A Wise Search & Online Marketing Insider Tells All…

1. Ad Networks need to go deep to strive. Ad Networks need to offer true differentiation and add unique value. I predict the untargeted or performance-based ad networks lose ground to the portals who are building their own ad networks, and to vertical ad networks and data/ behavioral ad networks who are building a defensible deep expertise.

2. Local & SMB market get to critical mass for a handful of players and the search engines pay attention to them. Its about time…

3. Video continues to not have a standard ad unit, but continues to take huge mindshare within brand departments, ad agencies, brand publishers and portals… and amongst the press, who loves to talk about the broadcast dollars shifting.

4. Mobile explodes. Similar to the social networks in 2007, huge amounts of venture capital will pour into this market without a material focus on established revenue streams.

5. Ad Exchanges go mainstream…!!!

More to come in Part II…

Hot off the rumorville… these two have been compared to a young couple dating– get together, fall in love, they have a big fight, brake up, he buys her flowers.. they kiss and make up, get back together, etc, etc…

Well, supposedly MySpace popped the question and bought a quarter billion dollar engagement ring!

Congrats to all (if true). A good friend and great sales executive is over there and I hope for him and his family the rumored marriage proposal is true…

Fun days here at Right Media… I have been incredibly impressed with Yahoo!s strategic vision and commitment to the exchange model through the process. I think this will be a great marriage. More importantly, it makes the competition with GoogleClick that much more exciting!

Official Press Release: Yahoo! Announces Agreement to Acquire Right Media, Largest Emerging Online Advertising Exchange

New York Times: Yahoo to Buy Ad Company in Bid to Compete With Google

Some excerpts from the above New York Times article, by MIGUEL HELFT:

- “The acquisition, to us, is a key step toward executing our long-term vision to build the leading advertising and publisher ecosystem both on and off the Yahoo network,” Terry S. Semel, Yahoo’s chief executive, said in an interview. The deal is to be announced today and is expected to close in three months.

- Right Media, a four-year-old company, runs an exchange in which advertisers and publishers buy and sell online ad placements in real time through an auction system. DoubleClick, which specializes in serving ads on Web sites, announced recently that it would develop a similar type of exchange. Online publishers are increasingly turning to exchanges like these to sell ad space on their sites.

- “What we look forward to do as an owner is put more inventory into that pot to help create a more vibrant exchange and create better pricing for everyone,” Mr. Semel said.

- Yahoo said that after the acquisition it would increase its participation in the exchange as both a buyer and seller of ads. The company said it planned eventually to sell all the nonpremium ad space on Yahoo through the exchange, a move executives said would enhance revenue.

- Google and Yahoo each dominate one segment of the online advertising market. Google is best at selling text ads that appear alongside search results and on other Web sites. Yahoo, which has lagged Google in search, is a leader in selling graphical ads, mostly on its own sites.

- By buying Right Media, analysts have said, Yahoo would accelerate its own efforts to sell and broker ads on other sites. Those efforts began taking shape recently, after Yahoo reached agreements to sell ads on eBay and on some 264 newspaper Web sites.

(Note: For the math impaired, $680 million for the remaining 80% that Yahoo! didn’t yet own is equal to an $850 million in total valuation…)

It has been rumored that Microsoft bid right around the rumored $2 billion for DoubleClick. So the question remains, “Why did Google pay $3.1 billion?”. I have some thoughts; some serious, some just for giggles:

1. With AdWords, “max bid” represents the most an advertiser is willing to pay for a click for a particular keyword or group of keywords. The ACTUAL price the marketer pays is one penny more than the next highest bidder (on an effective CPM basis, which takes into account CTR/ quality score). Meaning, a marketer can bid $50 a click, but may only end up paying $0.50 for the click if that’s what it takes to win the auction. My theory is that Google thought the $3.1 billion was its MAX BID, and insiders say the Google executives were astonished when they didn’t win the auction for $2,000,000.01!!!!!!!!!!!!!!!!

2. This one is serious… PATENTS! While DoubleClick may claim to be the “central nervous system” to online advertising in their new marketing campaign, they really were the pioneers of online advertising the 90’s, and have really, really, really valuable patents that Google just couldn’t afford Microsoft to get their hands on. After all, they need to protect their 149 BILLION MARKET CAP… an extra billion to ensure it is seemingly a decent insurance policy. Thanks to an awesome write-up at SEO by the Sea below are a list of the patents DoubleClick has.

3. Last, the ability for Google to publicly beat Microsoft yet again was worth a little premium. Dr. Eric Schmidt spent decades at Novell and Sun getting beat up by Microsoft… Time for some pay-back from the Google CEO, who now also sits on the Apple board of directors.

WIPO Patents Assigned to Doubleclick

1. Method and System for Sharing Anonymous User Information
(WO 2002/035314)

Published May 2, 2002
Doubleclick, Inc.

A method and system for sharing online user information in an anonymous manner. The system associates an identifier (100) with anonymized information of the user, and sends the anonymized user information to a receiving party (130). In one embodiment, the system receives a temporary id with personally identifiable information from a Web site, uses the personally identifiable information as a key to obtain the anonymized information from a data source, and sends the temporary id with the anonymized information to the receiving party. the receiving party uses the temporary id, previously received by the Web site, as a key to obtain the anonymized information of the user. In another embodiment, the system receives a temporary id from a Web sit…

2. Automated Online Sweepstakes System and Method
(WO 2001/059656)

Published August 16, 2001
Doubleclick, Inc.

