AOL Ad Project, 'Platform A,' Plots Plan B

Digital Effort Aiming To Unite Multiple Fronts Faces Various Obstacles
By EMILY STEEL
March 26, 2008; Page B6
Over the past two years, Lynda Clarizio has helped build Advertising.com, AOL's ad network, into one of the hottest properties in online advertising. Her reward: She gets to try to clean up one of the Internet company's messiest divisions.

Time Warner's AOL unit is aiming to transform itself from an Internet service provider into a full-service digital-advertising business. To that end, it has spent about $1 billion to buy seven ad-technology firms with different areas of expertise, from behavioral targeting to video ads. The next step is to knit them together with Advertising.com -- an entity AOL has dubbed Platform A, but has yet to take to market.

AOL's future largely hinges on the success of that transformation, which involves aggressively slashing costs, forsaking billions of dollars in overall subscription revenue, and laying off thousands of employees. Time Warner Chief Executive Jeff Bewkes has said that mission is key to plotting a new course for a company whose stock price has stagnated in recent years.

But Platform A is off to a rocky start. In its first six months, it has been marked by failed sales targets, tensions among its different business groups, and, most recently, the dismissal of its president, Curt Viebranz. A number of marketers say they are ready to spend their ad dollars with Platform A, but can't because the disparate units still operate independently.

The idea behind Platform A is that AOL can be a one-stop shop for placing ads both on AOL's own Web sites and on the broader Web, through its ad networks like Advertising.com, which sell ads on thousands of Web sites. So far, though, the company is a long way from that reality. AOL is fourth among the major Web portals -- behind Google, Microsoft's MSN and Yahoo -- in ad revenue, and the pace of its ad-revenue growth has also dropped off. AOL's ad revenue grew 12% in 2007, compared with 37% in 2006 and 38% in 2005, according to research firm eMarketer.


Even Advertising.com, a rare bright spot in AOL's business recently, is facing new pressures. A major part of a two-year deal with its biggest advertiser, Apollo Group's University of Phoenix, ended in January. Advertising.com was University of Phoenix's exclusive online marketing partner, managing its ad buys both on its network of sites and on other ad networks. The deal generated $215 million for AOL in 2007, up $58 million from $157 million in 2006, and accounted for 17% of AOL's ad-revenue growth last year. (University of Phoenix will continue to buy ads on the Advertising.com network, but decided to take its ad buying in-house.)

AOL's biggest competitors are developing their own ad networks, which will make life tougher for Advertising.com. "If I get the inkling they are not innovating, I'm going to look elsewhere and talk to Yahoo or any of the other Web giants," says Tom Hespos, president of Underscore Marketing, a closely held digital agency in New York.

AOL executives have picked Ms. Clarizio, 47 years old, to rescue Platform A, which has the widest reach of any ad network in the country -- reaching 90% of the U.S. online audience, according to comScore -- but isn't able to effectively sell across that spectrum yet. A nine-year veteran of AOL, Ms. Clarizio led the deal team that acquired Advertising.com in 2004 for $435 million. That unit has accounted for nearly a quarter of AOL's revenue and is one of the fastest-growing parts of the company.


Trained as a lawyer, Ms. Clarizio is known internally for an analytical mind and an ability to delegate. A graduate of Princeton University and Harvard Law School, she came to AOL from Washington law firm Arnold & Porter, where she was a partner for seven years and also worked as an AOL outside counsel.

While AOL is known as a relatively slow-moving, bureaucratic company, Advertising.com has developed a different reputation. "AOL has reinvented itself so many times. It is hard to keep track," says Adam Schlachter, senior partner and group director at Mediaedge:cia, a media-planning firm that is a part of WPP Group's Group M. "(Advertising.com) has been able to grow steadily, consistently and innovate."

Ad.com grew from a cramped townhouse on the outskirts of Baltimore, where brothers Scott and John Ferber opened a digital advertising company called TeknoSurf in 1998. Their idea was to piece together a network of Web sites where they would buy ad space, then resell it to advertisers at a premium. It changed its name to Advertising.com in 2000.

Ms. Clarizio tried to embrace Ad.com's start-up spirit. The company remained at its Baltimore headquarters, instead of relocating to AOL's Dulles, Va., base, 60 miles away. She dressed up for Halloween and competed in relay races.

She also has tried to get the company's various sales teams and engineers working on common goals. During daily 9 a.m. meetings in Ad.com's "War Room," midlevel executives discuss the previous day's results and chart the next day's goals.

Ms. Clarizio wants to replicate that culture at Platform A, which suffers from duplication among its sales, tech and other groups. Different ad units, for instance, call on the same clients -- in essence competing for the business. One of Ms. Clarizio's first moves in her new post was to announce a "leadership team" for Platform A. The new structure puts in place one sales team, one technology team, one product and operations team, one marketing team and one publisher-services team to cut across all the company's different ad units.

Some digital-advertising executives question whether combining sales teams is the right strategy. They fear Ad.com's emphasis on data-driven results will come to dominate Platform A, frustrating bigger-brand marketers used to the tailored campaigns they have gotten from some of AOL's ad-sales teams.

But Ms. Clarizio is moving full speed ahead with the integration. AOL also announced last week that it has integrated two of the companies that provided separate search-engine-marketing services -- Advertising.com and Quigo, a contextual targeting ad firm AOL acquired last fall. "It's an example of what we need to do across the board. It's definitely an iterative process and takes a lot of work to do that," Ms. Clarizio says.

ESPN Turns Off Ad Nets

Moves to protect brand, content; other publishers mull

mike Shields >> mshields@mediaweek.com

MARCH 24, 2008 -

Top Web publishers are planning a revolt. Even as more prominent sites experiment with selling remnant inventory through online ad networks, and in some cases ad exchanges, ESPN.com is saying thanks, but no thanks.

