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Redefining Premium Content Towards CPM Zero

Say Goodbye to Hollywood

When Ari Emanuel, co-CEO of talent agency William Morris Endeavor said that Northern California is just pipes and needs Premium Content it’s clear that he just doesn’t get it. There is no such thing as premium content. There are only two things premium on a mass scale anymore – distribution and devices. 

Massive media fragmentation fueled by the Internet has forever redefined what is ‘premium’ content. The democratization of media – the ability for a critical mass of people (now virtually the entire world) to create, distribute and find content killed the old model of premium. Modern Family is a good TV show but when I can more easily stream a concert like this through my HDTV at any moment I want I’m pretty sure “premium content” has been redefined.

Since the web is the root cause of death for premium content it makes sense that the effect is no better exemplified than in web publishing. Since the advent display advertising publishers have sought to categorize and valuate their content in ways that were familiar to traditional media buyers. No media channel has promoted the idea of or value for premium content more than digital. Thus, print media’s inside front and back covers became the homepages and category pages on portals. Like print, these were areas where the most eyeballs could be reached. 

But a funny thing happened in digital behavior. People skipped over the front inside cover and went right to content that was relevant to them. Search’s ability to fracture content hierarchies and deliver relevance not only became the most loved and valuable application of the web, it destroyed the idea of premium content all together. In reality, premium never really existed in a user-controlled medium because it was never based on anything that had to do with what the user wanted. It was based on the traditional ad metric of “reach” when in this medium, decisions about what is premium are determined by on-demand ability and relevance. 

Sinking of the Britannica

Screen_shot_2012-06-06_at_2

The beauty of this medium is in the measurement of it. Validation for the drowning of premium beyond the fact that Wikipedia destroyed Encyclopedia Britannica rests in the performance of digital media. A funny thing happened as advertising performance became more measured. Advertisers discovered premium didn’t nearly matter as much as they thought.  There were better ways to drive performance that yielded better and more measureable results. The ability to match messaging to people on-request and in a relevant way was more valuable in this medium than some content provider idea of what was “premium.” In this medium the public not the publisher determines what is premium.

As realtime rules based matching technology continues to improve performance advertising and marketing itself continues to grow at the expense of premium advertising. Today, despite those trying to hold on to the past, premium is little more than an exercise in brand borrowing and little else. Despite the best efforts of the IAB to bring Brand advertising to Digital it has fallen as a percentage of ad spend for five straight years. In the world we live in today Mr. Emanuel’s $9 billion dollar upfront for network TV primetime advertising is $1.5 billion less in ad revenue than Google made last quarter

What this all means for the future of digital media (and thus all media eventually) is that it’s headed to “CPM Zero.” Look around – all the digital advertising powers – Google, Facebook, Twitter, Amazon – are selling based one thing. Performance. They are not selling on the premium sales mechanism of CPM. When ‘CPM Zero’ happens, and it will, these forces pushing the digital ad industry forward win. They own the customer funnel and they will own the future of marketing and advertising. It begs one big question. Where does this leave content creators and publishers?

Don’t Fear the Reaper

Publishers will never be able to put the CPM sales genie back in the bottle. CMOs and advertisers are already finding out that they are paying too much for premium. Go ask GM what they think. What publishers are finding out is that they are no longer selling their media; it’s being bought. Purchased from a marketplace with infinite inventory in a wild west of data. Therein lies the publisher’s ace in the hole and the strategies and tactics digital publishers (and eventually broadcasters) can use to combat the death of premium. 

Like Search, Publishers need to have two crucial components to their marketplaces. They need the tension of scarcity in the marketplace. That will drive up demand and force advertisers to spend the time working on improving their performance. This was the cherry on the sundae for Google as a $1billion industry – Conversion Testing and Content Targeting grew out of nowhere to support spends in Search. Most every dollar saved with optimization went to drive more volume – or back to Google. They need a unique currency for the marketplace. Keywords were a completely new way to buy media. Nothing has ever worked better. Facebook is selling Actions with OpenGraph. Ultimately advertisers are buying customers not keywords or actions but there is a unique window of opportunity for publishers at this moment in time to create something new and uniquely people, not page focused.

The tactics used to fuel these strategies all rely on one natural resource – data. Publishers have diamonds and gold in beneath the surface of their properties. Mining these data nuggets and using them to improve the performance of their media is the sole hope publishers have competing in the world of “CPM Zero.” Only publishers can uniquely wrap their data with their media and drive performance in a manner unique to the marketplace. That’s what Google does. That’s what Facebook does. That’s what Twitter does. The scarcity mentioned above is created because the realtime understanding of site visitor interest and intent is only derived using first party data as rules and integration with the publisher ad server for delivery. So pubs are really left with one choice – take control of their data and use it for their benefit creating an understanding of WHY people are buying their media and how it performs. Or let Google, Facebook, third-party et al come in and grab their data and know nothing about why it’s being bought and how much it’s being sold.

