Akamai CTO Afergan On Akamai Ad Product Momentum, Pixel Free Technology And The Media Landscape

During last week’s Internet Retailer Conference In Chicago, AdExchanger.com spoke to Mike Afergan, CTO and SVP of Advertising Decision Solutions (ADS) at Akamai about the company’s digital advertising products including its new “pixel free” solution as well as industry trends from Akamai’s point-of-view. Read the release on Pixel Free.

AdExchanger.com: What’s Akamai’s pitch at an e-Commerce conference like this?

MA: So, at a conference like this, Akamai’s pitch is very simple. We do three things for your site: Bring people to your site, we help give them a great experience on your site, and we help them transact securely and scale. That’s our “one floor elevator” pitch at a place like this.

Probably what’s most relevant to [AdExchanger.com’s audience], is that first part, bringing people to the site. There are a couple things that we talk about there such as the advertising decisions: the predictive and descriptive of targeted advertising.

Another relevant area that we actually talk about – especially with a lot of IT folks at this conference – is about how search engines are creating a lot of discussion on how page latency will now impact a site’s ranking in search. For [latency challenges] we have a product called Dynamic Site Accelerator (DSA).

That’s probably a good segue to Akamai’s Pixel Free announcement today.

As we’ve rolled out the Advertising Decision Solutions (ADS) product, our customers are already on the DSA product, and they’ve obviously spoken to us about the pain of pixels. [There are two sides to the pain:] I had one marketer tell me that his IT staff came back to him with “great news” that it was going to take now, only six months to change the pixels on his site. That’s just a non‑starter for the marketer. [The other side of pixel pain is] represented by the large retailer, for example, who knows that a large fraction of their page load time is coming from pixels that are slowing things down.

Also as a result of that, what retailers might do is put pixels only on a few portions of the site and what ends up happening is the sideways traffic, search, etc., doesn’t get captured at all.

Months ago, our Pixel Free solution was just a new idea and in beta. Now, we’ve released this and had a lot of commercial success working with many large advertisers. They’ve validated, frankly, even more so than we would have hoped, the key value props.

AdExchanger.com: Does your new Pixel Free technology offer aggregation of all cookies on a client’s site?

We decided to walk before we ran – basically meaning no Akamai advertising products require any pixels. Now, we’re starting to have conversations with customers who are asking us these sort of questions. Obviously this is an exciting area for us to explore and understand over time: the potential ability to really eliminate pixels in general from whole industry.

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There are certain customers we’ve worked with on custom projects already, around those lines. But the product is really focused on the Akamai ADS products today.

AdExchanger.com: How is the pixel-free technology used?

So, for example, a travel site was interested in identifying a particular audience on their site and advertising to that audience. They had pixels on their site, but pixels only on a fraction of their pages -that meant two things. Number one is for those particular users, they could only see them. Number two is what we focus on -what we call our predictive products, which is a lot more than re‑marketing. It’s understanding the whole ecosystem across the entire set of, say, 140 million US online shoppers who are in market for your product right now.

The travel site was missing 80% of their target market [due to not pixeling all pages] – thus missing all of those profiles. By Akamai now seeing all of the pages on their site [with the Pixel Free technology], we were now able to get a much better view into their population, which meant we were able to go and run a much larger campaign.

AdExchanger.com: Clarify what part of Advertising Decision Solutions (ADS) is Acerno which was acquired by Akamai in 2008?

Very simple. ADS has one product line. We have the Akamai solution, which is the predictive and descriptive. It’s powered by a lot of technology. Powered by the co‑op, which is where shop‑o‑graphic comes from, powered by our Pixel free, powered by our modeling, etc. Our customers work with us. They buy Akamai products.

Then, those products run on the Acerno ad network. We talk about Acerno as our media footprint that these products now run on. That’s the way we handle our branding.

[To summarize,] Akamai has predictive and descriptive products. Those are powered by our Pixel free technology, our data co‑op, the Akamai distributive network, obviously, all of the great folks that we have on our team. Those campaigns run on the Acerno network.