The site recently cut ties with Specific Media and several other unnamed ad networks, and is taking the bold stand that ad selling that relies heavily on arbitrage and algorithms is not for them.

"We're heading down a path where it no longer suits our business needs to work with ad networks," said Eric Johnson, executive vp, multimedia sales, ESPN Customer Marketing and Sales. Sources say that ESPN would like to rally support from other publishers behind this move and ultimately tamp down ad networks' growth. Turner's digital ad sales wing is rumored to be considering a similar move, though officials said no decisions are imminent.

"Turner, like a lot of media companies, is currently reviewing all of its media practices, and ad networks are certainly a part of that process," said Walker Jacobs, senior vp of Turner Entertainment New Media Ad Sales.

ESPN's decision crystallizes a philosophical debate in the online ad sales industry that has intensified since the Interactive Advertising Bureau's annual meeting last month when during a keynote address, Martha Stewart Living Omnimedia media president Wenda Harris Millard gave her now famous warning against selling Web inventory like "pork bellies."

Two sides have formed—those who want to protect traditional, direct selling of premium content brands and the math-loving crowd that favors automation and data. The math lovers make the traditional sellers nervous.

"There is a genuine concern about commoditization of brand inventory by some of the networks," said Millard in an interview.

Of course, there's a reason that online ad networks, which rose to prominence in the late 1990s by aggregating inventory across thousands of smaller Web sites, are playing a bigger role in Web publishing. Most large sites are swimming in avails they can't sell. Insiders estimate that a range between 20 percent and as much as 70 percent of inventory can go unsold at a given time. Thus, ad networks offer a monetization alternative.

But some sites, like ESPN, see networks as profiting on their brand investments and their user data, while also threatening their own marketer relationships. Many just think using networks devalues the power of content.

Several publishers, in conversations with Mediaweek, privately applauded ESPN and hoped that others would follow suit. However, in this accountability-driven, quarter-by-quarter climate, it's hard for any publisher to walk away from revenue, even if it's not huge.

"Not all inventory is created equal," said Peter Naylor, senior vp, digital media sales, NBC Universal. For example, Naylor said iVillage's Horoscope section generates a lot of traffic but doesn't attract many endemic advertisers. That's why he turns to networks. According to Pam Horan, president of the Online Publishers Association, most publishers do just that.

For example, MTV Networks recently inked a deal with Microsoft to let the software giant sell its remnant inventory. Nada Stirratt, executive vp, MTV Networks Digital Media (a former top sales exec at ad net giant Advertising.com), said that ad networks "absolutely have a place for high-frequency, low-value impressions." Plus, she likes tapping into Microsoft's tech expertise and is comfortable with the numerous safeguards the deal offers.

So can ESPN change the model? "It won't have the desired impact," said Adam Kasper, senior vp, director of digital media, Media Contacts, unless the top 10 or so Web sites followed suit. ESPN is "essentially fighting technology. That's a hard thing to do."

How to fix ad exchange challenges

By Tom Hespos

The investment community makes a lot of fuss over ad exchanges, yet agency buyer reaction to them has been lukewarm at best. Here are some of the top problems exchanges need to address.

It can be argued that the need for an ad seller to have its own ad exchange was one of the driving forces behind much of the recent M&A activity in the digital communications marketplace. Right Media and DoubleClick have both been acquired, and the industry trades buzzed about how exchanges were the future of buying and selling media.

I'm a big believer in exchanges myself, and at my agency, we're staying ahead of the curve by getting involved with all the major players and kicking tires as new features are introduced to exchange-based buyers. And we've had our share of difficulties. Largely, though, those problems are being addressed, and it won't be long before the tepid reaction to exchange-based buying warms up.

Here are some of the issues on the table:

Not enough transparency
An issue common among many exchanges is transparency, or lack thereof, especially where the identity of the seller is concerned. Public awareness of the fact that a premium-brand site needs to get rid of some remnant inventory quickly is not something that many publishers want disclosed. They think it cheapens their brand and presents problems with respect to comparative CPMs that various advertisers pay. Think about it -- no one wants their top advertiser to find out that another buyer who has never advertised on the site before managed to book inventory at 1/10th the rate through an exchange. It's not considered good for business.

This mentality leads a number of publishers to mask their identities. From the buyer perspective, it looks like the exchange is carrying a lot more trash inventory from undisclosed sellers than it is from disclosed branded sites. And that can be problematic. Many brand advertisers disqualify undisclosed ad deals as a matter of practice. In the case of exchanges that allow undisclosed sellers, there might be slim pickings for the brand-conscious advertiser.

Thankfully, this problem is being solved by the free market. As more publishers find regular buyers through exchanges, we have seen an uptick in the number of sellers willing to disclose their identity through the exchange. This behavior is usually rewarded with a boost to the CPM the buyer is willing to pay. The invisible hand of capitalism will solve this problem for everyone but publishers with ultra-premium brands.

Floating budgets
"If you don't watch it carefully, budgets can quickly get out of hand," was the quote delivered by one of my media supes when talking about a popular exchange. Much like a Google AdWords account, budgets need to be set, capped and watched very carefully in order to ensure allocated funds are spent fully, and that spends don't go over budget. Yes, there are mechanisms in place to keep spending under control, but the parameters don't always line up with the limits media buyers need to impose over time.

Thankfully, technology can easily solve this problem, and exchanges are working to make sure delivery stays as close to specified budgets as possible. Right now, many exchange platforms are a far cry from "set it and forget it," but we're getting there.

The stigma
Exchange inventory often has the reputation of being -- how shall I put it delicately? -- not exactly top-tier. Some clients and prospects we've talked to about exchanges initially reacted poorly to the idea but have since warmed up to the idea after we've showed them that inventory on top-tier sites can be bought through exchanges at a discount.

