He spoke to AdExchanger.com about his company's recently announced premium ad strategy and re-defining the ad network model through advertising.com and Pictela (read the release).
AdExchanger.com: Is AOL and advertising.com building a premium ad network?
NB: We have a premium ad network. And, we're going to try to make it even more premium.
If I look at the competitive forces that exist in the network space today, most of the innovation and the marketplace has been on what I would call the least common denominator impression model, where you're really driving to automation, and through automation hopefully efficiency. I think that leaves a big gap in the premium side of the marketplace. If you take it from a publisher's perspective, if you're a premium publisher and you're putting a tremendous amount of time, money and thought into developing content that you believe is extremely valuable and resonates with users, you don't want to see your yield and your CPMs essentially driven down by the commoditization of the network business.
The shorthand probably would be, if you're a premium publisher and you're not seeing premium yields, that's a problem. So I think there's a real opportunity in the marketplace for a company to focus on helping publishers drive yield through greater premiums, rather than driving efficiency. One of the quotes I've used is from one of the publishers that we’ve talked to who said, "RTB really stands for the race to the bottom for us."
Let me just get this straight. With the IAB Portrait ad, is Pictela creating that ad or helping serve that ad? How do those two work together?
We believe wholeheartedly that the best way to do it is with a platform we've created called Pictela. If you want to think of it this way, the analogy would be that the Portrait unit is the MP3 standard, but the MP3 standard comes alive when you use iTunes to do it. You get all of your assets in one place and can mix and match those assets with playlists, optimizing for your favorite songs -and, it will find other songs that make sense for a playlist. The iTunes metaphor is really Pictela.
Pictela lets you put assets into a content management system (CMS), drag and drop those into a playlist and then publish. Those get propagated in real‑time on the Web.
For us, we want to be the platform that serves that in a ubiquitous fashion on the Web and through the entire network so that we provide brand advertisers the first scale opportunity for brand advertising. That's why we created the Devil network.
When does that sort of unit become biddable?
We don’t have any plans right now to make it biddable for a variety of reasons. When something's biddable, you put it down to a least common denominator standard. You have to - otherwise it doesn't fit on an exchange. The branded experience that's available through a Pictela unit will take a while before that is biddable. It’s going to take a long time before that becomes a commoditized unit, simply because it's designed for uniqueness, brands and is a premium format.
Now, do we want a network of it, where instead of having to go to one of five or six companies to buy it, you can buy it from 2,000, or 3,000, or 4,000? Absolutely. That will happen soon.
What can you say overall regarding a data strategy for the ad.com group? I'm struck that you have a strategy focused on the buy side and the sell side. What are your thoughts?
Tim Armstrong is famous for saying “Both” when someone gives him an either‑or question within AOL. So the answer I would say is both. We have a very vibrant data strategy. You win when you have both access to publicly available data and you have proprietary datasets. Because of our role as a publisher with the Huffington Post media groupp and our very relevant placement in search, we have datasets that we can actually use as proprietary. We'll use those to help publishers drive yield and advertisers find the best impressions.
What did you think of Google purchasing Admeld recently?
My take is the same as everyone else's take: Google is very clearly wanting to be a horizontal player across the entire span of publisher to advertiser. Sell-side platforms (SSPs) offer relationships into publishers, and that's what they bought. They bought relationships into publishers as well as good technology.
Do you see AOL putting together a marketing stack?
Here's what we've said on the topic, and you can draw your own conclusions. I think it's important to do what your market wants you to do. As we look at the publisher market, we serve roughly 25,000 publishers today. Those publishers have clearly said that we are looking for solutions that cut across the entire horizontal of the marketplace, from publishers all the way to trading desks and advertisers. I think you will see us play in all of those spaces. Now, that doesn't necessarily mean we're going to do an SSP strategy, but some of the functionality that publishers want, SSPs provide today. I think you'll see us try to provide that functionality to the publishers.
What's surprising you right now about digital advertising?
Looking at the non‑reserved space, I'm surprised by the number of companies that are competitive in trying to find a solution for at least one constituency in that market. When you add up the number of companies in the DSP space, the SSP space, the DMP space, the optimization space, the third‑party data space, the real‑time exchanges, it is a tremendously complex set of companies that are all competing.
It's surprising to me that these companies have lasted as long as they have. The question is, is that industry going to stay as fragmented as it is today? I think the answer has to be no.
I think you're going to see the emergence of a couple of companies that provide much of the technology across the whole stack. I think that's what Google is doing and that's what we've said we're going to do.
By John Ebbert