AdExchanger.com: Let’s talk about the data cooperative, which is central to Akamai’s advertising solutions. The idea of sharing data with one’s competitors – is there any pushback there, and do your customers have any options, in terms of the rights they have around their data, being mixed into your system?

It’s certainly a question that all of our customers think about and ask. Frankly, it’s a good thing that they think about that, because it means they are running mature responsible businesses. They are thinking through the trade-offs. We are at the scale now where the amount of benefits that any customer gets so far outweigh any concerns they might have. We are already targeting, effectively, everybody who shops online.

We have a massive amount of data across hundreds of product manufacturers, retailers, travel, telecom sites and the like that contribute their data. So, yes, if I were a retailer, I would be concerned about sharing my data with a company that maybe only had two or three other companies in a system.

At Akamai, we are at the scale now…We have a trusted relationship with our customers now that they feel comfortable participating in our co‑op, leveraging our products, because it gives them so much benefit in the marketplace today.

AdExchanger.com: What has surprised you about Acerno and its business model, since it was acquired by Akamai?

I think the thing that has been most positively surprising is just the amount of resonance that it has had in the existing customers at Akamai already had, and the benefits that those customers are getting from using the product. It’s been really exciting for us to take that new product, leverage it in, and the synergies that we were getting both in terms of up‑selling existing customers. Then, obviously, the synergies with DSA have been really, really exciting for us.

AdExchanger.com: Thinking a little bit about the landscape, as it were, what are your thoughts about maybe Akamai as the owner of a demand-side platform (DSP)? You mentioned earlier Acerno as a media network. Doesn’t it make sense for Akamai to have a DSP on behalf of its clients?

I will say that at Akamai we are always looking at what incremental functionality is valuable, is needed by our customers to do more with us, leverage our unique capabilities and leverage the data that we have.

And we are always going to be looking at new functionality we can add on to the system that allows us to do that, whether or not you define that as within the DSP regime or not, it depends on how you define a DSP. But certainly we are looking to expand our product portfolio. Looking to do more for customers and we are always looking for great ideas that are out there.

AdExchanger.com: How does the Acerno Media Network buy today?

We use every available tool that is out there to buy high quality media for our customers. And so we use all the different techniques that might make sense there.

AdExchanger.com: Akamai has been relatively quiet about Acerno – except maybe on AdExchanger.com – as well as the ADS solution. Why have you been quiet today and is today’s announcement a signal that Akamai will become more public about ADS from a marketing perspective?

I think we have been very loud and very focused with customers and building more traction in our market. Over the past year you have seen us very, very focused on bringing more customers on to the system, making sure they are happy and doing more. Certainly into the general marketplace we haven’t done as much in terms of explaining what we are doing, but I think certainly over the past few weeks you see us doing more.

For example, the data visualization tool is a great example of us really not just talking more, but also giving insights into what we are doing behind the scenes.

You will see us doing more publicly and talking a lot more about what we do. The flip side is we are going to focus on what’s most important, which is making sure we are bringing more customers into the system. And ultimately making sure that they are very, very happy – that’s obviously our key focus.

AdExchanger.com: In terms of revenue, what contribution is the ADS business includes the Acerno Media Network business making to Akamai today and then part two of that question is, when will it become meaningful?

Great question. So I will defer to the IR team in terms of the specific numbers. What I can say is that we are very happy with the progress and the growth that we are having. And I will defer any other specific financial questions there. I would say that ADS from a business and strategic perspective is already meaningful. It is already something that is a prevalent in any of the conversations we are having with people who do advertising, retailers, travel, telecom and the like.

There is already a significant portion of the conversation we have with those types of sites. Pixel‑free is a great example of how it ties into the rest of Akamai’s product portfolio in a meaningful way. And so from our business it is already meaningful, strategically obviously the finance questions I will defer to the IR team.

AdExchanger.com: How do you answer some critics who question why should buyers pay a premium for Acerno’s Shop‑o‑graphic‑enabled campaigns when they can get the same intent info from BlueKai and tie it to whatever inventory they want for a lot less money?

