Category Archives: Advertising & Marketing

The 87.5% Category According to Luma – Lots of Acquisitions

I’ve spent a bunch of time with ad servers in my life.  It all started when I was installing phpAdsNew for my brother‘s website, Exotic Car Network, creating ad zones across Student.com in OpenAdStream, a web property that about 7 of us ran in the late 90s, working on the team to create a self-service ad buying platform for eBay, creating a proprietary ad server for the in-game advertising marketplace called Radial, founded MDC‘s trading desk practice using BidManager and TerminalOne, and finally, using DART, Atlas, and MediaMind at the agency that I’m currently at.  Now looking back at it, I’ve centered much of my career around served and tracked media.

So as you can see from above, I spend quite a bit of time with media technologies.

I believe they will play a large role in the future of advertising and I will continue to play in this field over the coming decades.  There’s been an increased amount of coverage in this space which was once reserved for the back floors of the premier industry showcase, AdTech.  Terry Kawaja is bringing some light humor and some fantastic charts, John Ebbert is creating a mini-media empire (well, not an empire), Brian Morrissey is resurging an old newsletter back to the top, and there’s been a handful of acquisitions lately including Admeld (Google) and MediaMind (DG Fast Channel) totaling close to $1 billion.

According to the display Lumascape, the only category with 87.5% of companies acquired, yes, 87.5%,  is the ad server category.  Crazy when you think about it.  Atlas, DART, MediaMind, Pictela, PointRoll, MediaPlex, etc have all been acquired.  There are some independents in the market today such as OpenX and insurgent AdZerk, but the majority have already been acquired.  I predict that the category is still ripe for innovation and will continue to see many new players enter the space.  I was a personal shareholder of MediaMind and it was one of the larger positions I’ve held.

I continue to think that the best 3rd party ad server is exactly that – a 3rd party ad server that is not biased towards any media.  Almost exactly a year ago, I wrote a piece titled, “Insurgent:  How to take down Atlas and DART.”  I continue to dislike Google’s positioning in the marketplace as overnight they theoretically could shut off access to their inventory for non-DART users (could, not should), Microsoft has an ad serving system built in the 1990s and still feels like it, and this left an opening for a major ad serving player to come in with an independent stance, thus MediaMind gained traction.  I love this stance as mentioned above and it needs to continue.

A few days ago, I wrote a post about attribution and the growing advertising operations line-item.  If you haven’t read it, you should.

If I personally was to start a company tomorrow, I’d probably create the next 3rd party ad serving system built for the future of all media (able to serve site-direct placements, social media and RTB) and include the opportunity for biddable, rich media, video, and full reporting & analytics.  I believe no ad serving system delivers superior reporting and analytics so this is an area that I’d specifically make sure I’d nail.

I think this is an area for massive innovation because the vision that the industry hasn’t recognized the full vision for the future… I believe that all media will be served, tracked, and optimized across all channels.  Television, print, radio, and out of home will all in some way or another be served, tracked and optimized.  This obviously cannot happen overnight as there are quite a few barriers and obstacles to go thru, but the opportunity is huge.  There is a reason why 87.5% of the companies in the ad serving segment have been acquired.

Note, I don’t think you need to start from scratch.  If you could raise some money, you can start by acquiring several of the pieces.  There are quite a few DSPs who could use an exit right now.   There are even some large independent ad servers who would be interested.  A roll-up strategy would be interesting and something that could come together nicely.

One of the bigger parts here is that you need to service the advertiser (or marketer).  This needs to be written on all company walls.   Mandated thru corporate handbooks.  This is similar to how SSP’s service the publisher.  You cannot be all things to everyone and when this happens, decisions sometimes become very tough to make as you try to please too many constituents.  Think about all the decisions Google (and Admeld) had to make about where to flow it’s ad dollars – to Google-run sites or it’s 3rd party network of sites.  Stick to one core area of focus and innovate within it.

This area gets continually dinged because there isn’t a ton of money to be made.  $0.04 average CPM and 200 billion monthly impressions net out to about $8MM in monthly ad serving fees (~$100MM/yr).  That’s a nice company but think of how many are larger.  If you create a robust reporting & analytics infrastructure, ad verification, workflow solutions, etc – you can charge a premium.  I believe you can.  Create a premium bundle of services to execute within the Ad Ops space, and sell them as one package.  There are buyers.

