies need to restructure out of the search/display paradigm. My thoughts is that they should switch to teams focused on performance-driven v. brand-driven advertisers/campaigns.
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