Category Archives: Advertising & Marketing

Google Controls 5.85% of Worldwide Advertising

According to some simple excel calculations (see below), Google controls about 5.85% of the worldwide advertising billings.  According to a recent article I was reading, ZenithOptimedia has 2012 advertising expenditures pegged around $485 billion.  Google derives 97% of its revenue from advertising so they are around $28.4bln.  Do the math and it comes out to 5.85%.

The majority of this is derived from their search engine marketing practice, which is otherwise known as AdWords.  If Google nails display, can get TV seriously off the ground, participate in organic search (take a look at our, kbs+ Ventures,  portfolio company Yieldbot), and dominate the tablet/mobile market, then they could realistically get up to 10-20%.

Pretty amazing for a company that was founded in 1998.

Calculations

2012 Advertising & Media Technology Predictions

Over the years, instead of writing my own forecasts and predictions, I’ve aggregated them on this blog as a source for everyone to turn to for marketing, technology and media.  Here are the lists for 2008, 2009, and 2010.  This year, instead of aggregating them, I wrote 5 predictions that I think will come true for Advertising and Marketing Technology in 2012.

The predictions are below, but you can read more about them here on Advertising Age.

1.  The vGRP metric gets adopted once released and AdXpose/Comscore finally makes sense to most people

2.  Trading Desks are no longer the bright shiny object for Madison Avenue as they begin to mature and become growth businesses for holding companies.  Holding companies need to make a strategic decision whether or not they are going to continue to support them and if so, they must acknowledge and realize they are building technology organizations.  If not, we’ll start to see some trading desks spinning down (or out) of holding companies in 2012.

3.  Agencies who are not agencies will challenge the agencies.  I like the title on this one:  tomorrow’s madison avenue will look different than todays.  Read more about it in-depth over at Ad Age.

4.  Attribution drives dollars to currently undervalued assets.  By using engagement mapping, TrueCPA, or other fun names for understanding conversion attribution, media buyers will actually be able to purchase sites that aren’t part of the lower purchase funnel.

5.  And of course, what marketing technology trend and prediction list would not include Consolidation and Investment as a headline?  Mine certainly will.

I’m super excited about the above 5.  There are quite a few more but these are my starting five going into 2012.

Marketing Technology behind $35 billion in holiday 2011 ecommerce sales

Ever wonder who is the marketing technology behind the $35 billion dollars in e-commerce sales this holiday season? If you are an agency, wall street analyst, marketer, optimizer or any other player in the digital media ecosystem, you probably want to read below.

I always tell my team at The Media Kitchen that you can learn a lot from what other companies are doing; the good, the bad, and the ugly… so study them.  On the web, it’s relatively easy to study companies and their respective infrastructure as the source code of competitors is only 1 click away.

I teamed up with my friends over at Evidon who own the Ghostery product and had them send me a data dump of 3rd party tags that were placed on 20 e-commerce sites (list below).  Note, the data I have is fairly reliable but not perfect, so I may have missed a partner here or there.  However, I do have over 150+ partners who had tags down on these 20 e-commerce destinations, so I feel I have a directionally accurate view of who was part of the marketing technology ecosystem for Holiday 2011.

Sites I tracked were Best Buy, CouponCabin, Sports Authority, LL Bean, Gap, Dicks Sporting Goods, Bed Bath & Beyond, SVPPLY, DSW.com, Modells, Zappos, Old Navy, Disney, Target, Walmart, Gilt, Sears, Amazon, NewEgg, and Piperlime.

I counted a total of 413 partner tags/pixels placed across these 20 sites (note, I only went to 1-2 pages per site and assumed tags would be similar across most pages).

