The Rise of the Audience Marketplace

The high-level disconnect in our conversation about online media and advertising – now in its 14th or 15th year – remains the notion that positioning matters to consumer brands but not consumer media.

Eric Picard’s thoughtful piece in iMedia today puts this on display again in his recounting of a panel discussion titled, “The Rise of the Audience Marketplace,” at ad:tech in New York a week ago. During the panel, participant Quentin George, Chief Digital Officer at Mediabrands, reportedly observed:

 ”In a world with such massive overcapacity, the only way for companies to differentiate and capture a disproportionate share of dollars is through building a brand.”

This was a very sensible assertion. Hold that thought.

The panel discussion then veered into talk about media planning and buying online with a great deal said about the rise of new buying solutions such as IPG’s Cadreon and Publicis Groupe’s VivaKi. These fall under the heading of demand-side buying systems, discussed in a recent post to this space.

Demand-side buying systems are energizing media buying companies with a renewed sense of empowerment. There is no harm in this. It represents a transfer of power from certain horizontal networks that have been conducting business this way online for a few years, and keeping the money. Now, the media agencies get to keep the money. The industry needs media agencies (all ad agencies) to feel energized and empowered, so to the extent that certain amounts of planning and buying can be conducted through demand-side agencies, there is no harm in this. Perhaps it will serve as a catalyst to help fix agency comp so that life can continue on a transparent basis ultimately favorable and necessary to marketers.

I digress.

In the midst of the panel’s enthusiasm it sounds like Bill Demas of Turn got up the nerve to suggest that most of the inventory wafting through the demand-side buying systems is non-premium inventory (much as it has always been through the horizontal networks) and that premium inventory is still making it to market thanks to human sales forces and their interactions with human media planners and buyers.

From Eric Picard’s recounting it then sounds like Bill Demas’s observations disappeared quickly under a pile of demand-side enthusiasts. Fellow panelists pointed-out that the idea of premium inventory is a relative concept. Brands care about quality content, but the quality of the audience is not measured by this alone. Basically, quality does not depend upon context.

This is the important question of our day: is the quality of an audience shaped by the context of its media environment.

Back to Quentin George who was on the panel. As he did, marketers will insist - with every justification – that brands matter, and the more complex the environment, the more imperative the need for brand. Brands differentiate.

What does that mean? It means context. Context is the differentiating agent. Context determines meaning. It is everything to brands. It says so clearly in the dictionary (from Answers.com):

con-text

 

n.

[Middle English, composition, from Latin contextus, from past participle of contexere, to join together : com-, com- + texere, to weave.]

1. The part of a text or statement that surrounds a particular word or passage and determines its meaning.
2. The circumstances in which an event occurs; a setting.

Brands are about meaning and circumstance. If they are not, then soap is soap. A car need only be black, as Mr. Ford would have had it, and get a traveler from point A to point B.  One smoke would be as good as another. Brands need positioning.

Yes, brands can certainly exist out of context for periods of time, like I can swim under water or a fish can flap on the ground. I use brands all the time unconsciously. But there are no unconscious brand champions and brand loyalists and there are no automated brands. In my house you will get one kind of vodka, which is an otherwise orderless, tasteless, neutral spirit with one purpose that can be met by any run-of-network vodka that will be (fall-down-drunk, for fall-down-drunk) cheaper. Yet, I am loyal to one brand. Go figure. 

Let’s be frank: really, the question is about money. The world is trying to impose cheap on marketing and context is not cheap. Neither are brands. Our world is hung-up on this problem and we know it. It is a dis-connect if ever there were one.

Truthfully, if there were enough great advertising creative in the world brands might be able to survive out of context. If every ad were brilliant, touching, funny, compelling – even simply polite – advertising could, perhaps, live and breath outside of a naturally supportive, media environment. We are not so fortunate. Advertising is hard. Great advertising is really hard. 

As we continue to bang around the miriad opportunities with which the Internet presents us in order to target our best customers let’s remember the obvious one, present from the beginning, the one that aligns us most with consumers, the one that made Google particularly rich: context. I don’t notice anyone else getting as rich as Google (or Google as rich from anything else).