Again, as more publishers get aboard with exchanges and disclose their identities, the stigma will begin to vanish, particularly when agencies are able to increase efficiencies by getting better rates. Over the long haul, agency services may become more competitive (cost-wise) as agencies streamline their process and incorporate exchanges into their day-to-day media buying processes.

So, while exchanges have yet to make a huge splash, I wouldn't look at them as a flash in the pan, either. Remember that they're fighting years' worth of institutional inertia. The way to combat all that inertia is by showing significantly increased efficiency, which they are. So it's only a matter of time.

What brands really think about ad networks

Depending on your brand, ad networks can be a boon for your business or kind of a wash. Brands that need to reach a mass audience relatively cheaply say they are happy with the traffic they net on a network's hundreds or thousands of sites. But brands that are especially vulnerable to bad or confusing placement on sites, or want to cultivate a particular user, have to wade into the ad network depths with caution.

Quality placements, of course, are defined differently by different brands. But controlling your image and collecting clickthroughs can be done, say our online marketers. Nevertheless, they warn, overlap and the mass profusion of networks without clearly defined niches can make it hard to differentiate which one is the best buy.

Below, a panel of intrepid marketing professionals discusses how ad networks have worked for them, and what they are still waiting to see in online marketing's evolution.

1. Do you use ad networks? If so, why?

Kyle Sherwin, media director at Sony:
Ad networks are a ripe opportunity for our business in its current state, not only for economic reasons -- low entry costs and aggressive rates -- but also because they can address the special interests of our artists' fan base. Some networks have a host of specialized media properties that are very important for gaining credibility with a core fan base. For certain artists and products that appeal to a narrower fan base, we need to penetrate properties that are relatively undiscovered and can serve as initial points of influence for us.

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
Yes, Microsoft uses ad networks. We use ad networks primarily for volume and efficiency. We typically test how ad networks perform and then optimize based on performance against campaign objectives.

Valerie Constable, director of media at Kaiser Permanente:
We use ad networks for our individual plans, primarily. Health care has different types of insurance: corporate, small business and individual/family accounts. Our individual plan group at Kaiser Permanente is all direct response-oriented, so we use ad networks.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
We do use a number of ad networks for direct response campaigns. We find that they provide very efficient, targeted campaigns with low-cost, high-volume impression levels, and a lower cost per conversion. They also allow us to be present on a number of sites that we would not normally buy. Smaller sites can be aggregated together to drive scale, and larger sites are sold at a lower cost. Most networks also offer a CPA campaign, which can also be very efficient.

Correy Honza, director of internet marketing for Quiznos:
We've used them in our test markets for new products and we're planning to use them a lot more. We've done a lot of portal advertising but now, looking at the benefits of it, portals require a minimum spend. Ad networks are inexpensive and you get on thousands of sites. So we are checking out ad networks and see what they have to offer. It's also interesting how ad networks are getting into behavioral marketing. It's a slick way of communicating a message.

Dave Chase, CMO for AltusAlliance:
We're more focused on niche ad networks like Glam and Active Athlete Media than "buying ads by the ton" with traditional ad networks.

Katie McCormick, web manager at Revlon:
Yes, we do. In 2007, for our Mitchum Man deodorant, we chose the larger ad networks that had a lot of site traffic. We're planning now for 2008. Who knows where we will land?

Bill Daley, senior manager, interactive marketing for Universal Orlando Resort:
We use them because they are guaranteed targeted traffic to our website and we do the ad buy on a CPC basis. Also, we view the additional impressions to help branding and still track view conversions.

Sean X Cummings, director of marketing for Ask.com:
When you can't advertise on Yahoo!, AOL or MSN, as we can't, you have to find ways to get mass reach. We use a lot of different ad networks. Those brands that are smart are taking advantage of them. Most advertisers do not comprehend the power of online ad networks but are still buying media with old-school traditional thinking. For example, in offline, there is often an associative halo affect with brand name shows and properties. You buy on "Heroes" because your brand's association with the brand "Heroes" makes your brand, for a lack of a better word, cooler. You are one of very few advertisers during an immersive, commercial interruptive experience. This does not exist online.

So why are you paying the price premium for being on a portal or branded site? You used to buy on portals, and sites with scale, because you wanted more bang for your buck. Buying on smaller branded sites and assembling your consumer piece-by-piece required too much effort, too much trafficking and complex media plans. Those days are over. Online networks allow you to scoop up thousands of micro-consumers. It's not death by cannon fire but by a thousand cuts. The ad network has already assembled the inefficiency, into efficiency. Most brands do not understand this. They get convinced that they want to produce very rich creative. Most of that is wasted. Sure you need it, but as a supplement. The argument you often get is "Well, I want to be on that site with the $20 CPM. It's a much better property." Yes, it is, but it also has much better content. Why could that be an issue? First, their brand, the branded site, often overshadows yours instead of providing that halo. Second, what are people there for? Content not advertising. If you are on JoeBlow's blog, his content is not as rich. Where does your eye wander online when the content is not king? Advertising. Sure there are brands with very specific demographics that they need to reach, but often, even with colossal wastage, the online ad network is much more efficient. You get much better price-per-performance on networks. Why? Well, even if your creative performs better on the branded site, it will do so by about 20-30 percent for the same creative; but you get between 3 to 30 times better pricing on the network… you do the math. Unfortunately, or fortunately for us, most brands don't.

Author notes: Mira Schwirtz is a San Francisco-based freelance writer covering the culture and business of technology. Read full bio.

2. If you, either through an internal department or an agency, work with ad networks, are you happy with the placements your ads get through ad networks? Why or why not?

