John Childs-Eddy is VP of Business Development at Australian direct response ad network, Funbox.
AdExchanger.com: How is the Australian ad network business different than ad network businesses in other parts of the world?
JCE: It’s far less fragmented. The Australian market is essentially controlled by an oligopoly of a few main publishing players who work very hard to prevent what they see as the potential commoditization of their inventory.
Sales channel conflicts are far more common in Australia than in the domestic US market, and restrict the way inventory can be resold. For example: we have sat down with Yahoo7 (Australia’s Yahoo joint venture) several times this year – and have not yet found the right synergy to work through Yahoo’s Right Media platform to buy their inventory outside of a directly managed relationship (they do not have a demand link with any ad network in the exchange from what we’ve been told) – they explain this is because they do not have problems with domestic Australian demand. Their team also has what appears to be tremendous internal pressure on them to maintain the integrity of the campaigns they run (far more than the other Yahoo’s we work with) – which makes them understandably very cautious about opening up the Yahoo7 inventory “kimono.”
CTR’s are usually far lower here than in the US, and brand dollars play far more frequently, for a far higher percentage of the Australian inventory pie. This creates an interesting effect of allowing relatively under priced remnant CPM’s for DR campaigns with creative’s that perform well. This is because brand campaigns usually run with far lower metric goals than DR campaigns, and so the CTR expectations of the publishers cause them to price in a performance inefficiency that doesn’t usually exist with effective DR advertisers.
Even more interestingly, quite a few smaller Australian publishers still sell inventory on time-based metrics, instead of visitation-based metrics.
As a quirky side note which reflects the evolution of online display advertising in Australia, creative sizes here are still regularly described in archaic terminology such as “Leaderboard” or “Medium Rectangle”, instead of standard pixel size descriptions such as 728×90, or 300×250.
Australia is considerably further behind domestic US ad agencies, publishers, and networks in understanding what exchanges are, and how to use them. While no one here is really talking about exchanges or demand-side platforms yet, I foresee that will change with companies such as Funbox leading the charge.
The publisher oligopoly has a lot of interest in the ability to retarget their own users on other web properties, and I think that is where exchanges will find the most traction in the Australian market.
Of course, those large publishers also have a great amount of concern working with third-parties to retarget their own users – for fear of the third-party retargeting those users for one of their competitors– and that is essentially the major sticking point here right now.
As far as demand-side platforms go, Australian advertisers are definitely interested in increasing their scale, so long as they can do it in a brand safe manner, and obviously demand-side platforms will play a role in this space. Like I’ve said though, the market here is conservative, and requires a lot of educating before they would be comfortable participating to the same extent as domestic US advertisers and Agencies.
What is Funbox? Can you share some trends you’re seeing in your business?
Funbox is a “vertically integrated” ad network.
This means we directly own, or have close partners who own much of the infrastructure (merchant accounts, 24 hour telephone customer support in 14 languages, mobile phone short codes, and supply chain infrastructure) required to sell most products online.
When a groundbreaking product gets released, we are in a unique position to exclusively license the product for online distribution. This means we have unique products, and are at the highest point in the value chain, with no middlemen between our publishers and us.
For example, we have an exclusive licensing agreement for a new child safe internet monitoring program which can tell if a child on a computer using an Instant Messaging program is chatting to an adult pretending to be another child (using semantic language processing). The program can then shut down the conversation and alert a parent or responsible adult. This type of product has wide appeal and can easily be sold in many different countries because it is a downloadable product.
Because we control the customer support, the billing, and the product quality – many larger, more brand sensitive publishers choose to work with us to monetize their international long tail, or higher domestic frequency curves. They do this because they know Funbox is one of the only companies able to ethically run direct response campaigns in a sustainable way. We have been here since 2004, and have seen many “fly by night” operations come and go. We have never been inspired to be one of them.
In terms of trends, I think the evolution of exchanges has created an opportunity in which many businesses that have previously viewed their online business activities as either advertiser or publisher related, as now network related. Our own evolution has been from advertiser to network – as we saw an opportunity to simultaneously mitigate risk, and eliminate zero value 3rd parties, while increasing our own exposure through making that transition.
Breaking out your revenues a bit, what percentage of your business is generated from Australian audience as opposed to the rest of the world?
Ironically only about 5% of our current revenue comes from the Australian audience.
This is because we focus on monetizing Australian publisher’s international inventory – usually US, European, or Asian eyeballs. We found early on that Australian Publishers do not have a problem with Australian demand, and they do not need a solution to increase their incremental domestic revenue.
On the other hand, as much as 45% of Australian publishers traffic is international – Australia has large expat communities all over the world – and we have sales offices in Australia, the US, and Europe to help monetize that supply.
Also, we are about to launch our international publishers program to increase the reach of our Australian advertisers. We are currently signing up publishers from all over the world who have English speaking Australian IP traffic. This will be our first real venture into increasing domestic Australian revenue.
If the campaign or deal warrants it: I can be anywhere in the world within 72 hours.
Can you see a day when Funbox works with brand marketers on brand awareness campaigns?
I can foresee Funbox helping competent Australian online media buying agencies acquire more audience for their branded clients via our position and knowledge of the Exchange space.
At the moment, Australian advertisers usually need help increasing the scale of their campaigns. We are in a great position in terms of our relationships, knowledge, and technology to help those agencies and advertisers acquire more of their target audience on Exchanges, as well as our own directly managed network of sites and social applications.
How do you prevent your client campaigns from running in inappropriate content?
We either do direct media buys on guaranteed site lists, run them exclusively on our own sites and publishers, or we use semantic language and proprietary imaging technology to help circumvent the problem on Exchanges.
Obviously there is no 100% solution for this outside of guaranteed placements and site lists, which has problems with scale. As soon as you start increasing scale and acquiring more audience through Exchanges you are opening yourself up to inappropriate content.
Working with Exchange partners we know and trust helps us much as technology does. And we try to get every advantage we can to prevent this from happening.
What kind of performance are you seeing from Right Media Exchange? Anything you can report about DoubleClick ad exchange – or any plans to use it?
While we got off to a slow start, we’ve seen great performance from the RMX recently.
The RMX is a complex eco-system of relationships and technological know how, which has taken some time to integrate into our existing technology and business model. Q4 has been particularly good.
At the moment with Yahoo reshuffling its Right Media international team, we are uniquely positioned in the Australian market to allow Australian advertisers to increase their scale and buy more audience through our Right Media Exchange seat. In my opinion our account managers have far more RMX knowledge than any other Asia Pacific network or even worldwide network – many of Right Media’s original employee’s now work in a select few Ad Networks such as ours and are best positioned to leverage the Exchange they were part of building.
The DoubleClick Exchange actually “packed up shop” in Australia and moved out after six months of trying to woo the big publishers here – which reinforces my earlier point of Australian Publishers not needing to increase incremental domestic Australian revenue.
With the Adsense inventory coming onto the DoubleClick Exchange, we are definitely looking closely at becoming involved and getting a seat on the DoubleClick Exchange in 2010, as we continue to grow.
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