The only thing I notice is the European Union and the FTC getting ready to drop a safe on our head. Then what?

Ad Agencies should be paying attention to potential opt-in legislation in Washington

Edward Barrera, Editor of Adotas, raises serious concerns that advertising agencies may be dozing through the privacy debate in Washington D.C. that is right now headed towards opt-in requirements for all advertising online. Opt-in means that any time a consumer is presented with an ad, that consumer will be required to accept or reject the cookies associated with that ad, which are there largely to provide the advertiser and their agents with the ability to manage the delivery of the message.

The truth is ad agencies are probably faking it. Their eyes are shut, but their eye-lids are twitching. They are awake and they are listening. As Edward suggests in his column, many are working on the assumption that privacy legislation is going to hurt them a lot less than many ad networks, with the result that they can recapture control over a great deal of media planning and buying online that they lost by treating most of the Internet as throw-away material. A blast at high altitude over the industry is just the thing, they think, to level the playing field.

Yes, perhaps. Agencies have a trump card which is the relationships they enjoy with the clients. In contrast, many purveyors of media space online, including many ad networks, enjoy relationships with advertisers or publishers that are only as deep as their last lunch and which can be easily swept away by the crosswinds of change, including, potentially, regulatory change.

But agencies should focus on what sort of world it might be once the smoke clears. As a consumer, it’s not a world I relish. I don’t even like the reminders Microsoft Windows pops to me each time I want to tinker with a document, let alone the opt-in intrusions that dooms-sayers suggest might attend every ad online. The freedoms that both consumer and advertiser enjoy online could be severely compromised by opt-in legislation that erects check-points every few yards. Doesn’t advertising have enough problems? People don’t like commercial interruptions. Now the potential exists to place an interruption in the way of the interruption?

There are fundamental advertising issues at stake here, the defense of which should be of paramount concern to ad agencies. They have been taunted relentlessly over the years by the digital upstart classes, and who can blame them for imagining a world where the taunters have been muzzled. Still, there is the question of an effective working relationship with consumers, which has been steadily eroding for years. Agencies should have no desire for an Internet experience that says “Kick Me!” every time consumers encounter advertising messages, something opt-in will surely contribute to the ”enjoyment” of an agency’s work each and every time.

Defending data from regulation

As reported in Media Post today, there was good news for a sensible approach to the issue of online privacy courtesy of the Technology Policy Institute, which released a study that says nothing much can be gained for consumers or companies by increasing the amount of  privacy regulation online. As quoted in Media Post the study, ”In Defense of Data”, said:

“Regulation should be undertaken only if a market is not functioning properly and if the benefits of new measures outweigh their costs…Our analysis suggests that proposals to restrict the amount of information available would not yield net benefits for consumers.”

Right. And besides all that, the argument has been made before in this space that the conversation about online privacy seems totally detached from the presence of far more intrusive forms of data-driven marketing offline. Really, how many online ads are intruding on dinner hour at home at night? In comparison to some offline tactics, behavior targeting online is thoroughly benign. Thus, apart from the benefits that may exist, the dangers of anonymous data online should be measured againsts the dangers of more extreme data uses offline – and there don’t appear to be many. Offline data use is frequently a nuisance to consumers, but not typically a danger. Online data use is neither.

For newspapers to survive there needs to be more of them, not less. That’s called living in a new media world.

Jason Klein, CEO of the Newspaper National Network, was in Ad Age yesterday with a thoughtful piece about the torments of the newspaper business today. Jason has a great vantage point from which to comment, given the NNN’s close working relationship with virtually every newspaper in the country.

I agree with almost all of his points - including, most importantly, the enduring value and ability of newspapers to survive as print properties. But, I don’t agree that the path to survival is fewer newspapers, and/or that the economics of the business favors one large newspaper per city.