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
We are generally happy with ad networks. We have used almost every major network in the U.S., including Advertising.com, ValueClick, Tribal Fusion, Specific Media, 24/7 Media and Collective Media. Ad networks provide reach and are effective for retargeting, but we have found that consistency of service and cost effectiveness varies greatly between networks.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
Most of the networks we are working with are blind, so we do not have a strong understanding of where our ads are placed. We try to focus more on the targeting aspects rather than the sites. We generally ask for a sample site list, which usually lists the top tier sites within a given network. We do happen to see a lot of our ads throughout the web due to retargeting, and the placements typically seem to be desirable. We also monitor incoming traffic to our site, and it leads us to believe we are getting some good traction on several sites that we deem to be network traffic. We do plan on testing more open networks in the future so we can pick and choose the sites we are on. In terms of actual ad sizes available, there typically seems to be a wide variety.

Sean X Cummings, director of marketing for Ask.com:
This is a red herring question. We have a unique relationship in that we know many of the sites that our networks use. However, most networks protect their site lists from the advertiser. The important issue is to look at the performance of your various creative sizes. It's about the "mass" placements, not individuals as with a branded site. Don't pay attention if you run into a site that has a poor placement; the data of the "mass" will tell the full story. It really all depends on what type of business you are and what your goals are. Are you an acquisition-and-then-prevent-attrition model? Well, then, the conversion funnel is the most important for you. Getting users in that funnel, retargeting, converting and then loan-to-valuing on the back end. Are you instead a top-of-mind awareness model? Your measurement goals must be very different. You have to change the consumer mindset away from the ad. That is much more difficult and requires different measures. Basically the burden is on the client to develop the strategic measure that drives their business. If you deliver that strategic measure to your agency, they will find a way to get the ad networks that can optimize on it.

Valerie Constable, director of media at Kaiser Permanente:
We only use ad networks where we can use site selection because there are certain sites that would be inappropriate for health care. We're happy with the reach, which can be pretty extensive. And it's a way to get on some of the smaller sites that would be editorially appropriate but wouldn't make it on our radar.

Kyle Sherwin, media director at Sony:
We are generally happy because we work with open, visible, transparent networks. We will suppress any sites or categories that we don't want to be involved with.

Correy Honza, director of internet marketing for Quiznos:
It's an intelligent and economical way of reaching consumers, and we don't have to know about each site and its traffic.

Katie McCormick, web manager at Revlon:
We're happy with the placement for Mitchum Man.

Bill Daley, senior manager, interactive marketing for Universal Orlando Resort:
We work with an agency and we are very happy with the placements. They know where we want to be and where we don't.

3. If you're comfortable disclosing this information, which network do you use? Why did you choose it?

Sean X Cummings, director of marketing for Ask.com:
We've used every major network and constantly test new networks every quarter for performance. Not all ad networks are equal, and not all are equal for each business. A network that performs great for one client may tank for another; that is what surprises most brands. They hear a brand espousing the virtues of a certain network, try it out and their program tanks… and then think either they are doing something wrong, or the other brand does not know what they're doing. There is the illusion that because many networks can provide mass reach, that it means mass consumer. The type of ad placements within a group of sites will be quite diverse. Sure, you may be buying skyscrapers and leaderboards, but where they are on the page has as much influence as what site it is on. Those various combinations of the assemblage of sites within an ad network create a psychographic persona of sorts for that network. It is not about demographics, but psychographics, and the mindset of those consumers when they are on those grouped sites.

Bill Daley, senior manager, interactive marketing for Universal Orlando Resort:
The ones we use the most are Undertone, Specific Media, Advertising.com and Vendare. We also use the MSN Direct, which is like a network buy within the MSN sites. They work the best for us in regards to site conversions, and duplication of websites within these networks is minimal.

Valerie Constable, director of media at Kaiser Permanente:
We've used many including Tribal Fusion, Specific Media and Advertising.com. We apply some internal controls and calculate marketing costs per (potential) member. We've used more general networks, rather than health-oriented ones. Sometimes health content is applicable if we agree with it. We do contextually target, for example, expectant mothers, but we're just as likely to behaviorally target. We re-target too. We have a re-contact strategy that we've only been using for a few months, but we've already seen a significant lift.

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
Aside from niche networks and nuance features, ad networks in general offer a commodity product -- i.e. massive reach at a relatively low cost -- and they can scale fast. Aside from price, what really makes one network different from another is an understanding of our needs and business, which comes down to service. In our experience, service is a differentiator between ad networks.

Kyle Sherwin, media director at Sony:
We've used Specific Media, Collective Media, Undertone Networks and ValueClick. Other companies like Gorilla Nation that are not technically networks also serve similar functions for us. We have used Advertising.com but since they're not transparent, we've shied away more recently. For a more broad-based artist, we'll use networks with the most popular sites (i.e., Comscore 100 or 200). Sometimes we'll work with networks with thousands of sites because they have properties that attract the right influencers and specialized music genres.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
Without giving away too many secrets, we work with some of the top networks out there and continuously test new opportunities.

Katie McCormick, web manager at Revlon:
We use ValueClick and Advertising.com because they are the best known and came to us with the best proposals.

4. What is your biggest fear about relying on ad networks for the placement of your ads? How have you tackled this?

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
One of our primary concerns is consistency in performance. Like any good performance-based buy, we'll buy a little from every network to spread our risk then reallocate funds to the ones that perform best.

Valerie Constable, director of media at Kaiser Permanente:
Inappropriate content. We site-select and we have guidelines we provide, but the reality is with the way networks are set-up, we don't have as much control as we'd like.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
Our biggest fear is conversion duplication across networks. If you are using multiple networks, you need to make sure you have a mechanism for de-duping conversions whether it is through an ad server or another method. Also, creative wear-out. With so many impressions served, you have to be careful not to become the advertiser that is considered annoying. Carefully plan your creative variations and frequency caps.