The space is only going to heat up further.  Continued innovation, a lot more media technology thinking, and investment will raise the industry forward.  I know I want to be a part of it!

Advertising Operations and The Growing Line Item

One of the big trends I’m seeing within the agency and marketer ecosystem is that a specific line item on our media plans are getting seemingly larger each year.  Year over year growth of the “Ad Ops” line item is starting to catch my attention.  To be fair, it caught my attention back in 2008, but I’ve not written about it in a while.

Way back when, the ad ops budget basically included enough money to pay for our 3rd party ad server of record (Atlas, Dart, OpenX, MediaMind, etc) and that was anywhere from $0.04-0.10 per CPM.  If we wanted to include Rich Media on a campaign, we either had publishers bake their fees into the CPM’s they were charging us (CPM uptick such as PointRoll) or we would pay a separate CPM that got baked into our ad ops budget ($0.60-$2.00 depending).

Now, our Ad Ops budgets are increasing not just due to the volume of display advertising, but because of the media technologies that we deploy for our campaigns.  Here is a limited selection of a few, but there are certainly quite a bit more we can chose from based on the clients needs:

  1. 3rd party ad serving (MediaMind, Atlas, DART, OpenX, AdZerk, etc)
  2. Online advertising verification (DoubleVerify, AdXpose, TrustMetrics, etc)
  3. Compliance (Evidon, DoubleVerify, Truste, etc)
  4. Advanced Analytics & Measurement (VisualIQ, C3Metrics, Marketshare, etc)
  5. Data Management Platforms (Turn, Legolas, Aggregate Knowledge, BlueKai, etc)

We’ve gone from $0.04 CPMs for Ad Ops budgets to now, well, very high.  The Ad Ops budgets are reaching 10-25% of a total campaign.  $20MM in media could equate to $2-5MM in ad ops budget.  Does this Ad Ops budget come out of the media budget or is it separate budget?  Big questions.

One of the areas that I was talking to my friend Jerry about this morning was around attribution (#4 above).  We are seeing an increase of full funnel attribution companies popping up and we’ve both had different experiences.  I’ve been working with some cutting edge attribution companies in the office that are working on assigning dynamic weights to the conversion path based on all different dynamic factors.  While this is great, one could argue that the cost of doing this isn’t worth it unless you are investing enough money in media/advertising to cover the cost (gains in performance outweigh cost of implementation).

IMHO, the role of attribution modeling should sit at the 3rd party ad serving level – so I think folks like MediaMind (one of our ad-servers of record) should get acquisitive and add this to their general offering.  It’s going to become a standard, cost of doing business, and in the next few years, I expect advanced analytics and attribution to be table stakes in the ad server marketplace.

This post was all over the place but I absolutely love the topic.  Would love to participate in the comments. Please leave them.

My next post on this subject should talk about going from tactical to strategic with Ad Ops and the increased importance of the role of media technology in an agency organization.

Disclosure:  I’m a personal investor in MediaMind.

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Areas of Interest from kbs+p Ventures Summit

We launched kbs+p Ventures about 6 months ago as an early stage investment arm of our agency, kbs+p.  Last Friday, we hosted a summit where we brought a small group of people with both visionary and tactical backgrounds to help us filter the areas that are of potential investment focus.  While most firms keep this confidential, following Fred’s recent post over at AVC, I’ll open these thoughts up as well.

Why?  I hope that any of you reading this blog might help point me/us in the right direction of entrepreneurs who are innovating in any one of these spaces.  You can easily get in touch with me here or on Twitter or LinkedIn.

In no particular order:

1.  Virtual Currency – what will the impact be of Facebook Credits?

2.  Measurement – how do you measure engagement?  How do you value “social”?

3.  Fan Acquisition – what are the best ways to acquire “fans” and “followers”?

4.  In-Stream – should brands participate in the stream of conversation and if they do, what are the rules to play by?  A company who is participating here is 140Proof

5.  Influence – how do you buy influence?

6.  No two networks or channels are used the same way.  I.e. While Facebook is a social channel, so is Linked In.  Think about the differences in your usage.  Compare this to 20 years ago when ABC and NBC, both television stations, were used similarly.

7.  With millions of web publishers, how do you match creative to each individual publisher?  It’s tough.

8.  We spend a lot of time targeting specific audiences, but an additional filter to overlay is “mindset.”  Are they currently in the “mode” to purchase? How do we differentiate messaging based upon where audiences are in the funnel?