To the contrary, the economics of the media business today favors the small. The Internet is only the most recent and obvious example of how the business of producing and distributing content has fundamentally been fragmenting into smaller and smaller units for decades, beginning with Cable TV. Nevermind how fragmentation has perplexed advertisers and media buyers. They will catch-up on their own to the new, narrower nature of things. The business of providing content that audiences find valuable, and for which they may even be willing to pay, favors the discreet. It favors the targeted.

Accordingly, the economics of newspapers going forward favor a return to multi-paper cities. Not one newspaper per city, but more-than-one, smaller newspaper per city probably divided along unique demographic, social or political interests. One-section newspapers, easily distributed, with carrying costs subsidized largely by subscriptions.

There may be a place for the consolidation of distribution and content at a national or broadcast kind of level, but it will be a battle to perpetuate: Ask any company trying to sustain those sort of franchises today, such as Yahoo! or even the New York Times.

Again, we should pay careful attention to the plight of newspapers (and traditional media, generally) lest history repeat itself in too short a time. As Jason Klein says, the bell is tolling for newspapers. But, it tolls for all of us.

Think small.

Now you can have your cookies and eat them too!

Google announced the beta of its Behavioral Targeting program today which will give consumers the chance to peek behind the curtain to see why a particular ad was furnished to their desktop. Leaving aside the potency of Google’s BT offering, which should be substantial, the consumer transparency provision will be very interesting to watch develop. Privacy regulators and marketers should both pay careful attention.

Regulators may discover that people aren’t that curious to know how the appropriate ad showed-up on their web page. Google should report on how many consumers actually inspect and then make changes to their categorizations. Personally, I’ll be surprised if people opt out, or in, of behavior categories more than once – which they might do initially in the same way we all customize web pages and then never alter – or pay much attention to them – again.

Google’s transparency commitment will mean different insights for marketers, namely how revealing is the behavior data in the first place? Some of that will depend on the duration of Google cookies. Is it 5 days? Is it 90 days? Depending, we may find that the cookie files of consumers reflect a boundless array of interests and opportunities, inviting questions about the significance behavior targeting may represent to advertisers positioned, as it is, further down the value chain of consumer engagement; or we may find that people are rather boring. A travel web site here; a pet care site there. Someone has a new puppy. In which case, behavior’s significance will be reinforced for building reach against a target audience, although, now that’s it’s transparent, advertisers may want to have the opportunity to better establish that it’s the right one.

Google may not have a lot to say about these variables over the next weeks and months, but industry observers will as they eagerly peak behind the curtain of the advertising served to their attention. It will be interesting to see what is revealed.

Have you had a “Truman Show” Moment

In this week’s Behavioral Insider from MediaPost, the results of some <shameless self promotion warning> Burst Media research on consumers’ concerns about privacy. The “Truman Show” moment is a perfect analogy for when you see an ad that is just a little too relevant, like when Laura Linney turns around and does the product promotion for laundry detergent, and Jim Carrey gives his googly-eyed all.

The key finding from the research is that 80% of people online are concern about their online privacy as it relates to age, gender, income and web surfing habits.

See the research here and subscribe here to future reports.

Getting Personal on the Web

The Wall Street Journal carried a report today on new technologies that improve the personalization of advertising online. The notion is not new: use technology to keep track of where users go and what  they do online and confront them elsewhere with advertising  matching those observed behaviors. In the case of Overstock.com, for instance, the article says they are providing a company called ChoiceStream with the browsing and purchase history of customers on their site so that ChoiceStream can push the appropriate Overstock ad to those users as they move about the Internet pursuing their other interests. The result, according to Overstock CEO, Patrick Byrne, has been a seven-fold increase in clicks on Overstock advertising and three-fold increase in sales relative to his other display ads.

It’s always a slippery slope when  user data is exploited for advertising purposes as another piece on the same story appearing on eMarketer reminds us. People don’t like the idea they are being followed. In the eMarketer article, ChoiceStream President and CEO Steve Johnson is quoted as saying, “Today’s online consumers understand the value of online advertising and know retailers have information about their shopping behavior that can make their experience more relevant.” But, according to a couple of polls in the story roughly 50%  people are uncomfortable with the idea of marketers using browsing history to customize advertising messages.

