Jim Spanfeller is CEO of Spanfeller Media Group and former CEO of Forbes.com. He discussed a range of subjects on his company and the state of web publishing today:
- Latest on the Spanfeller Media Group
- Pitching The Brand Marketer
- On Using Ad Networks and Exchanges
- RTB and the Impact On Publishers
- Bigger Ads Are Better?
- Making The Rate Card
- On Agency Trading Desks
AdExchanger.com: What’s the latest on the Spanfeller Media Group?
JS: Things are going well. We're getting ready to come out of beta. . Traffic is scaling. There's lots of interest in what we're doing in the advertising community. So, all is well. We're now starting just the very, very beginning of thinking about what the next site might be. We hopefully will have more definition on that after the New Year. The Daily Meal is the first site.
AdExchanger.com: What is the premise with your new company?
JS: The general premise of the company is that, while there is massive amount of content online and it is growing all the time, for the most part there are not wide, navigational, core sites for the different, vertical interest areas. There are some notable exceptions of course. I think there are five categories that have a digital "center" to them; news, business / finance, spectator sports, entertainment and technology. When I say this, I don't mean to suggest that there's not an ability to go out and do a lot more sites in those categories. There certainly is. But there are established players in those categories. But after those five verticals, it's pretty wide open, which is amazing when you think about.
There are lots of legacy brands that have spent lots of time and have had lots of success growing up around different verticals, including food for that matter. But for the most part, those brands have not been overly successful in moving into the digital space
Over a relatively short period of time after I left Forbes it occurred to me that there was a huge opportunity to fill some of these voids. So to your point, why choose food as the first one to go after?I guess there were sort of two main motivations of that. And neither one of them was the fact that I'm a foodie. I'm not. I enjoy eating good food and know many great restaurants, but I wouldn't characterize myself as an all‑knowing gourmand.
The two motivating factors were huge amounts of interest in food these days. It's becoming even more of a passion point on a national and international scale, than it has been in the past. We see that in terms of, the amount of unique visitors going to food sites in general, the attraction that the Food Network has in their first channel, the fact that they're launching a second cable channel, the number of newsletters and magazines around food and, in general, the extremely heightened focus by just about every major demographic segment in what they are eating.
There's just a lot of thought and pleasure derived from the act of cooking and the act of sharing the product of that cooking, whether it be in a restaurant setting, or in a home setting.
The other part that really drove us there was that it was a category of content that was supported by marketers that were more brand‑focused than DR focused. Not that there's anything wrong with DR focus. It's fine, I think there's a great spot for it in our industry. But for your first site to be held accountable at a cost‑per‑click basis, that was going to be more problematic than what we wanted.
So, we went after food initially. Of course, it became very, very important that we got out of the blocks with credibility. And so, we went out and hired some of the best folks available anywhere to be the editorial heart and soul of the site.
AdExchanger.com: Getting back to that brand focus, what is the pitch right now? And, what will the success metrics be that you'll end up providing the brand marketer? Or will it be more on them to understand if a campaign was a success?
JS: Most of the package goods and food product type advertisers, by definition, have to be more sophisticated about how they track marketing success because they are not really going to be able to look at a cost‑per‑click metric or a cost‑per‑direct sold. People aren't going to go out and buy a box of rice over the web. They might buy it as part of Fresh Direct, or Peapod, or something along those lines but again, you're going to have to go back to your branding metrics to really see the benefits of advertising.
There's been tons and tons of research that proves that advertising works, it's just a matter of how well different versions of that advertising works.
Are you thinking about going direct at all for your advertisers? Or do see agencies as your key partners as this?
So, clearly agencies are a big partner, and clearly talking to the clients is a very import part of the process. To be successful we will need to do both.
I shouldn't say no without qualifications. Our ad sales folks are talking with a company called Halogen. It's not so much an ad network, it's more of a rep if you will, a publisher rep. Partly because, as a young business right now, our main focus is on driving audience. We'll get very focused on monetizing that audience once we have something that's scaling quickly which we hope to see by the middle of 2011.
The early experience with ad exchanges, in general, has included issues with basically becoming the playpen for ad networks. The initial exchanges were much more of that. And then the DSP version of an ad exchange became, I guess, maybe one step up from all the vagaries of a straight ad network. But having said that, I think that the notion of ad exchanges could be a great way to take out some of the friction of the marketplace if they're clean and well‑lit. Whatever they actually become though I think there is a big opportunity for exchanges.