9.  How do we combine SEM + social media monitoring.  If a topic is trending, how do we buy SEM against it?

10.  Predictive Trending – how do we predict what might trend and then purchase advertising around it.  (current company doing this is buzzfeed)

11.  How do we create video at low-cost, and then scale the distribution

12.  There currently isn’t one cohesive “stream” of me.  How can we harness the entire stream?  Where will the meta-stream live?

Leave comments and/or questions.  Would love to elaborate on any or all of these.

We (and they) are hiring!

At my last startup, we used our investors not just for business guidance, but also as talent scouts.  They were constantly meeting interesting people who were looking to join or build the next big idea and they helped us place some great talent within our organization.

Now, as an investor at kbs+p Ventures (and still an entrepreneur), our portfolio companies are asking us for hiring help.  Taylor and I are working on an internal & external talent management tool but I didn’t want to wait to publish these until it’s polished and released as it could be another month or so.

Here are some awesome opportunities from our portfolio (and friends of ours) who have asked us for candidates:

Crowdtwist:  A New York based startup who drives customer engagement through next generation loyalty software. CrowdTwist’s activity engine intelligently tracks consumer interactions with your brand (i.e. consuming, creating, sharing, purchasing, etc.) within your own site and across other destinations online. They are currently looking for:  Director of Engineering, Project Manager.

Adapt.ly:  A New York based startup who has made it extremely easy to buy media and audiences across the social web.  I personally call these guys the first social DSP.  They are currently looking to hire:  Ruby Developers, Data Scientists, Account Managers, and Summer Interns

The Media Kitchen:  New York based communications planning and buying agency (part of kbs+p) is hiring an Associate Director of Media Technology.  This position will be reporting into myself and will be an awesome role for someone who understands the infamous GCA/Luma Partners slide and reads AdExchanger daily.  Job description is located here.

If I missed any opportunities, I’ll post again in a few weeks.  If you are interested in applying for an opportunity, please contact the company directly (follow instructions on the opportunity page).

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Paid, Owned, Earned (Media)

I’ve been on a recent kick looking for “media” opportunities that cross the paid, owned, and earned landscape.  I’ve been looking for them for some of our clients media plans but I’ve also been looking at them from an investment perspective thru kbs+p Ventures.

The Paid, Owned, Earned Media framework isn’t new and a quick Google search reveals that it started catching on in 2009.

For those unfamiliar with the team, it’s a media construct/framework where a tactic (or overall strategy) crosses between paid media (media you purchase), owned media (media you own such as a website, video) and earned media (Re-tweets, shares, etc).

I’m on the lookout for companies who cross into this category.  An example of one that I was a lead mentor for in the TechStars NY program is CrowdTwist, as it’s a social loyalty platform that plays into the POEM framework.

Would love to hear about any other POEM partners out there as I think this area is really interesting.

Incentivized Viewership

I wrestle with whether or not I like the notion of  Incentivized Viewership.  It’s coming up a lot lately around the office as we’re starting to see more and more vendors offering us solutions to have viewers watch or interact with our clients ads because they are being compensated to do so.

I decided to write this post to get my thoughts out in the open and hopefully have a dialogue with all of you who can help create a better informed POV.

My general thought is that incentivized viewership is negative for the ecosystem because the quality of the view is diluted because the person did not decide on their own to watch or interact with the ad unit.  The person is only watching the ad unit because they earn a Facebook credit, a game credit, or some other form of compensation.  Here are a few posts about Facebook and some partners incentivizing video watching to earn Facebook credits.

Does anyone have any research that uses a control and variable group to measure conversion and/or brand metrics around people who are incentivized to view?  I’d love to see it.

Do you believe that incentivized viewership is good for the ecosystem?

Measuring Integrated Advertising

I have a lot of respect for Mark Suster, an entrepreneur who turned venture capitalist and now is investing out of GRP Partners.  He writes a terrific blog called Both Sides of the Table and his posts are picked up on TechCrunch and other major outlets.

He recently wrote a declarative post called The Future of Advertising Will be Integrated.  The post went up on April 29th but I’ve been noodling it ever since. Due to some personal obligations, I’ve not been able to respond, but finally, here it is.

As an entrepreneur turned ad agency guy, when I hear the word “integrated,” I immediately think media and creative under one roof, such as my firm, kirshenbaum bond senecal + partners.  I personally believe this is really the only way to go if you want to get to a big platform.  With media and creative all under one roof, under one P&L, and with a cohesive team, you can create big ideas that know no creative or media boundaries.