Sean X Cummings, director of marketing for Ask.com:
As with UGC, there is a much higher degree of uncertainty of the content you will be placed next to. Ignore it. Many clients do knee-jerk reactions to a single ad placement; they fear some overly conservative person will get offended by the content it is next to. You are not endorsing that content, and it will always be in the vast minority of placements. Online is not offline where there is an implied endorsement because it is almost always a branded property. When only one in 10,000 people clicks on an ad, and only a moderately better proportion see it and come to your site, it is too transient to get worked up about. If you do, you'll spend your entire time justifying the people barking at the moon and not doing your real job. If you are too fearful then just stay in your little bubble on branded sites, and watch me outperform you.

Kyle Sherwin, media director at Sony:
Invisible networks may be a suitable fit for credit card companies that want to attract huge audiences. We are a micro marketer and need to know where every penny goes. So we're looking at networks with specified points of interest for us.

Correy Honza, director of internet marketing for Quiznos:
Are they able to deliver the impressions they promise? For us, it's about dollars and cents and reach.

Dave Chase, CMO for AltusAlliance:
We only work with transparent ad networks and ones that refuse to use pop-up ads.

Katie McCormick, web manager at Revlon:
Our biggest issue is the use of celebrity sites because we don't want our celebrity models (for example, Halle Berry) to appear next to a competitor's talent in an editorial mention and confuse consumers.

Bill Daley, senior manager, interactive marketing for Universal Orlando Resort:
Our biggest fear would be complaints by consumers if they saw one of our ads on a site that is controversial or inappropriate. Over the years I can only remember this happening once.

5. If you don't use ad networks, why not?

Dave Chase, CMO for AltusAlliance:
Our use has been limited as we are interested in creating brand associations with our ads rather than just buying ads by the ton.

6. What would ad networks have to change about the way they work in order to attract a client like you?

Keith Pieper, director of performance media at Universal McCann, on online campaigns for client Microsoft:
Price and scale are the primary factors for including ad networks on media buys. However, it would be nice to see additional differentiation in product offerings. For instance, we have yet to see a major B2B ad network out there. Or how about a custom ad network for each advertiser based on a vertical niche?

Valerie Constable, director of media at Kaiser Permanente:
Because we're a regional player, we geo-target, so ad networks have to have geo-targeting and site selection. Being able to have more to say on where we are placed on sites would add value. Oh, and of course customer service is very important. We love when reps educate us about their new opportunities so we can take advantage of them and be included.

Katelyn Himes, manager of online marketing for La Quinta Inns & Suites:
As a brand, I speak to about one new ad network per day, and with so many choices out there, it can get very overwhelming. Ad networks need to find a niche. All ad networks claim to have the same value proposition: "Quality traffic, enhanced targeting, account management teams, best inventory, etc." The truth is that the overlap across most major networks is between 60-80 percent or more. With that in mind, ad networks need to take the time to stop the battle and demystify the landscape. What are the true differences outside of what everyone else is saying? In speaking for all other brands out there, if we had a list of all ad networks in one place with the true unique core competencies of each one, it would really help brands holistically understand the uniqueness and pros and cons of each network. I encourage the networks out there to take up this challenge.

Kyle Sherwin, media director at Sony:
We can't know with full confidence that we're getting equal distribution on all the sites within a network, so we need better auditing on a property-by-property basis. But it's a trade-off because we're working with remnant inventory that has its financial advantages. Beyond that, I think networks will have to start organizing segments of unique real estate outside of traditional media placements or offer custom programs that will give us the creative or specialized presence we're looking for.

Correy Honza, director of internet marketing for Quiznos:
It's hard to muddle through all the different ad networks because it seems like there's a new one created everyday. They need to promise a certain number of impressions.

Dave Chase, CMO for AltusAlliance:
By providing the best of both worlds: reasonable ad prices and reach with quality sites.

Katie McCormick, web manager at Revlon:
The problem is there are so many ad networks that it's hard to differentiate between them.

Star Is Born: Traffiq Launches

YIKES!!a star is born (says who?) with one of the worst web sites i have seen in a long time. I am also not sure how they are any more of a "star" than any of all the other exchanges that have launched (and bought).The core team all left Miva to start this operation..... based on how poor Miva was it is going to be interesting to see how a me to is going to do late to the party. They should look to innovate... this "star" is late to the party. Lets NEVER be a traffiq.

TRAFFIQ, Inc. announced the launch of TRAFFIQ—The Internet Traffic exchange. The exchange is described as a transparent auction-based bidding environment for media buyers and web publishers.

The exchange offers real-time auctions of single impressions and clear details of ad placement before a bid is made. This is in an effort to protect brand integrity and to improve ad performance. Automated matching of buyers and inventory based on traffic segmentation and campaign criteria also ensure a symbiotic relationship.

Mark Kahn, CEO of TRAFFIQ stated, “The open economy nature of TRAFFIQ, and the level of brand protection and budget control it provides, make real-world sense to both buyers and sellers.”

The exchange supports all display and text ad formats, as well as major 3rd party ad servers. The exchange will be open to all buyers and sellers later this year.

Display Meet Email Ads: Datran Acquires Chintano

Written on

August 8th 2007

Acquiring contextual and behavioral targeting ad network Chintano, Datran Media will be incorporating the site with their existing email based ad network, EO.com.

EO.com was launched this year and was to serve as an email ad network for publishers of newsletters and email lists. These clients can incorporate ads from marketers, but what the firm realized was that there is a demand for site-based display ads. Hence, the acquisition of Chintano.

Chief revenue officer for Datran Media, Sean O’Neal said, “We had been working with Chintano for quite some time to help us explore the display advertising opportunity and the ad network opportunity [and] we had a string synergy with them.”

