AdExchanger.com: Looking at the industry as a whole since last we spoke, what surprises you about what's happened in the industry in the past year?
SK: There is a graph that I like to draw (often on a cocktail napkin) that helps to illustrate my biggest surprise. The graph shows two bar charts comparing the amount of money spent in advertising online vs. the major media offline--broken down by direct response and branding activity. The first thing that stands out is pure brand advertising makes up only about 20% of online bar chart yet over 70% of the offline bar chart.
In the late 90’s my former boss Kevin O’Connor used to always say that the internet advertising industry was a good bet because “ad dollars always follow eyeballs.” Historically, he is correct. Today online makes up 50% of the average US person’s media consumption hours (according to IDC), but still receives only 15%-20% of total major media ad spend. While online’s share of media spend appears to be expanding rapidly, you get a different story if you look at the media mix for direct response dollars and brand dollars side by side. Online direct response is more like 35% of the total direct response spend and online branding is less than 5% of the total brand media allocation despite the fact consumers are spending so much time on the web.
This confirms that increasing brand spend is by far the biggest untapped growth opportunity for the online ad industry. Yet surprisingly it seems that most of the innovation and focus in this industry continues to be placed on direct response, despite the fact we are getting relatively close to the equilibrium point of dollars to eyeballs. In the last year we have seen countless articles, conversations, conferences and investments poured into businesses such as demand side platforms, supply side platforms, exchanges, optimization engines, real-time bidding, behavioral targeting, trading desks, social graph targeting, look-alike modeling and re-targeting. Yet these are all technologies aimed largely at further improving direct response. I understand why this is the case, the web is a proven entity at direct response and the demand for such services is currently at an all time high. It’s clear however that the industry also needs more focus and innovation geared towards improving online brand advertising if we want to capture the bigger media opportunity
What is Aperture today? Is it a data company, ad network, DSP, and/or measurement company?
Aperture at its core is a rich demographic, psychographic and transaction-based collection of data that we leverage for measurement, verification, planning, analytics and targeting. The data is truly unique because it’s more accurate than the self reported, survey and look-alike data the internet industry has been forced to rely on. And Aperture data has an unprecedented combination of depth and breadth. From a measurement and planning perspective this means that Aperture can identify the make-up of an online audience at the site, section, placement or page-level and provide these results with statistical significance. For many of our brand and agency clients, Aperture has become the preferred method for accurately measuring verified audience data across banner ads, video, rich media and web sites.
How does your revenue breakout for Aperture on a percentage basis per offering - i.e. measurement, data, media is ...? Where's the momentum here?
Up until late last year our revenue came mainly from our full service ad network. This year our measurement usage has exploded and we are experiencing nearly 100 percent quarter over quarter growth. The same can be said about our self service data solution. As we continue to launch new products in measurement and custom data, I expect a majority of our revenue to come from measurement solutions and data services next year and beyond.
How is Aperture positioned within Datran Media today?
Aperture is one of several independent business lines that operate under the Datran Media corporate umbrella. It is among the most strategic as online audience targeting, measurement and analytics are the cornerstones of brand and direct response growth requirements. We have integrated Aperture across some of Datran’s other businesses including StormPost, Datran Media's top-ranked Email Service Provider (ESP). Aperture is a key differentiator for this business as ESP clients can now leverage audience analytics to enhance customer communications and cross-sell, up-sell opportunities. We are also integrating PreferenceCentral into our framework. PreferenceCentral is the first solution to provide consumers with the ability to control their experience with targeted advertisements across, publishers, agencies, brands and networks.
What client trends are you seeing today? How has your target market evolved in the past year?
When you and I conducted our last interview a year ago, Aperture had just launched its audience measurement solution, Audience Discovery. The solution was a first of its kind for marketers and provides insights into the various attributes of the audience that viewed, clicked, engaged with or converted on advertisements. The initial buyers of the solution were direct response advertisers looking for new data segments to target in order to increase the number of quality conversions. At the same time we approached brand advertisers – those who couldn’t measure success in terms of click or conversion rates – as we felt that Aperture could address an unfilled need in determining which of their placements were being viewed by the specific audience these brands were attempting to target. We needed to do a lot of evangelizing at first and it took more than six months to get our first few clients using the solution for something other than direct response targeting. However, our evangelizing paid off and at the beginning of this year as word got out about our unique value proposition, brands started coming to us. More than 400 brands are now using Aperture and this number keeps growing as we continue to expand our offerings for brand and direct response marketers alike and integrate our solution within ad servers, networks, exchanges, video and DSPs.