We have a saying internally at the agency, E=(MC)2, which is obviously repurposed, but it means a “[brand] experience” is exponentially greater when media and creative work together.

Enough agency speak for now but keep this last sentence in the back of your mind as you read the rest.  I hope you do.

Mark came at his post a bit differently and took the above tenants, whether he realized or not, and applied them to the digital media ecosystem today.  He highlighted a few companies such as my buddy Ari’s company, Solve Media, along with Adly and Kontera (amongst others).  The creative is the media in most of these, along with the media being the creative.  I’d argue Paid Search links play here as well.

The Elephant in the Room

One of the largest issues that the digital advertising ecosystem faces today is that we as an entire industry, are not setup to measure the “integrated” nature effectively. Because of this, at scale, this is not a near term reality.  There, I said it.  The elephant is in the room.

The digital advertising ecosystem by default rewards the intent harvesters, not the intent generators.  The primary reason why is that many agencies and marketers are using 3rd party ad serving systems that reward the last click or last action.  In the world of rewarding the last click or action, generally, the ad networks are the ones who win out.  There are 400 (or 700 depending on who you talk to) or so ad networks in the world who have nice businesses.  Just look at ValueClick or InterClick’s financial statements as they are public.  Not too bad.

THE Digital Opportunity

Because of the above, therein lies an opportunity.  If we believe what Mark wrote last week and I’ve been saying for years, then an opportunity lies in being able to create a measurement platform that allows us to understand intent harvesting and intent generation/creation. Piecing together a DART (3rd party ad server) report with a ComScore or Knowledge Networks study is inefficient and frankly, annoying.   There needs to be an evolution here.  This is a big opportunity.

Where We Are Today

Many readers of this blog don’t work in advertising agencies but are awesome entrepreneurs looking to figure out the next big idea to go and tackle.  Being that you are not in the walls of agencies on the daily basis, I thought I’d take the remainder of this post to outline where the industry is in terms of advanced analytics and then open this up for commenting in the thread below.

I highly request that you engage in the comments as group knowledge will benefit the community at large, you might find your next co-founder, and I love open conversations.

Ad Serving:  The Madison Avenue ecosystem basically uses one of three third party ad servers to “serve” and “track” different pieces of creative.  We use Microsoft’s Atlas, DoubleClick’s DART, and MediaMind.  In Q1 2011, we moved the majority of our clients off of Atlas and onto MediaMind because I personally have a strong viewpoint of independence of my ad-server and it’s relationship to media. (should be separate)

Data Warehousing:  This is a relatively new area and somewhat unchartered territory for many agencies.  Many agencies rely on their third party ad-server to be their main data warehouse for tracking. This is good, as you’d be surprised how many people don’t use a 3rd party ad server, but this is not great. Using a full on data warehouse such as VisualIQ, Neteeza, Artemis, or others allows for a larger capability to manipulate data and understand the relationships between touchpoints beyond “last click.”

At the agency, we’ve been using VisualIQ with some of our most progressive clients and the reports and results we’re seeing are fascinating.  One of the biggest questions we’re tackling is “optimal touchpoint analysis” and we’re seeing the relationships between display, video, search, social, and beyond.  We can now determine a value to each one.

Brand Lift Studies:  While I’ve argued time and time again, that “brand” advertising for the sake of brand advertising online is dead, many marketers continue just spending on “brand.”  Agencies use 3rd party brand study vendors such as ComScore, Knowledge Networks, Vizu, and others that help measure the “lift” (or change) associated in any one of many categories including but not limited to awareness, intent, and consideration.

Opportunities

·     The basic ideas behind today’s ad serving systems were conceptualized in the mid to late 1990s.  Online video, social, search, etc were not around then.

·     Product placement and integration into online video and social are hard to quantitatively measure with a 3rd party ad serving system as the only metrics you can pull back to your ad server are by using a click-tag.

·     The Display ecosystem is being fractured into traditional display (i.e. banners on ESPN) and social display (i.e. creative/textual units on Facebook, LinkedIn, etc).

·     I see Paid Search and Display converging on each other within the next 12 months. In some cases, they already are: Google Content Network.

·     I challenge you to ask your 3rd party ad-serving vendor to recommend an attribution model – report back what they tell you.  Not much – there is no standard yet.  It’s unchartered territory.