Executive Summary (full report can be downloaded here)

  • Best Buy, CouponCabin, and Sports Authority properties contained 43% of all tags placed.  The top 10 of the 20 sites accounted for 85% of all tags placed.  I am actually surprised that Amazon didn’t fall into the top 3, but again, Ghostery told me they only had 3 tags down on their pages (Turn, DoubleClick, Google Analytics).
  • The top 3 tags placed across all 20 sites were Google Analytics, Omniture, and DoubleClick.  No real surprise here.
  • The biggest surprise IMHO is that Google+1 outranks Facebook and Twitter as social plug-ins that are embedded across these ecommerce publishers.
  • The DSPs are in-line with the recent Forrestor report so I didn’t find anything crazy in those numbers.
  • Google Analytics has 70% coverage across these 20 e-commerce sites.  Imagine the data that Google could/is collecting.  Just saying.

In order to digest this 1000+ cell data dump, I created a schematic whereas I broke down the product (such as Tag Management) and took the top companies and their % composition the 20 e-commerce destinations.  The link to the excel sheet is at the bottom of this post.

Web Analytics software:  Google Analytics (70%), Omniture (60%), Foresee (40%), Webtrends (15%), Yahoo Analytics (15%), Coremetrics (10%)

3rd Party Ad Serving:  DoubleClick (55%), Microsoft Atlas (25%), ValueClick MediaPlex (35%), MediaMind (5%)

Tag Management:  BrightTag (20%), TagMan (5%)

DSP:  AppNexus AdNexus (30%), Turn (25%), MediaMath (20%), Invite Media (20%),  AdNetik (10%), X+1 (10%), Lucid (5%), DataXu (5%), Rocket Fuel (5%)

Exchange:  Right Media (35%), AdBrite (15%), OpenX (10%)

SSP:  PubMatic (50%), Rubicon (25%), Admeld (10%)

Social Plug-Ins:  Google +1 (45%), Facebook (40%), Twitter (15%), AddThis (15%)

Site Optimization:  Omniture (60%), Monetate (20%), RichRelevance (20%), Visual Website Optimizer (15%)

I believe the Omniture & DoubleClick tag data above is a bit misleading because those are grandiose tags that can do many different things and without the right context, they could be categorized incorrectly.  I tried my best.

Conclusion

Google dominates pretty much up and down the marketing technology stack. I still think they should buy Adobe to become the monopolistic dominant player (to get Omniture), but I don’t believe the government will ever allow that.

I was actually surprised that Omniture didn’t have even higher composition of the 20 ecommerce players.

I couldn’t tease out DoubleClick AdX from their other tags so that’s why they weren’t included in the Exchange part.

And of course, since I work, play, and invest in the marketing technology ecosystem, I’m conflicted up the wazoo with many of the companies mentioned in this post as well, as, the data in the chart linked below.  I have done my best to tease out bias.  Please proceed with caution but honestly, I don’t think you need to.  Contact me if you are interested in discussing.

Thought you might find all of this data interesting.  I have included my chart here in case you want to download it and play with it.  The full report I put together is located herePlease remember to give proper attribution if you use it.

I’m curious to look at this data in 2012 and compare it to 2011 (I don’t have historicals).  I’m sure we’ll see some interesting changes.

Happy holidays.

Darren Herman is the Chief Digital Media Officer of The Media Kitchen (part of kbs+) and is President of kbs+ Ventures which is an early stage marketing technology institutional investment arm of the agency.  His tweets can be found at @dherman76 and blogging here at http://www.darrenherman.com

Digital Media & Advertising Articles of Note

I’ll be traveling over the next 24 hours or so, but wanted to post a few articles that I’ve found interesting over the last couple of days:

Online Merchants Hone In on A New Demographic:  My friend Stephanie writes an article about a new audience for merchants… the imbibing consumer.  A glass of wine or beer after dinner while online shopping?  Sounds like merchants can have a lot of fun with this including potential wine pairings with individual online items.

SocialGuide unveiled their year-end look at SocialTV.  FOX is in the leadership position because of their sports & youth oriented programming.  Note however, there are 36,700 projected total socialTV related comments in December 2011, which still seems small, but can really only go up from here.