First of all, I am not sure that all of the pieces of the question were necessarily true. I would focus on sort of Akamai’s two key products here which are predictive and descriptive. For predictive, we do something that is fundamentally different than anyone else out there, which is we have levered this data from across hundreds of different websites in a very deep and granular level. We built specific models for that particular retailer, that particular travel site, based on their particular products, their particular business objectives. And we see very well across our customer base that that same model doesn’t necessarily work for somebody else, that every customer is different,.

And so it is really critical to have models that are finely tuned, number one, using the predictive analytics that we have which no one else has, leveraging that massive data set which we have which no one else has. But then combining those in a way that brings a specific model for our customer. So I think our predictive model is very different from anyone else that’s out there.

I would also say that our descriptive which is powered by Shopographics, is also fundamentally different from anything that anyone else has out there. In that it really leverages a broad set of purchases that are made in the past to really understand what this person is and what they’d be interested in buying in the future.

It really focuses on that shopping data across hundreds of different sites. And that’s really what we see is powerful to the models is the type of data and the diversity of the data really allows us to be effective in what we do and that’s very important there.

AdExchanger.com: Can you give me use cases for the “Predictive” and “Descriptive” products?

So we have two products, we have the predictive product what you think about is finding in‑market consumers. Find me someone who is in‑market for my type of plasma TV right now. Find someone who is in‑market for the swimsuits that I am selling on my site right now and that’s the predictive product. The descriptive product which is where the Shopographics technology comes in is more upper funnel and so that is a place where somebody who wants to … a brand advertiser who wants to, may not be selling something in their store but wants to create awareness for their product.

So a manufacturer of televisions as opposed to somebody who sells televisions, somebody who is trying to take their brand and branch out into a new market, someone who could historically might have a strong male following, but not as much females; trying to go after females. Those are examples where someone would use our descriptive product powered by the Shopographics.

AdExchanger.com: Any plans for Akamai to open up the ADS data to third parties for targeting purposes? – maybe letting demand side platforms or ad networks use your data for targeting?

Let me kind of step back, which is as I look at the ecosystem right now. I see three really exciting trends I think we are well positioned for. One trend is the shift of brand dollars online which will happen more and more overtime, which is why the Descriptive product powered by Shopographics is really important and valuable for us.

Another really exciting trend for us is the proliferation of types of media. So you see certainly mobile becoming more and more important, video becoming more and more important, certainly our targeting technology is something that we leverage across all forms of media.

We focus on display today, but you should expect to see overtime that same technology, that same information, that same data being leveraged across a variety of different forms of media, and obviously a variety of different sorts of devices. And we as Akamai sitting in a neat place to actually be doing that across all forms of media and devices given what we do as a business, what fraction will that be powered.

Another exciting trend for is the separation of data from media. That is a place that as data becomes more and more valued as an important dependent asset. We are certainly going to be exploring opportunities for the models that our customers have to be leveraged in a variety of different ways.

Now there is obviously a lot of different things we can do. We are going to really focus on ultimately what our customers want us to do. And so that is a case where we work with our customers and understand as they build models, as they run those models on the Acerno network, how else might they want to use those models is a conversation that we’re having with our customers today.

AdExchanger.com: How is real-time bidding impacting your strategic thinking?

I think real time bidding is a great trend that’s a good thing for the industry. Obviously there’s a lot of challenges and a lot of details that have to be worked out by the industry. But certainly in a world in which people can do things more efficiently and at scale I think is good for the industry in general. Certainly as we want to shift offline dollars online, obviously one of the challenges the advertisers and marketers had is being able to deploy those dollars efficiently at scale. And so certainly automated systems, real time bidding systems were a good example of those, are a great thing for the industry in general, regardless of targeting anything else.

