Thursday, June 19, 2008

Online Ad Management Syncs Up

JUNE 13, 2008

Mike Leo, President and CEO of Operative, co-founder of Avenue A.

Mike Leo is best known as co-founder of Avenue A (now Avenue A | Razorfish). Parent company aQuantive has acquired multimillion dollar accounts like Microsoft, Gateway, Expedia and Disney, and earned Adweek magazine's Independent Interactive Agency of the Year award.

Mr. Leo joined Operative in 2003 as CEO and president. The company provides software and services to media companies, including Dow Jones, NBC and Fox Interactive Media, whose MySpace now runs 3% of all Internet ads.

With coordination and billing of digital ads growing more complex, eMarketer spoke with Mr. Leo about how publishers are coping.

eMarketer: For those who might be unfamiliar with Operative, what does the company do?

Mike Leo: It lets media companies manage their inventory and productize it. Salespeople use those products to integrate with DoubleClick, aQuantive and other ad networks. The software helps operations staff execute campaigns, including trafficking and operating ad servers on others' behalf. Then it deals with billing.

eMarketer: Don't media companies already get all this done?

Mike Leo: Sure, but the typical publisher runs 16 different systems. The software of choice is Microsoft Excel. We often consult with clients on best practices and workflow as much as on software.

eMarketer: Operative recently added National Public Media, the national media sales representative for public TV and radio stations and their Web sites, as a client. How does NPM handle ads on its various properties?

Mike Leo: The creative and collateral is created by agencies; that is unique from format to format, be it podcast, radio, site or what have you.

On the publisher side, NPM now coordinates its proposals. Everything is in one proposal for agencies: Reporting, inventory, tracking and billing all now come from one proposal. There's a single process, for everyone.

For NPM, the biggest thing is that they can scale and integrate the various systems they use, including DoubleClick, Salesforce, Atlas and billing technologies. So using a single system for sales, inventory checking and system management, things that used to take three hours to a day across media properties and departments now take 10 minutes.

eMarketer: How do other companies use this type of system?

Mike Leo: Reuters manages its Times Square digital billboards and Web ads in the same campaign. NAVTEQ delivers Web and mobile ads through the same infrastructure.

By automating ad inventory details, reduced unsold inventory. As the company increased yield across its inventory, effective CPMs have risen by nearly 20%.

Companies on the system could also be networked to create a wider inventory selection.

The Internet reduces friction and improves communications, which allows people to pull together what look like disparate firms on a single product, be it the parts needed to make airplane, the components that go into advertising or many other products.

eMarketer: How are other companies dealing with these issues?

Mike Leo: Google, Yahoo!, Microsoft and AOL are all building closed systems of their own.

eMarketer: Where do you see digital ads going in the next few years?

Mike Leo: Anyone in the Internet media business in three years will be in a tough position. Advertisers will be demanding much more in the way of accountability. The complexity of fragmentation makes it tough right now to provide that accountability. As the complexity disappears and the problems associated with media fragmentation are solved, tough advertisers will use that as leverage.

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