“Data-Driven Thinking” is a column written by members of the media community and containing fresh ideas on the digital revolution in media.
Today’s column is written by Jonathan Mendez, founder of Yieldbot.
“So far audience targeted media optimization has been a huge party that only the demand side has shown up for. The supply side guys need to make data work for them.”
- – Terence Kawaja, GCA Savvian Advisors. IAB Networks & Exchanges Keynote, May 3, 2010
The idea of buying an audience is native to advertisers so it’s understandable that display technology has being trying hard to craft narratives around this vernacular from the earliest days of behavioral targeting. The thinking has always been more advertiser awareness of targeting brings more ad dollars into display. However, targeting is not selling an audience in the true sense. It is tracking people across the web and matching cookies.
This is why there remains a huge disconnect with advertisers. 74% of advertisers cited “targeting” as the primary reason they make site-specific buys. On the media side, on a dollar basis, direct buys will continue to dwarf audience buying through networks and exchanges. $7 billion of the $10 billion total display dollars in 2011 will be site buys (JEGI Estimates 2/10).
The other 30% of the media will have to manage against a myriad of cookies, third-party data, inventory, pricing, segmentation, creative and optimization. That is a fair amount of services and no DSP wants to become known (or valuated) as a services business. There are also a number of statistical inefficiencies and technology challenges managing across the entire web. As industry observer and investor Jerry Neumann recently commented “A DSP is going to need to be buying tens of millions of dollars of media to know anything at all about what works and what doesn’t.”
This presents publishers with a unique opportunity. In fact in Terrence Kawaja’s IAB Networks and Exchanges Keynote called it out as one of the largest opportunities in the space. Operating within a single first party domain or network publishers already have an audience. In fact, the huge opportunity is they have many, many different audiences they can sell, brand or target, to many, many different advertisers in many, many ways.
Even better, the performance and engagement of those audiences will be far superior to demand side audiences due to brand, timing & context. Simply, as all media becomes performance, publishers can thrive since they have better data, more ways to slice it and easier optimization.
How do I know? Look at Search. It operates from the same dynamic that publisher audience selling will.
In Search, marketers first create segments based on the actions of the audience (in this case keyword queries). Only then do they match ads and landing pages relevant to the segment created. This is a much more effective practice than Display where the marketer first creates an ad then they tries to find an audience across the web that might respond. The starting point is what is critical and therein lies an insurmountable edge for publishers segments and audience selling. Starting with the ad is a strategic legacy of old media. Performance here is akin to finding needles in haystacks. Starting with people’s interests or intent is the unique advantage of a user-controlled medium. It is akin to shooting monkeys in a barrel.
Publishers have two other critical performance factors in their favor mentioned above (and also present in Search) — timing and context. With first party data event driven ad targeting is reality. In much the same way Search referrer actions can drive dynamic landing pages visitor events can drive ad matching. Best of all, these ads can be placed in context to the interests or intentions harvested from the visitor. As the advertising sage Howard Gossage famously said, “people don’t notice ads, they notice what interests them and sometimes it’s an ad.”
More intelligence has always made campaigns more effective. The issue has always been at what cost. With a higher CPM cost basis to begin with site-specific audience buying is well positioned to succeed, possibly even better than exchange buying where the costs of buying and optimizing data are increasingly becoming higher than the media itself.
Ultimately this may lead to the integration of demand side platforms with supply side platforms in an “end around” of Google and the myriad of middlemen in the Display ecosystem. This would provide higher returns, revenue and performance for advertisers and publishers, and more relevance for everyone on the web. In 2010 Publishers are only beginning to wake up to these ideas but I don’t expect they will sleep on their data much longer.
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