The ability to match messaging to people on-request and in a relevant way is within the publisher’s domain. It is the most premium form of advertising currency ever created and will deliver an order of magnitude more value. It will fuel the 20% YoY growth of digital advertising and marketing for the next 15 years. Who captures the majority of that value, the advertiser or the publisher, is the only question remaining.

 

Realtime Kills Everything

Our first ad campaigns are live and the results are exciting. The campaign ran on a premium publisher in the women’s lifestyle vertical and beat the publisher’s control group on Click- Through-Rate (CTR) by 77% on the 728 x 90 unit and 194% on the 300 x 250. There were over 1M impressions in the campaign served on this domain over a 2-week period. Yieldbot is now serving the entire campaign.  

Most exciting to us are some of the individual results:

  • The best performing keyword has a CTR of 1.56%. 
  • The best creative unit (a 300 x 250) is getting 1.01%

We are running IAB standard banner units. This is not text. This is not rich media.

According to MediaMind the industry average CTR for the campaign vertical is 0.07%

The most matched keyword intent has a CTR of .43%. It also has a CPC of $5. 

That math works out to an eCPM of $21.44. That’s pretty exciting stuff. Even more so when you factor in that this campaign is running in what was unsold inventory.

When I shared the results with one of our Board Members he asked me, what at the time I thought was a simple question. “Why are the results so good?” But then, I actually had to think hard about the answer. I had to boil down a year of beta testing and then another year of building a scalable platform into what deserved to be a simple answer.

Realtime.

Realtime was my one word answer. Never before was every page view of intent for this publisher's visitors captured in realtime - let alone used to make a call to an ad server at that very moment.

Realtime is different. Realtime kills everything before it. As such, Yieldbot is not building ad technology for the web. We are building web technology for ads. Since nothing is more important for advertising success than timing it makes sense that nothing is more valuable for results than realtime.

Realtime was a big buzzword for a while but the hype has died down. That’s good. In the Hype Cycle we’re now somewhere moving from the “Trough of Disillusionment” to the “Slope of Enlightenment.” It is however this ability of the web to react in realtime that makes the future of the medium so exciting. 

Twitter of course is the best representative example. Twitter changed everything about media that came before it. Used to be that breaking the story was the big deal Now, even online news seemed stodgy compared to people giving realtime updates that planes have landed on rivers, people being killed and opining on a live show right along with it. 

As technology continues to get better at processing the trillions of inputs from millions of people going about their daily lives - doing everything from riding their car to work, buying a pack of chips, surfing the web – the web will respond in realtime. Because of that it will be relevant. The idea of an ad campaign will seem like owning a 32 volumes set of Encyclopedia Britannica. Everything becomes response because the technology is responsive. Calculations need inputs. The web will be measuring just about everything you do and know the moment you are doing it. Nothing will be sold. Everything will be bought.

It’s that realtime pull that creates these new valuations of the media. That new value of the media is what we have been working to create at Yieldbot. That is why these results are so exciting. Best of all, we’re just getting started. We’ve got a bunch of new campaigns about to get underway and we’re only going to get smarter and more relevant. We’ll continue to keep you posted on how it’s going and if you're running Yieldbot you'll know yourself. In realtime.

 

Serendipity Is Not An Intent

Serendipity-unexpected

Wired had two amazing pieces on online advertising yesterday and while Felix Salmon’s piece The Future of Online Advertising could be Yieldbot’s manifesto it is the piece Can ‘Serendipity’ Be a Business Model? that deals more directly with our favorite topic, intent.

The piece discusses Jack Dorsey’s views on online advertising and where Twitter is going with it. I had a hard time connecting the dots.

“…all of that following, all of that interest expressed, is intent. It’s a signal that you like certain things,” 

Following a user on Twitter is not any kind of intent other than the intent to get future messages from that account. If it’s a signal that you like certain things it’s a signal akin to the weak behavioral data gleaned from site visitations.

Webster’s dictionary describes intent as a “purpose” and a “state of mind with which an act is done.” Intent is about fulfilling a specific goal. Those goals fall into two classes, recovery and discovery.

Dorsey goes on:

When it (Google AdWords) first launched, Dorsey says, “people were somewhat resistant to having these ads in their search results. But I find, and Google has found, that it makes the search results better.”