Next Steps

I would obviously love to hear your feedback.  Please post it in the comments section below or shoot me a note.  I believe that we won’t see large integrated opportunities that get their portion of the measurement/attribution credit until there is a way to measure these.  While we might try one or two of these integrated opportunities on each media plan, if you ask the agency how they really performed, the agency won’t have much to tell you because the tools for measurement are ancient.  With the data warehouses mentioned above, we get much better, but not perfect.

While we don’t need perfect to make the industry move forward, we do need better tools.  If you are building them, I’d like to speak to you.

Controling Your Image

All too often, Startups get compared to other startups.  Spacely Sprockets is Foursquare meets Yelp.  Widgetsly is Appnexus meets Legolas.  Usually, startups don’t pick who they are compared to as it’s up to the writers or editors of whoever is writing the press piece.

I was recently chatting with Chris Dixon, the CEO/founder of Hunch and angel investor in over 70+ companies, and he said something that really stuck with me.  I’m going to paraphrase here but he said something along the lines of, “when you are designing a product and crafting the positioning and messaging strategy, you need to keep the above in mind so that you, as the startup, controls who you get compared to.  If that means making your interface more like one company so you can be compared to them, that’s what you should do.”

Remember, once you contact the media to talk about your startup, the story is out of your hands and in someone else’s.

Of Acceleration, Inspiration Spaces, and Funds: 2011 TMK Digital Media VC Conference

One of the areas that I focus on is bridging Madison Avenue with Silicon Alley/Valley.  I think it’s unbelievably important for the future growth of both ecosystems.

At The Media Kitchen, in 2008, we launched our first Digital Media Venture Capital Conference.  We haven’t looked back since and we’re going on our 4th year of doing this.  We’ve had venture firms such as Union Square Ventures, First Round Capital, DFJ Gotham, Spark Capital, Betaworks (not a full VC firm), and IA Ventures present in the past with a wealth of CEOs and founders from amazing startups including but not limited to Meetup, 33 Across, AppNexus, Pinch Media, Izea, ContextWeb, DoubleVerify, Boxee, 5Min, TargetSpot, ChartBeat, Bit.ly, Zenetics, Metamarkets, FourSquare, GetGlue, Tumblr, and Twitter.  Here’s a link to my post from our 2008 conference.

This year, we’re changing it up a bit and not focusing 100% on Venture Capital funds, but around the ecosystem that surrounds entrepreneurship.  I think this is very important to present because the more people that we inspire about the surrounding ecosystem of entrepreneurship, the more people will feel comfortable with the possibilities of innovation.

We’re holding our TMK Digital Media Venture Capital Conference entitled, Accelerators, Inspiration Spaces, and Startups on May 17, 2011 here in New York City.  I have the ability to give 5 lucky readers of this post admission to the event which will be from 8;15am-12:30pm.  It’ll be an intimate group  of <150 awesome people.

If you are interested in attending and want to come, please reach out using this form with 1-2 sentences of why.  I’d love to give the right people the opportunity to be here to mingle with our entire agency, our clients, and our friends from the entrepreneurial world.

Data Dashboard: eBay Auctions, Autotrader, Manheim Data Sets

I’m in the market to make a new automotive purchase. Because of the nature of the purchase, I’d like to do as much due diligence as possible.

I’ve spent the last week watching new auctions pop up on eBay Motors and the like for a few specific models of cars, but realized that unless I keep a detailed manual spreadsheet of all I’m tracking, I’m going to be wasting my time watching different auctions.

The data geek in me is excited.

I’m wondering if there are any data dashboards or software that can scan eBay, Autotrader, Manheim, and other automotive datasets and record the following:

  1. Automotive Make (i.e. Toyota)
  2. Automotive Model (i.e. Camry LE)
  3. Exterior Color
  4. Interior Color
  5. Mileage
  6. Condition
  7. Source (eBay, Autotrader, Manheim, etc)
  8. Seller Name
  9. Seller Email
  10. Seller Phone

If I had just the 10 items above, in a structured data set for a rolling 90 days of data, I think I’d be very much ahead of the game.  I’d then port the data table into visualization software such as Tableau and then manipulate it so that I can figure out which cars I should be focusing on.

So, my question to the Interweb:

  1. Does this type of software already exist?
  2. If not, can it exist?  (if so, please contact me if you’d like to build it)

I don’t think this is too difficult but I could be wrong.