ComScore released their holidays sales numbers and showed a 16% lift last week from the same week in 2010.  Total online spending amounted to $2.83bn for the week or $36bn for the entire holiday season.

AdExchanger has their holiday reason list up on their site.  It includes industry reaction posts of major topics such as Adobe Acquiring Efficient Frontier, Mediabank-DDS Merger, and many others.  Certainly check it out if you have time to digest a lot of right (and wrong) opinions.

And lastly, a great interview with Antony Young, the new Chief Executive of Mindshare.  Why I specifically call out this interview is because he gives some good insight into his vision and needs within the media world, where many agencies seem to be undifferentiated.  As you can see after reading this, he’s striving for change and will invest and build in it.

Marketing Wednesdays: Recapping 2011

I launched Marketing Wednesdays in October in order to cover a marketing related topic each Wednesday.  For me, this was bullish due to my schedule, but I took it on and pretty much failed about 50% of the time.  Not good and not fair, since I committed to handling the topic.  So looking back at the reasons I failed at this, I will optimize for 2012.

Here is what to (or not to) look forward to:

  1. Much more specific topics such as Cost Per Point, vGRP, and ad optimization tools
  2. Guest posts from industry thought leaders and not-so-well-known-but-amazing industry participants (reach out if you are interested)
  3. Sometimes short and sometimes lengthy posts but will certainly vary at length

I’m looking forward to this.  I have a bunch of posts already coming together in my head.  I’d love your feedback so feel free to reach out.

Content Creation

Over the summer, I wrote a post on kids & content consumption.  The post came about because I realized that many of the user generated videos that my 3-year old son was watching on YouTube (via his iPad) had over 6MM views on them. I was shocked that these videos accumulated so many views as it was simply kids and their parents playing with Thomas the Tank Engine trains.

Over the past month, when my son was asked what he wanted for the holidays, he mentioned a few toys that we’d not heard before.  After going thru his YouTube history, we realized that he had viewed short pieces of content put online by both big and small toy stores and manufacturers as marketing content.  He watched some of these videos many times and could now tell us all about them.

We are now in the middle of toilet training.  He’s good with his #1s, but is a bit shy about his #2s.  We promised him that we’d buy him any toy he wanted if he started going #2 on the potty (TMI, I know).  He asked for a very specific truck, one of which I said we can get from Toys R Us, but he quickly corrected me and told me it’s only available at Walmart.  He’s 3 years old.  He’s never been to Walmart (none in the area).

It’s a marketer’s dream.  Walmart had unaided recall from a 3 year old.  I’m long content creation over the next few years.

YOUniverse & Personalization

An area I have been studying for a while is personalization, especially under a macro trend that is termed the YOUniverse.  While I did not create the term, Renier did, it’s an area that has been of increasing interest to me.  Personally & professionally, I have been involved in personalization over the years: content recommendations (Knowabout.it), mens shirts (Second Button), and ad optimization (Varick Media Management).  In 2001, I had a business plan to essentially create what become Second Life, but it never got anywhere.  It was all about personalization.

Ninety years ago, pretty much everything was personalized.  We went to the butcher, he chopped meat to our liking.  We went to the tailor and came away with a perfectly fitted suit.  We needed pencils, so we sharpened them ourselves to match what we needed.

We moved away from this customized business world because we optimized our processes to create cost efficiencies that were passed to the consumer as well, as, created additional margin that was kept for the business.  It was a win/win.  The Gap emerged, created a lower cost pair of basic jeans, and was able to sell at a lower price point because they created 1,000,000 items of the same thing in mass factories.  If someone wanted a very specifically tailored pair of the jeans from the Gap, they had to purchase the jeans and then take them to a tailor and the tailor would alter them.  Inefficient, but this is how it works today.

In a world where technology (and software) is penetrating every industry imaginable, processes are going to evolve.  It was cost inefficient to create custom/personalized items back then, but will not be tomorrow.  The world of personalization is starting to unfold at a price point that is palatable for consumers.