The company believes that what will ultimately set it apart from its competitors will be the offering of email and display advertising simultaneously. Terms of the deal were not disclosed.

Tags: ad serving, chintano, datran media, email, eo.com and Web Sites

The AdECN Exchange

AdECN is the only real-time, auction-based, neutral exchange for online display advertising.

It works much like a stock exchange. A member of the AdECN exchange buys on the exchange for its advertisers and sells on the exchange for its publishers.

The member's advertisers specify in advance how much they are willing to pay based on the visitor's profile, or the visitor's past behavior, or the page content, or other factors. Advertisers can bid on a CPM, CPC, CPA, or CPL basis.

When a visitor lands on a website page, an auction is held among all the advertisers — in less than 12 milliseconds, for every single ad impression. The highest bid wins, and that ad is shown.

AdECN provides:

• the interface for the member's advertisers and publishers, branded with the member's name and artwork;
• the real-time, per-impression auction;
• the targeting, metering, frequency capping, reporting, ad serving, and all related technology;
• the accounting and money transfer between members;
• all of the servers and bandwidth necessary to run the Exchange.

Members can place all, some, or even none of their traffic on the exchange. They can specify that the auction favor a match between their own publishers and advertisers, unless the profit of using traffic from the Exchange exceeds a certain threshold.

This guarantees members the best possible liquidity — fewer campaigns go unfilled, less inventory goes unsold, and members make the highest profit, always.

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Microsoft Acquires a Broker

By ROBERT A. GUTH
July 27, 2007

Microsoft Corp. is acquiring a small broker of ad space on Web sites, part of a broader Internet industry exploration of how electronic exchanges can make the market for online advertising more efficient.

The Redmond, Wash., software maker said it has purchased AdECN Inc. of Santa Barbara, Calif., a 30-person start-up that runs a network linking buyers and sellers of Internet ad space. Terms of the agreement weren't disclosed.

The acquisition follows the purchases by Microsoft's lead online competitors of companies building similar exchanges. Google Inc. this year announced a $3.1 billion deal to buy DoubleClick Inc., which is building an ad exchange. Yahoo Inc. in April paid $680 million for the remaining 80% of Right Media Inc., following a 20% stake it bought in October.

In each case, the Internet companies want to be the first to build a large-scale, dynamic market for the ad industry. Each hopes its exchange can inject efficiencies in trading ad space in much the same way the Nasdaq electronic market did for stocks.

Microsoft executives said they will include their ad inventory from the company's own nascent ad networks and a network it acquired through its $6 billion deal in May to buy online-ad specialist aQuantive Inc.

Microsoft will run AdECN as a stand-alone company in an effort to create a neutral venue for trading.

Write to Robert A. Guth at rob.guth@wsj.com

Yahoo Ad Sales Reorg Signals Platform-Agnosticism

by Laurie Petersen, Monday, Jun 25, 2007 6:00 AM ET
BY COMBINING ITS SEARCH AND display ad sales teams under one executive leader--search side's David Karnstedt--Yahoo is catering to what its customers want, but in a platform-agnostic fashion, Karnstedt's boss said last night.
"You will hear more," said Gregory Coleman, Yahoo's executive vice president of global sales, in an interview. "We have a full plan. Today's announcement is a signal to say to everyone that we're serious."
Months in the planning, the reorganization is accompanied by the departure of longtime Chief Sales Officer Wenda Harris Millard, the six-year Yahoo veteran whose new job as president of media for Martha Stewart Living Omnimedia, starting July 16, was announced separately by that company yesterday.
Millard was on the team that developed the ad sales reorganization plan, knew Karnstedt had been chosen to run it, and opted for the MSLO position rather than take on a global ad sales role for Yahoo, she told Online Media Daily. (See related story.)
"This new structure further solidifies marketers' instincts to plan their search and display campaigns together," said Roger Barnette, president of SearchIgnite, a media management platform specializing in auction-based media, and sister company to 360i. "Additionally, with this news following Yahoo's acquisition of Right Media, Yahoo is laying groundwork to emerge as a leader in providing auction-based media opportunities beyond search marketing so advertisers can achieve the most efficiency with their campaigns."
Coleman said it will take several months to work out the exact integration, but that the timing of the announcement had nothing to do with Millard's new job. Rumors that she would be leaving Yahoo for something new have circulated for weeks, and reverberated even louder last week after Terry Semel stepped down as CEO and was replaced by Co-founder Jerry Yang. Millard, whose profile is best-known on Madison Avenue, is credited with legitimizing Yahoo as a destination for leading brand advertisers. Earlier in her career, she was a founder of the pre-bubble DoubleClick.
"Integrating our world-class search and display sales teams under David's leadership will allow us to better serve all of our advertisers' marketing objectives ranging from brand awareness to direct response," said Sue Decker, president of Yahoo in the official company statement announcing the move. "This is one of many important steps we're taking to re-invigorate our display business, further build on our industry-leading position in advertising, and drive thought-leadership in the online advertising marketplace."
Last Monday, Yahoo said its second-quarter revenues would be closer to the lower end of earlier guidance because of display advertising weakness.
"David Karnstedt has done great things for Yahoo's Search Sales business, and it's his leadership skills, business acumen and keen understanding of the new media landscape that make him the perfect person to help shape the future of Yahoo's advertising sales business," Coleman said.
Karnstedt, who continues to report to Coleman as head of North American sales, joined Yahoo Search Marketing (formerly Overture) in September 2001. He is also a veteran of such pioneering Internet companies as Lycos and Alta Vista.
"By taking a more holistic approach to advertising sales, Yahoo will become a more consultative seller, which should make buying complete solutions easier for our customers across Yahoo and our partner sites," Coleman said.
Yahoo has been seeking to boost its share of advertising business on partner media sites as well. It is supplying both display and search advertising for eBay, and has recently signed deals with Comcast and a consortium of newspapers. Karnstedt will oversee ad sales on all Yahoo properties, including the new One Search mobile platform.
Yahoo made every effort to focus its statements on Karnstedt's elevation rather than Millard's departure, but her decision to leave is a reminder of a new wave of executive departures. Earlier this month, Yahoo's chief technology officer, who led the development of the Panama search marketing platform, put in his last day.

