Scott Portugal is SVP, Global Business Development at TRAFFIQ, an online advertising marketplace.
AdExchanger.com: Discuss the momentum for TRAFFIQ in 2009. What's going on right now?
SP: What isn't going on! Obviously, the announcement yesterday of our strategic partnership with Havas Digital is big news. We're extraordinarily excited about the chance to work with an agency of their caliber. It's also another validation of our belief that the market and the industry are in need of a company like TRAFFIQ now. Organizing the mid-tail and premium display advertising space – and facilitating transactions between those buyers & sellers - is something that needs to be addressed, and it's telling of Havas' forward thinking that they see an opportunity to have us help them address this challenge.
The Long Tail has been adequately addressed by all the names we know: Right Media, AdBrite, AdECN. Even publishers own long tails have been addressed: AOL has AdBidCentral in addition to Ad.com; Yahoo! has RightMedia; MSNBC has their AdReady-enabled system. But for agencies & advertisers trying to parse through 1000s of clean, well-lit sites ranging from premium category leaders to niche enthusiast sites, very little has changed over time: it's still very siloed and inefficient.
Agencies and advertisers are all striving to become more effective in reaching audiences as they fragment, but maintaining brand and price control is a challenge – one that we believe we're addressing through via an open and transparent marketplace that operates very much like a traditional exchange. The commodities example – and for the record, I am NOT intimating that ad inventory is in any way commoditized yet – actually works: an open market of buyers and sellers moving different products (current and futures) where buyers can apply downward pricing pressure and sellers can extract true market value of their goods.
The premium nature of our marketplace also aligns well with the ongoing push of smaller advertisers into display inventory. Because you've got local and regional advertisers starting to push online display advertising in a big way – clients who are comfortable with see their ad in the local paper, hear their ad on the local radio – they want that safety in the digital space. Semi-blind agencies and exchanges offer efficiency and reach and scale against those audiences but they inhibit brand and price control. By empowering these advertisers and their data with those controls, they can safely move more and more budget into display media. It's a win-win.
Let's talk about TRAFFIQ, the company, and revenue momentum as well as affects of the economy.
Everybody has been affected by the economy and TRAFFIQ is no different. It's meant the acceleration of our business hasn't happened to the degree that I think we expected prior to the recession really starting. However, the upside is that were given a window in which the product itself – the marketplace and tools around it – matured significantly. It's meant we were able to make sure TRAFFIQ was ready for prime time, and now that's playing out as we had anticipated: we're seeing significant month over month revenue growth as well as significant month over month user growth on both the buy and sell side.
What do you mean by "user"? Who do you target as a prototypical TRAFFIQ customer?
Buyers and sellers of digital display media who care where their ad appears. Agencies, direct advertisers, publishers as well as ad networks. Like anybody else, networks and exchanges have excess inventory and need alternate business development paths to monetize that space.
One thing we don't have is a pure vertical focus. We have enough liquidity so that whether the agency is targeting Travel, Auto, B2B, Moms, Sports Fans, etc., they can build their plan according to their own specs. TRAFFIQ simply enables them to do that with greater efficiency, scale, and control.
Our sweet spot has been working with agencies that want to gain greater efficiency beyond the sites they always buy on and at independent, local and regional agencies who are seeing local revenue flow online and need to increase their buying power.
We're seeing a lot of independent agencies be able to use the web-based walk-up nature of TRAFFIQ and start to grow their own businesses. With free ad serving, a deep set of analytics, consolidated billing and on-call support staff, these shops can accelerate their own understanding of best practices in the display space. That drives more revenue out to more publishers and networks, and again, everyone wins.
Let's go back in your past - to Tacoda. You read what Tim Armstrong said he wants: AOL should own display. What are your thoughts?
It's the smart play. They have always had strong content: at one time that maintained 120 owned and operated businesses. Putting an integrated display program in place around strong content is the killer for them. Taking the disparate ad tools – such as Tacoda, Ad.com (and the Ad Learn, machine-learned optimization system) – they should become an even stronger player.
The challenges of Platform-A is obviously similar to those that companies like Yahoo!, IAC, and other multi-site media companies face: excess inventory, various targeting options and methodologies, publisher overlap, and often times dozens of ad networks involved. Look at Yahoo!: they have their own ad space, O&O's, Blue Lithium, Right Media, their newspaper consortium….lots of overlap, plenty of inventory. Baking that all together into a cohesive and integrated inventory monetization system is a beast – but if anyone can figure out how to do it, it will be Tim.
One advantage Tim has is what's left of the TACODA technology. Behavioral targeting has shown to be effective is in the brand & branded response space: right user, right time, out of context, it resonates, they recognize it and it creates positive brand awareness. What AOL can do is stagger their inventory utilizing the positive CPM's that BT commands: start with premium ad partnerships, then step the subsequent ad calls down to behaviorally-targeted campaigns. Ideally you deliver all you can against that user at quasi-premium CPM's, then below that slot in Ad.com inventory maximizing the performance value of that user. It sounds like Yield Management 101, but pulling it all together is going to be essential to realizing the best value per impression each session.
What is the new platform trend on the agency side about?
It's about control. Back in February, Rob Norman was quoted in the Wall Street Journal saying ad networks should not have been allowed to exist. What he meant – and what he went on to explain – is that while agencies were so "heads down" on serving their clients, they couldn't focus on targeting technologies. So in a world of oversupply, the door opened for aggregators to start to pool together blocks of impressions. They then created slick, efficient targeting mechanisms to take advantage of that pool of inventory and better extract the real market value of their supply chains. Thus agencies & advertisers were left flying semi-blind in order to access the inventory they want insight into.