We keep hoping this slippery slope will dry up. I have heard the voice of advertising reconciliation offered by the likes of ChoiceStream’s Steve Johnson many times before, to no avail. Why? Well, for one thing - and I say this as someone that has spent nearly 30 years in the advertising business – consumers do not subscribe to the “advertising is good for me,” view of life.  Tons of relevant advertising is still tons of advertising. Tons of advertising is ponderous, especially since most of it is a creative blight upon the land. We amplify this problem online where display advertising is a mosh pit. Scott Portugal referenced this fact yesterday in ADOTAS:  in his article he reports that still, today,  75% of all display dollars are spent with eight media companies. Any of those media companies – which will certainly include heavyweights MSN, Platform-A and Yahoo! - may spray display ads in thin layers across the long tail of the Internet, but the preponderance will go to their own brand platforms.

If you want to understand why tweeking display advertising with targeting features such as those provided by ChoiceStream yield seven-fold lifts in action rates, this will be why: advertising online is a mosh pit. It is squeezed into the first few rows. Consumers can’t even raise their arms above their elbows, let alone click on an ad. A bit of personal space, therefore, (which, by the way, occurs naturally, with abundance online) represented by a bit of relevancy is bound to make a difference to people online. But, don’t let them feel your hand in their pocket.

Behavioral vs. Contextual Targeting — The Verdict

It seems like last year’s video buzz has ebbed, and for the moment the spotlight has been directed at behavioral targeting. Behavioral targeting comes in many forms, including but not limited to: 1) the analysis of clickstream behavior through tracking cookies, 2) remarketing to prior visitors of an advertiser or content site, and 3) the inspection of packets to determine where a web user has been based on their ISP connection.

ValueClick and AdBrite have just announced their versions of behavioral targeting at the OMMA Behavioral conference, and plenty of publishers and ad networks are responding to advertiser’s request for behavioral targeting with the hope of securing more ad dollars. The increased interest in behavioral targeting has raised the attention of not only consumers and web privacy advocates, but also legislators on Capitol Hill who are trying to determine where the line should be drawn in regards to tracking web surfing behavior.

Standards for behavioral targeting will undoubtedly be developed –perhaps through industry efforts, rather than government fiat. Addressing the governance issue, however, does not solve a fundamental problem with behavioral targeting: its reliance on historical behavior data to predict current consumer interest. Firms like NebuAd and Phorm view the clickstream behavior of a user as they surf from home, which allows them to extrapolate where the user has been and how recently they have been there. ValueClick’s new offer has the ability to predict what a customer may want, but not on the basis of what page they’re on at that moment. Because these campaigns are run broadly across networks, portals, and social media sites, they lack relevancy and content.

One of the advantages that ad networks like Burst Media have is that we represent publisher content. Our network is comprised of high quality, interest-based web sites in the mid- and long-tail of the Internet. This is the content that internet consumers search for, bookmark and invest in with their time and attention. Consider the fact that comScore Media Metrix’s June data release reported that the average time spent per visit to a search engine was 1.8 minutes, as opposed to the 5.5 minutes spent on a hobby site, or 4.4 minutes spent on travel information sites. It is clear where internet consumers are spending their time.

Placing a behaviorally targeted campaign next to specific content means an ad is viewed in a relevant environment to the consumer. An ad for a destination like Bermuda is appropriate if the visitor, having previously visited a booking engine and a Bermuda Tourism site, then sees the ad promoting a hotel or attraction on a sports site. Consumers engaged and invested in that environment view the ad in content they eagerly seek out, they care about, and most importantly, they trust. They are more receptive to the content, and likewise to the advertiser. What better place for an advertiser’s message?

Increasingly, high quality specialty content web sites allow for a degree of behavioral “hyper-targeting”. This type of targeting marries content targeting with behavioral targeting and allows advertisers to deliver a highly focused message in extremely focused content. An example of behavioral “hyper targeting” would be a tourist board that targets active travel researchers by placing an ad on travel sites and booking engines. The impact? Behavior + content = results.