Selling Web Advertising Space Like Pork Bellies

Exchanges That Pair Buyers,Sellers for Available Ad SlotsAttract Internet Giants

By ROBERT A. GUTH and KEVIN J. DELANEY
The next big Internet race might turn the buying and selling of advertising space on Web sites into the online equivalent of the pork-bellies pit.
Over the past few years, a host of small companies has started electronic exchanges where advertisers and Web sites can buy and sell online advertising space. The companies, with names like Right Media Inc., AdECN Inc., Turn Inc. and ContextWeb Inc., have been an obscure sideshow to a broader battle over Internet advertising.
That's changing quickly. The biggest Internet companies, including Microsoft Corp., Google Inc. and Yahoo Inc., are focusing attention and money on the emerging business, hoping to be first with the kind of large-scale, dynamic market for the ad industry that the Nasdaq market brought to stocks.
Over time there will be "a handful of winners that build very high-tech marketplaces," predicts Jim Barnett, chief executive of San Mateo, Calif.-based Turn. "That's what we're trying to do; that's what Google is trying to do."
Today, online publications and Internet companies have space for display ads built into their Web sites. Typically, that space gets filled with ads either the old-fashioned way -- through a salesperson -- or by a mix of computers and people called an ad network that automatically sells ads for the spot. But a significant portion of the available ad space -- called "inventory" -- remains unsold, or is sold for next to nothing. Enter the exchanges, which use automated systems to match buyers with sellers of unsold space.
With ad exchanges, member advertisers specify the price they're willing to pay for a certain type of ad spot, such as a banner ad that will be viewed by a female in Boston. When a woman in Boston pulls up a Web page of an exchange member with a banner slot available, software assesses the exchange's offer. If the price offered is better than the site's minimum rate for that page and higher than what it can get from other sources, such as ads sold by its sales staff, the site will usually accept the exchange-brokered offer. The exchange's computers can then deliver the winning ad to be displayed as the Web page loads on the consumer's PC. The exchange immediately notifies the site if it doesn't have a buyer for the ad space, and the site can then put in a nonpaying house ad or try other means to unload it on the fly.
Web sites rely on data such as IP addresses -- identifiers for PCs connected to the Web -- to know the general location, gender and other characteristics of the Web surfer pulling up an ad. Sites also use cookies, small files stored on users' computers, to track their Web activity, such as recent searches. Web publishers say the cookies generally don't allow them or advertisers to know the actual identity of specific users -- and any data are made anonymous. But for a car maker who might want ads to be shown only to consumers who had previously visited auto sites or had done car-related Web searches, for example, the targeting such technology makes possible can be attractive. By bringing together a lot of ad sellers, exchanges can potentially help advertisers buy a larger quantity of such specifically targeted ads across different Web sites.
AdECN says it can complete an auction for the ads on a Web page in 12 milliseconds after a consumer clicks to pull it up. AdECN runs an exchange where 28 advertising networks, which purchase ad slots from many different sites and sell them at higher rates to advertisers, buy and sell ads.
Exchanges usually collect payments for ads and pass them along to the sites, taking a commission. Ads are generally priced per thousand times they're viewed by consumers, a unit known in the industry as CPM.
Online ticket seller StubHub in recent months started using exchanges and ad networks to spread its reach to sports and music fans on the Web. (Historically, the company used ads tied to Internet search results on Google to reach customers.) The exchanges have allowed StubHub to place ads on a broader universe of sites large and small that it never had used before. Some of those, including ads on Gawker, a gossip blog, and Internet radio station Accuradio, led to ticket sales, StubHub executives say.
In a few months of use, ad networks and exchanges "have already become material to our marketing mix," says Michael Janes, chief marketing officer at StubHub. He estimates the company now spends about 15% of its budget (up from zero at the beginning of the year) for display ads over networks and exchanges. There's still some disagreement over the actual differences between networks and exchanges. But many industry executives agree that transparent pricing and an open neutral marketplace where anyone can buy or sell ads are distinguishing characteristics of exchanges.
Q Interactive of Chicago this month started selling some ads on its sites through the Right Media exchange. And it believes that buying ads on other sites through the exchange, which it has begun doing as well, will offer a 20% to 30% better return on investment than its previous practice of going around and buying ads from different sites individually. "Right now if you want to do a media buy you have to buy on a lot of different networks and with a lot of different publishers," says Q Interactive CEO Matt Wise. "Theoretically, with an exchange, one technology platform can cover an enormous swath of the Internet."
Or so the big players hope. Yahoo thrust exchanges into the spotlight in April when it agreed to pay $680 million for the remaining 80% of Right Media, following a 20% stake it bought last October. Yahoo said that it wanted to own Right Media as a way to take a leadership role in promoting the exchange model. The company has been selling some ad space on its site through Right Media, and says it has seen increases of over 50% in prices for ad spaces sold through Right Media compared with what it brought in for them on its own.
The Right Media acquisition followed Google's $3.1 billion deal to purchase DoubleClick Inc., which is building an ad exchange. DoubleClick last week began conducting transactions for actual ads on the exchange it has been building.
David Rosenblatt, chief executive of DoubleClick, estimates exchanges could eventually handle 50% of all display ad sales. He compares the exchanges to auctions that Internet search providers like Google used to ignite search-related advertising several years ago. "I think the exchange concept will have the same impact on the display market," he says.
Meanwhile, Microsoft has started developing a prototype of an exchange and has also considered buying one of the start-ups, say people familiar with the company. Microsoft General Manager Joe Doran declined to give details but said Microsoft has been studying the exchange model and "what it would take to build an exchange." But, he said, "it's still very early for the exchange concept to really catch on and drive to large scale."
Indeed, if the dream is to have the same kind of impact on advertising that spot markets had on commodities and stock markets on equities, one or more exchanges will need a critical mass of buyers and sellers. As with stock markets, "liquidity" is key for the ad exchanges: the more participants, the greater the chance of finding buyers and sellers.
But with a bevy of exchanges large and small, the industry risks not having a critical mass of buyers and sellers on any one exchange to make a viable market. "That's the thing that's uncertain," says analyst Greg Sterling of Sterling Market Intelligence in Oakland, Calif.
It's also unclear what percentage of their ads Web sites will be willing to sell through exchanges. Many industry executives say the exchanges are suited only for "remnant," or leftover ads and ad space that the biggest brands aren't interested in. Big advertisers generally want to have more control over where the online ads appear and who sees them.
With exchanges, "the underlying assumption to that is you're buying a commoditized product that anyone can sell you," says Steven Kaufman, senior vice president at Publicis Group SA's Digitas interactive agency. Many of the high-end ads that Digitas handles require human negotiation and tailoring before appearing on a Web site. "That's not coming through an exchange," he says.
Others disagree. Such high-end ads represent at most 10% of the ad market, counters AdECN CEO Bill Urschel. "And everything else is up for an exchange."
Write to Robert A. Guth at rob.guth@wsj.com and Kevin J. Delaney at kevin.delaney@wsj.com