At the dawn of AdWords I sat with many searchers studying their behavior on the Search Engine Results Pages. What I and others like Gord Hotchkiss who also studied searcher behavior at the time learned, was people were not as much resistant to Search Ads as they were oblivious to them. People did not know they were ads!

Search ads make the results better because they are pull. Your inputs into the system are what pull the ads. So how does this reconcile with the core of Twitters ad products that are promotions? Promos need scale to be effective. Promos are push. Precisely the opposite of Search where the smallest slices of inventory (exact match) produces the highest prices and best ROI.

Twitter is the greatest discovery engine ever created on the web. But discovery can be and not be serendipitous. Sometimes, as Dorsey alludes to, you discover things you had no idea existed. More often, you discover things after you have intent around what you want to discover. This is an important differentiation for Twitter to consider because it’s a different algorithm. 

Discovery intent is not an algo about “how do we introduce you to something that would otherwise be difficult for you to find, but something that you probably have a deep interest in?” There is no “introduce” and “probably” in the discovery intent algo. Most importantly, there is no “we.” It’s an algo about “how do you discover what you’re interested in.”

Discovering more about what you’re interested in has always been Twitter’s greatest strength. It leverages both user-defined inputs and the rich content streams where context and realtime matching can occur. Just like Search.

If Twitter wants to build a discovery system for advertising it should look like this.

Hacking Display Advertising

Hackers
Being as passionate as we are about the huge advances in dynamic web languages and event based programming it is tough to love display advertising. Display advertising was never about web programming or data networking. It was nested on the web as a rogue aggregation and delivery mechanism. The ability of display to deliver relevance remains hindered by this disjointed architecture. It is not threaded into site experiences and the realtime goals of the visits on the pages where it resides. This is exactly why we’re hacking it into something else.  

Vanilla Sky

In Q2 2007 while most of the industry was living some sort of vanilla sky of Behavioral Targeting one company came in and paid, what at the time seemed to most people way too much money, to own a controlling interest in display. No, I’m not referring to AOL buying TACODA. The company I’m talking about has maintained a focus since day one on hacking what you are interested in at that very moment. Unlike other content aggregators it tied its advertising system in the core user experience of its pages and the realtime relevance they delivered. Their stated Display strategy has little to do with cookie matching and everything to do with realtime context and creative optimization with the purpose of “capturing relevant moments.” It is now the most powerful company in Display. That company is of course Google.

Lucid Dreaming

The first lesson here is about the medium itself. This is a different medium and the old media buying and selling template breaks here. Behavioral Targeting may have changed names to the less scary “Audience Buying” but seven years later performance expectations have not been met and it has dragged display into the mud of issues like privacy, ad verification, cookie stuffing and more.

By contrast, Search and email – the most important of the web’s applications - have little use for tracking people across the web, let alone reach and frequency measures. They are the opposite of that. Search (and the web itself) was built by hackers to solve information management and retrieval problems.

The second lesson is that in this medium three pieces of data are valuable – context, timing and performance. The rest is just pipes. Understanding the context of an impression or click at the moment the page is loading and the ability to optimize the message is what the web was built for. It took Search to turn it into a marketing channel but growth (~20% YoY with no end in sight) and the size ($46B in 2013 per eMarketer estimates) of that channel shows how powerful that data is and how helpful understanding it can be to consumers.

Waking Up

The fact that it is referred to as display “advertising” is reason enough to know it’s from another time. This medium kills advertising. Everything on the web is marketing. As Suzie Reider, national director of display sales for Google said recently “display needs to move beyond advertising and into interacting.” Yesterday, Krux CEO Tom Chavez wrote a thoughtful blog post on how it is time for display to move beyond advertising. We agree and we're walking the walk.

This doesn’t mean that publisher will not show ‘graphical’ units as Google calls them. Of course they will. It doesn’t mean that prime real estate isn’t going to be turned over to these units, they will. We’re headed to a world with fewer messages that will be bigger and more interactive. But if we have learned anything from Search it is that format and size don’t matter when the message is relevant, helpful and useful at that moment.

Billions of Relevant Moments

As long as technology to understand context and timing are progressing as fast as they are (and as places like Betaworks where realtime is the thesis of the new medium value creation the startups are hacking away) there is a bright future. Search has proven that the web is the greatest and most democratic marketing medium ever created. The hackers working with dynamic web languages and event driven programming can unlock an order of magnitude of more relevant moments. There are literally billions of them out there waiting to be captured and created. At Yieldbot we see this scale everyday in the inventory of web publishers and if you’re a hacker and remaking the staid idea of advertising appeals to you we would be interested in speaking with you.