Alan Schanzer is Chief Strategy Officer, Undertone Networks, an online advertising network.
AdExchanger.com: What has surprised you most about online advertising in 2010?
AS: Just when I thought it was impossible for change in the industry to accelerate, it did. The impact that technology has had on the online ad business is quite amazing. 2010 will be the year of third-party data exchanges, ad verification, agency trading desks, DSPs and other platforms, resulting in the rumored death of ad networks and the adoption of emerging technology models. With two and a half months left until the end of the year, I’m anxious to see what lies ahead.
As an advertising guy, I’m very focused on how to combine innovative technologies with the basic notion (and I’ll date myself) that exposure (reach and frequency) and great ad creative and messages build brands and drive demand. I say this because, first and foremost, I really believe it. Second, I often wonder if our industry is so focused on individual low-cost impressions and clicks that we're overlooking the reason why adverting exists in the first place. As our business has become technology-centric, let's not forget about the importance of creative. In 2011, I think we can all think a lot more about that.
How common is retargeting as a campaign tactic among your clients? Beyond retargeting, is the use of data (online, offline, intent, etc.) growing in campaigns run at Undertone?
Currently, about 20 percent of our clients run retargeting campaigns. This number is growing as we utilize technology to make retargeting more segmented, refined and measurable. We’re also increasing use of third-party data, while spending more time analyzing results when it’s combined with proprietary data. It’s the combination of these data sets that often yields the best performance for customers, but the challenge with data, as everyone is learning, is scale and consistency. Undertone’s analytics and technology are quickly solving these problems, and we’re in the process of rolling out a powerful, next-generation engine that will optimize data in real-time and target on an impression basis. This will not only produce more consistent results, but it will also improve campaign performance.
How has real-time bidding influenced Undertone strategy? Have you added it to your toolkit?
Real-time bidding is something we will make available, because our customers are asking for better solutions to target the right audience on high quality, brand-safe sites. That commitment to brand-safety means that Undertone does not buy blindly through exchanges or daisy chain with other networks. We recently launched Undertone DirectConnect™, a new product that integrates with trading desks, allowing agencies to tap into a supply source of high quality inventory using their existing buy-side platforms. DirectConnect fills a market need by offering quality inventory at scale – something buyers today cannot get through the exchange marketplace. More, it supports the way buyers want to buy media today: electronically. We can do this because DirectConnect is built on top of our proprietary, next-generation technology platform. Today, we support rich media and in-banner video ad units, and future versions will enable real-time bidding (RTB) and allow us to offer buyers pre-roll video, expandable and other high impact ad units.
Is DirectConnect live today, and when will it be real-time biddable for buyers? What about sellers looking to set floor prices?
Yes, four agency trading desks from the major holding companies have signed on to leverage DirectConnect. Transactions are already flowing through the system, with positive early feedback. Early in 2011, we’ll release functionality to support real-time bidding, which will allow agency executives to evaluate each impression that they buy. We have also planned a series of feature enhancements over the next two quarters, which will make DirectConnect even more valuable to buyers.
Is transparency becoming more of a requirement whether from the buy or sell side?
Yes. With the emerging buy-side platforms, advertisers don’t know the quality of inventory they’re buying. This has never been an issue for Undertone. Our business model remains consistent. We control the sites and placements of 100 percent of the inventory in our network and only work with Undertone Qualified Publishers (UQP). Our buying process isn’t blind, and Undertone offered a quality guarantee long before ad verification was a business.
What is Undertone's target client market today and how do you see this evolving?
We continue to focus on a range of clients with top brands leading the way. In fact, ten out of ten of our biggest spenders are Fortune 500 companies. More and more brands are seeing the value of buying quality, brand-safe placements at scale, which is the reason why they select a core network partner in the first place. Our technology and product roadmap is firmly set on increasing the value we deliver to big portfolio brands and helping them drive better results online.