Datran was an early leader in visualizing marketing data with its Aperture platform. How important is that to your strategy going forward?
The amount of data available to today’s online marketer is staggering and growing every day. Data overload is definitely a problem facing everyone in the industry from ad planners to the marketers in charge of analytics. Our goal is not only to get the best, most accurate data available in the hands of marketers, but also to give them easy to understand insights that are actionable in multiple ways.
Why are brand marketers hesitating online with brand dollars? How is Aperture addressing the challenge?
One reason consistently cited is that the web is great at measuring what online action a person takes once exposed to an advertisement, but not good at identifying “who” is exposed to, responds to or engages with an ad. This makes it a tremendous direct response medium and consequently we have seen billions of dollars migrate from traditional direct response channels to the web. As strong as the web is in measuring response, it lacks specific details of the individuals exposed to advertisements due to the veil of anonymity the internet provides. For most direct response focused campaigns this is not a problem as direct marketers care primarily about immediate outcomes (e.g. leads and sales). For brand advertisers who measure a campaign’s success in a large part based on the percentage of their target market reached, this is an issue. Some people will say audience data has existed for some time on the web, but this legacy data suffers from two main problems: scale and accuracy. Traditional panel methodologies imported to the web from radio and television lack the scale necessary to allow marketers to navigate the complexity and robustness of the web. By relying on these solutions a marketer is forced to treat the web like a static medium and cannot leverage its true power. On the other hand, methodologies based on the extrapolation of self reported data or derived from similar look-alike surfing patterns are fraught with inaccuracies and sample bias.
So Brand marketers today are forced with a difficult challenge. Their target audience is spending increasingly more time on the web and less time consuming traditional mass media, but the medium does not allow them to measure targeted reach and define success in the way that they are used to. For all the attention the web gets for being the most measureable medium ever, its failure to provide even a standard branding metric like Target Rating Point (TRP) on a given campaign is a real barrier. Not to mention that today’s brand marketer wants to combine TRP with user engagement metrics such as time on a page or video viewing time and ad effectiveness metrics like lift or purchase intent. This potent combination would allow brand advertisers to leverage the true power of the web without having to create separate audience definitions.
I’m excited to say that at Aperture we are in the process of making this vision a reality. Our data has both the accuracy and scale necessary to tie demographic-based targets used in traditional media to engagement and effectiveness metrics on any site or placement across the web in near real time. And in many situations we will be able to deliver the results at the DMA level so that the brand marketer can adjust targeted reach and frequency on the fly. While it will take time and other changes to generate a significant shift of brand dollars to the web, we believe standard, reliable and accurate audience metrics will be a big step in the right direction for our industry.
What's your view on the self-service tools space? Does Datran's Aperture offer solutions - are they even important to your agency partners?
The industry has changed rapidly over the past couple years, especially in terms of targeting. When we launched our first solution in 2007 it was full service ad network where we leveraged publisher relationships, demand side platforms, supply side platforms and ad exchanges to deliver targeting against our data. At that time, very few networks had the experience or infrastructure to offer such a solution let alone agencies or publishers. Today it’s a different story. Whereas we still offer this full service network solution, a portion of our advertisers have decided to take the ad operations functionalities in house. For these clients we license our Aperture cookies for targeting and of course provide them with measurement and analytics to help their efficiency.
Where are the next "sweet spots" in terms of data-driven marketing channels for Aperture - beyond display?
Aperture was developed with multiple marketing channels in mind and online display is just a starting point. We will aim to leverage our Aperture data and methodology in everything digital. In display we are already integrated with video ad servers, PointRoll, ad networks, ad verification solutions, ad buying platforms, a digital marketing research solution, DSPs and an exchange.
Furthermore we are integrated with our email service provider, StormPost, which provides Aperture measurement for stand-alone email offers, customer communications and newsletters. We have also looked at several mobile opportunities and will likely move in that direction in the not so distant future.