I think certainly real time bidding platforms also provide an interesting opportunity for people to layer in other sorts of factors as they buy, and certainly targeting being one of them. And so we certainly think that real time bidding systems will only allow people to do more with targeting over time, which ultimately is a good thing f

AdExchanger.com: Let me go take us into the media network again. As I recall, you work on a CPA basis with your clients and one part of the optimization cycle is creative. How do you handle creative for your eCommerce clients through the media network?

So, we don’t produce creative, typically, for our clients. We work with the creative that they supply us. That said, obviously our optimization system provides some really interesting perspective in terms of what creatives are working well and what creatives aren’t working well. They’re typically conversations we’re having with our customers. Helping them to optimize their own creative strategy as they think through, either A) the data we give them or B) at the scale that we’re at today, we see across our customer base, what sort of trends work well, what sort of trends don’t work well.

For example, the impact of free shipping versus 10% off ‑ we’re able to provide those insights to customers.

So I’d say that we provide raw data to them in terms of what’s working/what’s not working. We can provide specific feedback to them, on those campaigns, based on what we’re seeing. And we can also provide some interesting cross industry viewpoints given the spectrum of customers that are working today.

AdExchanger.com: Can a client use multi‑variate creative such as the solution provided by Teracent? How does that work?

Our strategy is that our clients give us their creative. And really, when they give us the creative, they give us the tag. So our strategy is to focus on making sure that we’re finding the right user who’s in market and making sure we’re placing that ad tag, if you will, in front of that user. Then, obviously, the more rich, the more interesting, the more powerful that creative is. Obviously, we try to work with our clients and make sure they have a good strategy, but we’ll defer to them in terms of, if they want to have a static creative, if they want to have a more interesting creative.

AdExchanger.com: Is it essential that eCommerce retailers use other Akamai products such as your Edge serving capabilities in order to sign up and use parts of your ADS business?

So, certainly every customer gets to make a decision about what products they want to build. Obviously, we’re biased and we think we have great products and our customers should use all of them. And I think, frankly, we have a great track record that supports that value proposition across all of our clients. Certainly, we allow the ability for clients to buy particular products on their own. We are spending a lot of time, frankly because many of our clients do buy so many of our products. They’re really seeing opportunities, helping us find opportunities where the price and work better together.

So, clients, I think, over time will have more and more reasons to buy those products together because of the inherent value that it will give. Great example is today’s announcement around Pixel Free; which is certainly a client could buy DSA and not use ADS. The client could buy ADS (Advertising Decision Solutions) and not use DSA (Dynamic Site Accelerator).

But more and more, we’re seeing a tremendous value of those two products working together, making DSA more effective, making ADS more effective, and ultimately helping to drive, really what our customer’s want, which is more transactions and a better site experience for them.

AdExchanger.com: What’s your view on the Google acquisition of Invite Media? Any concerns?

No. Google has and will continue to offer a variety of tools to advertise their agencies. Certainly expect them to be building technology. To be partnering to have more functionality and to be buying more companies, over time, that build out their tools. I think [the acquisition is] certainly a natural and logical extension of the tools that they’re offering in the marketplace today.

AdExchanger.com: Overall, and Akamai aside, how do you see the media landscape evolving in the next 12 months?

I think some key trends are the shift of user consumption to online, particularly video playing a bigger, bigger role online. With that, ad dollars should shift online if we, as an industry, can do the right things to get there. I think the industry needs to focus on tools that allow for automation, scale, and tools that ultimately help to tap into the unique potential of online – the ability to have that one‑to‑one, direct conversations with a particular audience. This is where targeting plays a very important role.

And these ultimately have those tools that make it easy for advertising agencies to do all of these things at scale. I think the question and the challenge for the industry is: Will that happen over 12 months? Will that happen over six months? Will that happen over 36 months?

I think that’s the challenge that we as an industry face, where I’m absolutely convinced that these trends will play over time. I’m convinced that these trends should play out over time.

I think the opportunity for us, in this industry, is making it easy for advertiser’s agencies to be doing more of this, doing it more effectively and to help to accelerate that shift online, which I think ultimately will be good for everybody in the space.

By John Ebbert