Does Undertone find itself competing with agency trading desks for media agency business? If not, do you anticipate that you will at some point given the focus on ATDs by ad holding companies?
Undertone doesn’t compete with agency trading desks. Our approach has been very different; we consider the trading desk buyer a growing and very important customer segment. Undertone made the strategic decision to invest in DirectConnect to service the trading desks. Our core value proposition puts us in a positive position to offer quality inventory and scale in both display and video advertising that is differentiated from exchange-based sources that the trading desks rely on.
What ad formats are you providing access to in the Undertone toolkit today (display etc.)? What formats can you see adding in the foreseeable future?
There is a clear market need for creative units that drive performance. We will continually provide and refine unique placements at scale, such as synched ads, homepage channels and other units, while expanding to offer multiple formats in display, video and pure content distribution. By offering compelling creative opportunities, such as PageGrabber, which we announced in September, Undertone is providing products that can’t be bought in an automated manner through buy-side platforms. Even with high impact units, our customers will be able to use targeting techniques and performance optimization tools that help drive the scale and results that they expect from a network.
Earlier this month, an article posted on AdAge.com covered the resurging importance of ad creative in the agency community. I couldn’t agree more, but when advertisers want to target audiences, there isn’t much flexibility or opportunity for them to do so when buying via the ad exchanges. In the near future, Undertone DirectConnect will offer agency trading desks high impact, expandable and pre-roll video ads units that are not currently available today.
How have ad verification companies impacted your business? A nuisance or welcome addition? Please explain.
For us, verification companies haven’t changed anything in the way we do business. Ad verification requires additional effort for the trading desks – both to setup and to monitor for false positives. But we believe that this is a good thing as it shines a spotlight on the bad behavior that has hurt the growth of the industry. Because this is nascent technology, we’re vetting the partners we’ll work with as part of our Verified Included program, verifying (pun intended!) that their methodology is reliable and consistent. Clients trust Undertone because of our commitment to quality, and they know that when their ads run on our network, they’re not risking their brand with placements that lurk in the dark corners of the industry.
There remains some pushback among publishers in terms of using ad networks. Are you seeing any change of heart on the publisher side these days? How has Undertone's U360 product helped?
Ad networks that don’t bring much to the table outside of the traditional, remnant CPM buying model are certainly seeing pushback from publishers. Undertone’s offering, which consists of not only standard display but also high impact ads and video, has been received incredibly well by publishers who are seeking substantial growth from their secondary channel. With U360, an audience and reach extension platform that allows publishers to maximize opportunities for their direct sales channel, we’ve given them yet another tool in the toolbox to drive revenue. Between the two, Undertone has emerged as a very different type of partner for our publishers: one who is additive, strategic and generates significant revenue.
How many employees is Undertone today? Profitable? Any plans on raising a round of funding?
We’re aggressively hiring in almost all departments; depending on how fast we can fill the open positions and onboard new staff, our employee headcount will be about 150 people by the end of the year. Undertone is profitable with a positive cash flow, which puts us in a position of strength to invest in our business. Looking into 2011, we will continue to invest heavily in our technology, which is a critical part of our strategy and efforts to continually drive campaign performance and results. We’ll continue to hire to support our growth, with emphasis in marketing to help promote video alliance partnerships and products and establish a presence in global markets.
In the press release for your new full-page PageGrabber ad unit, you do not mention improved click-through rates, only better "interaction" rates. Why? Isn't CTR still a key metric for marketers?
While click-through rates are a standard industry metric, they provide a limited view of online campaign performance. Increasingly, marketers are beginning to evaluate campaign performance in other ways, looking at measures such as post-buy reports, brand lift across the internet, impact on search and offline sales lift reports, just to name a few.
Due to its size, PageGrabber is bound to see great branding metrics and will mostly likely see higher CTRs than standard banner and rich media ad units. Bigger ad units just perform better. But that’s not the point with an ad unit like PageGrabber, which is primarily bought for brand exposure. It’s about the impact of this execution, not the CTR.