The agencies were smart enough to realize that, it's their data, their campaign budget, and that they need to reach targeted audiences as efficiently as possible. So now the holding companies are fighting to regain that control over price, brand, and most importantly their own data. It's why WPP changed their data ownership terms. It's why IPG built Cadreon. It's why OMG is doing what they're doing and why Havas has Adnetik and Artemis etc. For these shops it's about being able to maximize the value per ad call in real-time, pulling data from their own campaigns, buying data out of BlueKai, eXelate, Brillig, Datran, etc. – and in turn helping publishers achieve maximum yield.
One challenge that the agency will face will be supply chain management. Ask anybody who has worked on the publisher side of managing an ad network and they will tell you that there's a lot of staff there that is needed to maintain relationships down to page load problems, "ad-tag-broke-my-page type stuff". Partners who can help them in this space are well positioned for the long run.
How is TRAFFIQ going to fit in to the platform world?
We think we are the perfect partner to help these agencies both manage their supply chains AND drive the efficient "deeper" buying that their clients want to see. Agencies and advertisers will always maintain strategic publisher relationships, as there is real value in working closely with a publisher to develop integrated programs. The performance component will be addressed via new agency delivery platforms. But it's everything in between that TRAFFIQ can help with.
We've created a platform where agencies can go direct-to-publisher to maintain brand safety, but also use real-time data and flexible optimization tools to re-allocate the buy to hit campaign KPI's.
We're not in a pure brand or performance world anymore. Advertisers can and SHOULD care about both brand and performance metrics simultaneously. TRAFFIQ offers agencies a platform through which they can negotiate direct-to-publisher and negotiate infinite numbers and permutations of media plans, execute through a single, easy-to-use interface, and re-allocate and optimize with full transparency which is part of the other game. This allows every buy to be brand safe AND optimized.
As audiences fragment, coalesce, and then fragment again, agencies and advertisers need a centralized location to be able to find best-of-breed sites, evaluate targeting options, extract the best price on an order by order basis (not ad call by ad call), and ultimately manage and execute against that without returning to the siloed process that exists today. It's simply not scalable. Our system helps advertiser & agencies achieve that sorely needed scale.
How will TRAFFIQ participate in real-time, impression-level bidding?
I think it's a natural outgrowth of our current business. Like anybody else, we can't be all things to all people. We started in an area of the market that we believe was underserved. From there, we are looking to expand in a number of different directions.
Agencies and publishers are going to find the exchange that works best for them, and a continuous serving environment is certainly on our roadmap for consideration. Over time, as TRAFFIQ develops secondary products, one of those options might be a TRAFFIQ powered auction-based buying platform.
Let's talk about a shift in messaging for TRAFFIQ. In 2007, TRAFFIQ identified itself as an exchange. Today, TRAFFIQ identifies itself as a marketplace. Why the change? Are you still an exchange?
We had been running a futures-based auction – a model that I don't think the industry was necessarily ready for. Managing auctions against current and future blocks of inventory on a non-real-time basis requires a level of liquidity that we may not have necessarily had, as well as publishers who needed to maintain a level of diligence in terms of managing blocks of inventory that on a futures basis – which can be difficult.
What we saw was a need for a better combination of both automation and transparency, thus our switch in messaging to what you see today – TRAFFIQ as an open and transparent marketplace.
Isn't that an exchange, though?
Absolutely! The term exchange has been linked in our space to ad networks because their aggregators of inventory and do sort-of real-time delivery. Like I mentioned before, we've built TRAFFIQ almost like a commodities exchange where you've got actually buyers and sellers with market-makers in the middle helping facilitate transactions. It's a return to what ad exchanges were originally developed to be.
Who are your competitors? Exchanges like DoubleClick AdX or buying platforms such as MediaMath and Invite Media?
I'd consider the DoubleClick AdX as our closest relevant competitor.
How do you compete with them and differentiate with THAT company hanging around?
The independent nature of TRAFFIQ is obviously a huge value for both everybody in the market. We're platform neutral. You don't have to be DFA/DFP/DFE-enabled: we are interoperable with all major serving platforms. Additionally we have our own ad server and analytics package that are free as services to help utilize the marketplace.
The free nature of our platform is also a critical differentiator: agencies and advertisers only pay for the media they buy (we work on a revenue share with publishers). This revenue share is more favorable than what many third parties offer, and because of the open model of our market, agencies, advertisers and publishers communicate directly with each other.
But the biggest point of differentiation is most likely the quality of inventory available in TRAFFIQ. AdX may have massive scale but it's against long tail inventory. Because TRAFFIQ is a biz dev tool for publishers, we see publishers selling premium bocks of inventory, including high-engagement placements like video, interstitials, roadblocks, sponsorships, etc..
Finally, remember that this is our only business – we don't have to worry about maintaining ancillary products and platforms – it's just TRAFFIQ. This centralized focus means we can quickly iterate the platform and grow the market without distraction. We put out new product releases monthly, not annually. It allows us to stay ahead of agency & publisher demand and address marketplace needs as they arise.
How does TRAFFIQ grow in the future? Do you need more funding? Or do you just drive sales?
We launched the product as it exists today in January, so like any other maturing business, today it's all about sales and marketing.
You have 500 directs, 400 agencies, 1700 publishers who work with TRAFFIQ. Among the publishers, directs and agencies, which is the most difficult to grow and why?
Agencies, as they certainly have the least amount of bandwidth to evaluate new opportunities.
Utilizing TRAFFIQ means a new tool to plan, buy, execute & manage display media campaigns, and in the agency world, anything new means a longer time for consideration. However, in the long run this consideration is beneficial to us, as the conversation is no longer about media being a good fit for one client, but instead it's a healthy conversation about how partnering with TRAFFIQ is it right for ALL clients and campaigns. Buying deeper with greater control impacts every agency & advertiser, and we look forward to helping buyers achieve the efficiency they want and the control they need.