I'm not sure where that all ends. There are a lot of variables in the mix right now when you think about it. And it's not specifically real-time bidding -just in general. I think what's becoming more transparent - and there still needs to be light shown on this - is that there is a really big difference between quality and lower tier impressions. The idea that an impression is an impression is an impression –it’s just flat out wrong. Buying audience as your sole descriptor of how you choose your impressions is a non‑winning formula.
The current notion of ad exchanges and audience buying is going to become more problematic still. I think that the real-time bidding process will be radically altered by all that. The real time bidding comes down to, “I want to buy ‘Women Who Cook.’ I don't care where I buy those.” That's a non-winning situation for a premium publisher because they are never going to get value for their impressions. If there is a better understanding of: “I want to buy the “The Daily Deal” or “I want to buy ‘Quality Food,’” it's contextual advertising layered on top of audience assurance and that is going to be a big winner when it can be done efficiently at scale.
I think real-time bidding might have a real opportunity to be valuable to publishers and other content creators and a way to modify those unsold, custom, bespoke programs.
The fundamental thinking behind Project Devil is taking the early work of the IAB and the OPA to bring more creativity to web advertising by giving the agency creative teams bigger palettes and bringing it to AOL's platform.
This is in line with the continuum of thinking around ad units on the web. It's irrelevant who thought of it first but if you go all the way back, when I was at Forbes created the first Skyscraper, which at the time was the biggest unit out there. We were the first site to run a Full Page unit. Although to be fair, the New York Times thought it up first. We just ran it before they did. And there is plenty of other examples of work around improving the advertising impact online while trying to balance the user experience.
In the end you want to make sure that the consumer gets what they want and the advertiser gets the ability to borrow the eyeballs of the consumer to create demand around their product or service. This has been the media model down through the ages. I don't think that's going to change radically any time soon no matter what happens with Exchanges, RTB bidding platforms or data mining.
What I like a lot is these notions of expandable, contractible ads work in a polite way. The end user can look at the ad all they want, or contract it immediately, but they always know who’s page they are on and can always see some amount of editorial content.
ESPN.com just ran a really interesting Apple ad a few days ago. It was part of a pushdown unit. It did all kinds of funky, wonderful things. I think all the work here to bring great creativity online is important. Whether it's Project Devil at AOL, or the OPA units, or what will come next.
The rate card is the rate card. The guidelines these days aren't a hard and fast rule as they had been in the past. How you present bespoke programs is almost a parallel process to what your rate card is. I would tell you that we'll attempt to work with everybody in a way that is fundamentally tailored to their individual objectives. My guess is we'll end up someplace around 50/50, 60/40 weighted more towards the bespoke program versus run-of-site.
A lot of that comes down to the agency's ability to actually plan on a site by site program on a regular basis. In the past 5 years or so this has been greatly affected by the fact that the fundamental agency model is broken and as such agencies are having a really hard time making money placing advertising online. A lot of what the ad networks offered was an opportunity to buy lots of sites relatively cheaply both in terms of planning and optimization .Thus making the implementation of the campaign much easier and less time consuming.
From an optimization standpoint or from a billing standpoint, it was all easier to go through an ad agency than to buy a hundred different sites. People who weren't well served by that were the clients.
I think to the extent that you're seeing the ad networks having a tougher time, is a reflection that clients are more aware of the sort of problems that were generated by the ad networks; questionable site selection, bad ad placement on pages and non-transparent reporting.
In many cases, negative brand value was a resulted of marketer associations with content that was inappropriate for what they were trying to communicate. All of that comes back to suggest there is a higher and higher degree of desirability around contextualization.
I view it as a step towards the grave for agency based media planning and buying. To the extent that it works it is just basically showing their clients that they are not needed to plan or place advertising. That the whole activity could be taken in house and in so doing might be more tightly entwined with in house data…
If the trend intensifies I would expect that over some relatively protracted period of time; call it a half‑year to a year‑and‑a‑half most major marketers, if they find that the majority of their buy is going through the trading desk, will not feel the need to pay whatever it is, 3%, 4%, 5%, 6% of buys to an ad agency for something that could bring house for much less cost and do arguably better (better because of a system that would be specific for their fundamental objectives).