What is a key attribute of personalization is that the consumer is part of the creative process.  Every one of us, consumes, have at least 1 bone of creativity in our body and the more we can exercise it, the more we are satisfied and inspired.  Union Square Ventures & Index Ventures both invested in a 3D printing company, Shapeways, which celebrates personalization, but it’s certainly not for the masses, yet.

A recent example of personalization: The Apple iPhone.  The iPhone is a platform which every owner can customize their own experience.  Unlike a feature phone, there is a real relationship with the iPhone because of all of the customization that goes into it on a consumer/app level.

I am very inspired and excited about the opportunities in the YOUniverse.  If you are too, I’d love for you to leave some comments around areas that you are innovating in.

Marketing Wednesday: Media

We’ve covered some pretty fundamental topics here for Marketing Wednesdays including The Chief Marketing Officer, The Marketing Plan, and previously, the Agency 101.  Today, we’re going to cover a very broad topic:  media.

History

Way back when, we used to divide media between Above the Line and Below the Line (ATL/BTL).  Above the Line was typically “brand” advertising which included print and television amongst others.  Below the Line was the non-sexy stuff such as direct mail and even today, most of the Internet.

We then went into an offline/online world; this was primarily from the 1990s thru today.

And now, we talk about media within the POEM construct:  paid, owned, and earned media.

  • Paid media is what you buy.  It’s a big billboard.  A 300X250 on Buzzfeed.  A captcha via solvemedia.
  • Owned media is what you own.  It’s your brand’s website.  It’s your Facebook page.  It’s your store windows.
  • Earned media is what gets amplified.  It’s the re-tweets.  It’s the check-ins.  It’s the word of mouth referrals.

Todays modern communications plans require thinking across the entire media landscape.  If you view slide 15 of our public Media Kitchen credentials presentation, you’ll see how we talk about this thinking.

I believe that the best marketing experiences play to POEM all in one.  It’s the future.  However, to deliver on tomorrow’s media opportunities, many folks will have to re-tool and re-structure.

I also believe that the way we purchase media will be re-tooled, to go from a human led and optimized process to a hybrid process of using technology where possible, not just for procurement but for optimization and insights.  We have invested in many of those companies here, but the entire media space is ripe for innovation.  This post is not about marketing technology, but about media, so I’ll stop there from a tech speak.

Buying

Many vendors sell media.  The way that agencies or marketers purchase media from vendors are on different cost basis:  CPM (cost per thousand impressions), CPC (cost per click), CPL (cost per lead), CPE (cost per engagement), ratings points (for TV), CPA (cost per acquisition), and others.  Each cost basis can “back into” others and savvy media buyers know how to work the numbers to make them work for individual clients.

If a vendor fails to deliver whatever is contracted, it’s common for make-goods to be delivered.  These make-goods are essentially exactly what they sound like: additional inventory to make up for missed performance.

When purchasing media, sometimes media properties bundle in “added value” which is essentially additional opportunities surrounding a core purchase that helps make the idea bigger and/or bring down the cost.  When a media vendor sells a package, the purchaser buys the specific package at a specific rate, but the added value is on top of it, which brings down the final cost-per metrics.  This is very common in the offline world and I’ve seen it often when buying site-direct sponsorship opportunities (online).

Media is also a big part of the agency world.  There are buying agencies, planning agencies, and integrated agencies.  I happen to work at an integrated agency where planning & buying are together (I can’t imagine them separate).  Agencies charge clients largely based on planning fees (based on time & materials) and buying commissions (relative to the media channel they are purchasing).  Some agencies put a % of their fee at risk so they can get a bonus based on performance.

Many people believe that the media agency model need to change, but I’ve not seen another model put forth which is the “golden” model.  All of the new models I’ve seen put too much risk on any one side of the equation.