Google Fiddles with AdWords' Macro-Economics; Allows Bid Averaging · MarketingVOX

Google Fiddles with AdWords' Macro-Economics; Allows Bid Averaging · MarketingVOX: "Google Fiddles with AdWords' Macro-Economics; Allows Bid Averaging
Google added a new feature to its AdWords platform that lets advertisers set an average budget, reports ClickZ.

The new tool will free advertisers up from, it's hoped, having to login repeatedly to adjust their campaigns in order to maintain an average spending amount. This allows users to define preferred CPM and CPC amounts, which Google's system will then automatically target.
Since the primary strategy to keep spending to an average rate is currently under-bidding on keywords, this may actually prove a macro-economic play by Google to increase the average bids for those campaigns with the most positive returns.
The utility might not be a good fit for all advertisers, especially those who deem it worth their while to pay more for specific keywords. "

Online Ad Stocks: The Next Takeover Frenzy?

Posted by Eric Savitz

I’ve been a little late - okay, a lot late - to weigh in on the ongoing auction of online ad company DoubleClick, which is controlled by private equity firm Hellman and Friedman. Supposedly, the company is looking for at least $2 billion. The current owners paid $1.1 billion in 2005, and subsequently sold off a few of the original pieces.. Among the rumored suitors: Google (GOOG), Microsoft (MSFT) and Time Warner’s (TWX) AOL unit.

Youssef Squali, Internet analyst at Jefferies & Co. asserts in a research note that the losers in the auction will likely shop elsewhere. One candidate would be a privately held company called Right Media, which auctions off online ad space; although he points out that the obvious buyer for that one would be Yahoo (YHOO), which already holds a 20% stake.

Other potential targets, in Squali’s view, include aQuantive (AQNT), ValueClick (VCLK) and 24/7 Real Media (TFSM). “Bottom line, the sale of DoubleClick is likely to spur the large players into action, driving up valuations for the group as a whole.”

Actually, all three stocks have been on the rise. Since mid-March, 24/7 is up 15%; ValueClick is up 7% and aQuantive is up almost 9%. So I would say, “let the bidding begin,” but it looks like it already has.

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What is the future of ad exchanges?

Suddenly ad exchanges are HOT. DoubleClick, earlier this month announced that it is setting up an ad-exchange, close on the heels of WunderLOOP, which had announced its own exchange, WunderLOOP Connect in mid-March. Even Google embarked on a little TV-ad experiment with EchoStar that essentially points to a future online ad-exchange.

The growing interest in these ad-exchanges shouldn’t come as a surprise. Online advertising continues to grow - about $16.8 billion in 2006, and heading to the $25 billion by end of decade. These numbers, while astonishingly large, are matched by an exponential growth in the available inventory.

The advertisers need to become more efficient and maintain a tighter control over how, when and where their ad-dollars are spent. Such needs can be met by online ad-exchanges - which also brings back recurring B2B exchange nightmares of the dot-com bubble.

One of the nagging worries about these ad-exchanges is the issue of liquidity - something only Google, and possibly Yahoo & Microsoft can provide. Perhaps that is why Google and Microsoft have expressed mega-billion dollar interest in DoubleClick? Thankfully, they will find little resistance from the web publishers, unlike the television and cable operators who thrive on the inefficiencies of the traditional media markets.

A few months ago, I had argued, that the core competency of large media companies is not the media. Instead it was their sales team, that was their edge over the upstarts. And that is precisely why cable network put the kibosh on an ad-exchange proposed by eBay and backed by the big spenders, aka the people who advertise.

Seven national cable networks tested the exchange over the last month, and executives at those networks decided it went too far in removing humans from the ad sales process, Mr. Cunningham said.

Sean Cunningham, president and chief executive of Cabletelevision Advertising Bureau, a trade group, in separate interviews with The Wall Street Journal and The New York Times stressed the point that it wasn’t going to work. Of course, pretty dumb of me to assume that the whole point of an online exchange … is to remove inefficiencies.