We've Seen It Before

I walked into the office this morning and my colleague at kbs+ Ventures, Taylor, greeted me with excitement around some of the latest mobile marketing studies that were released.  TechCrunch has an article titled, In Mobile Advertising, Does Size Matter? and Forbes has an article titled, What if Mary Meeker is Wrong and Mobile Ads Never Really Take Off?

Thru our clients at the agency, I’ve deployed many mobile campaigns.  I also oversee a tablet/mobile client of ours, so I’ve spent quite a bit of time within the mobile space.  Additionally, we’ve invested in a few companies that participate directly with the mobile space.

Mobile engagement rates are higher to what we saw with the early days of the web, but it’s a false positive.  Let me explain (and I’m certainly not the first to do so).  If you’ve heard me talk and heard the line, “it’s the same cupcake, just with different sprinkles,” then this is exactly a use case for the line.

#1:  Screens are smaller, thumbs are wild
Our thumbs (and fingers) tend to touch ads by accident.  It happens and we’ve all done it.  You’d be shocked at how many people touch ads and then immediate click away.  We ran a click-to-call campaign for a client and it drove significant response, but most callers didn’t actually mean to call.

#2:  Bigger drives higher engagement, but more disruption
It doesn’t take a rocket scientist to calculate higher engagement with bigger units.  We saw it on the web.  We could have immensely huge units on the web that drive the same engagement, but do we really want it?  How many desktop web publishers adopted the OPA-sized ad units?  Didn’t we do away with pop-overs and unders?  Do we really need bigger units on the mobile device?  Just because we can, does that mean we should?

#3:  Newness drives engagement
It’s true.  Look at any new platform (or even app) and the engagement rates with the entire platform is higher than when looked at over a period of time.  This is my thoughts and I don’t have data to back this up, but I know from my own experience that I’m more excited on a platform early on than over time.

Net/net, we’ve seen this all before.  CTR’s and engagement rates for email and desktop display were high in the 90s; multiples higher than they are today.  Marketers should certainly take advantage of these high engagement rates if they can as they won’t last forever, I hypothesize, as they come down over time.

I don’t believe that today’s mobile banners are the best use for mobile advertising.  I think there is a better way to monetize the mobile web.  I don’t know what the perfect state of mobile advertising is, but it will involve location based data.  I do believe however that marketing with mobile data will be huge, in whatever form it takes.

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kbs+ Ventures Portfolio News: Awe.sm, Momentum, Hiring, and Tumblr

We’ve been busy in the office which has been why I’ve posted very little over the past few weeks.  However, below are some of the reasons why I’ve been radio silent.  I’m super stoked about all of this and hope that you are too.  See below.

Awe.sm
kbs+ Ventures recently announced our investment in a social analytics (plumbing) company called Awe.sm.  We are super excited about this opportunity as social is going to become increasingly more important into the fabric of everything we do and having the right infrastructure to manage and measure is of extreme importance to brand marketers and agencies.   There has been a ton of articles written up about the launch of Awe.sm so do not hesitate to check them out.

Adaptly Momentum
Today, one of our portfolio companies, Adaptly, launched a service/product called Momentum.  Nikhil Sethi, the founder/CEO of the company said it best in his blog post this morning:  If we continue to base our paid media buys on only the paid media metrics, we are only measuring 1/3 of the value generated. These results leave so much value on the table and we believe there should be a better KPI suited specifically for social. I’m super bullish on companies who cross the paid/owned/earned media landscape and Momentum is a tool in which can measure this for a brand.

Hiring
There is no shortage of hiring in our portfolio companies.  Most of the companies are hiring talent here in New York City.  If you are a product manager, developer, front end designer, or business development exec and are looking to join well funded private companies that are in the marketing technology space, do not hesitate to reach out.

kbs+ Ventures Tumblr
We officially launched the kbs+ Ventures tumblog.  Lara has been updating the blog for us and it’s chock full of kbs+ Ventures information and pictures (including our 2011 Holiday Salon).

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