An automated process of conducting an online sweepstakes and marketing to sweepstakes entrants. The software system enables a non-technical individual (e.g., sweepstakes manager, marketer, etc.) to create a sweepstakes entry form that is integrated with back-end data processing systems (figure 2, item 210). The entry form and entry form processing system are kept consistent with sweepstakes rules chosen by the non-technical individual and automatically generated by the system. The system enforces compliance with applicable laws with integrated tools to pick winners, to determine eligibility and to collect winner affidavits. A back-end database is integrated directly with a sweepstakes entry form. Online tools permit a marketer to view entra…

3. Network for Distribution of Re-targeted Advertising
(WO 2000/008802)

Published February 17, 2000
Doubleclick, Inc.

A computer system for automatic replacement of advertisements includes an advertising server for selecting an advertisement based on criteria related to the individual viewer. In particular, advertisements are selected for a given user, based on the past behavior of that specific given user. Advertiser web sites on the network are configured to anonymously report back user activity such as visit dates, purchases, specific product pages visited and the like. Alternative reporting embodiments include email, file transfer protocol and spotlight tags. User activity lists are processed to select candidates for re-targeting. Candidates for re-targeted advertisements are identified based on their own individual past activity, and stored in a list …

4. Method and Apparatus for Automatic Placement of Advertising
(WO 1998/058334)

Published December 23, 1998
Doubleclick, Inc.

A computer system for automatic replacement of direct advertisements in scarce media includes an advertising server for selecting a direct advertisement based on certain criteria. Transaction results of the direct advertisement placement are reported back to the advertising server, and an associated accounting system. In one embodiment, the direct advertiser’s server reports transactions back to the advertising server by email. In a second embodiment, a direct proxy server brokers the user’s session (or interaction) with the direct advertiser’s server, including transaction processing and the direct proxy server reports the results of transactions back to the advertising server and its associated accounting system. A direct proxy provides a…

5. System and method for analyzing website activity
Invented by Jonathan Marc Heller, James Christopher Kim, Dwight Allen Merriman, Andrew Joel Erlichson, Benjamin Chien-wen Lee
Assigned to Doubleclick, Inc.
United States Patent 7,085,682
Granted August 1, 2006
Filed: September 18, 2002

Abstract

A method and system for analyzing website activity. According to an example embodiment, the system receives event-level data representing visitor session activity on a client website; attributes characteristic information of the event-level data associated with each visitor’s session to at least one of a plurality of visitor segments, stores results of the attributed information aggregated according to visitor segment prior to a client-requested analysis of the event-level data, and provides online reports based on the resultant data in response to a client-requested analysis of the event-level data.

6. Method and apparatus for automatic placement of advertising
Invented by Dwight A. Merriman and Kevin O’Connor
Assigned to Doubleclick, Inc.
United States Patent 7,039,599
Granted May 2, 2006
Filed: June 15, 1998

Abstract

A computer system for automatic replacement of direct advertisements in scarce media includes an advertising server for selecting a direct advertisement based on certain criteria. Transaction results of the direct advertisement placement are reported back to the advertising server, and an associated accounting system. In one embodiment, the direct advertiser’s server reports transactions back to the advertising server by email. In a second embodiment, a direct proxy server brokers the user’s session (or interaction) with the direct advertiser’s server, including transaction processing and the direct proxy server reports the results of transactions back to the advertising server and its associated accounting system. A direct proxy provides an independent audit of transactions at a remote direct advertiser’s web site. The feedback of the results of direct advertisement transactions provides an efficient utilization of direct advertising space by way of an automated computer system with a predictive model for selection and distribution of direct advertising.

7. Method of delivery, targeting, and measuring advertising over networks
Invented by Dwight Allen Merriman and Kevin Joseph O’Connor
US Patent Application 20050038702
Published February 17, 2005
Filed: September 10, 2004

(There are 5 versions of this patent application on file at the USPTO)

Abstract

Methods and apparatuses for targeting the delivery of advertisements over a network such as the Internet are disclosed. Statistics are compiled on individual users and networks and the use of the advertisements is tracked to permit targeting of the advertisements of individual users. In response to requests from affiliated sites, an advertising server transmits to people accessing the page of a site an appropriate one of the advertisement based upon profiling of users and networks.

8. Network for distribution of re-targeted advertising
Invented by Dwight A. Merriman and Kevin J. O’Connor
US Patent Application 20020082923
Published June 27, 2002
Filed: February 26, 2002

Abstract

A computer system for automatic replacement of advertisements includes an advertising server for selecting an advertisement based on criteria related to the individual viewer. In particular, advertisements are selected for a given user, based on the past behavior of that specific given user. Advertiser web sites on the network are configured to anonymously report back user activity such as visit dates, purchases, specific product pages visited and the like. Alternative reporting embodiments include email, file transfer protocol and spotlight tags. User activity lists are processed to select candidates for re-targeting. Candidates for re-targeted advertisements are identified based on their own individual past activity, and stored in a list of candidate user ID’s. When a candidate on the re-targeted list is identified at any network affiliate web site, a re-targeted advertisement is delivered to the candidate user.

The Wall Street Journal reported yesterday that DoubleClick is for sale, Microsoft is the most likely buyer, and the two companies are already in talks.  The rumored hypothetical purchase price is $2 billion, which I feel is the “ask” not the “bid”.  People who cover the industry, but don’t work IN the industry, are speculating that the acquisition would make Microsoft much more credible in the minds of advertisers than it has been to date, would give a boost to AdCenter by association, and this marriage would somehow shift dollars away from Google.  The ‘insiders’ of the industry agree this hypothetical positioning will be great to speak of to analysts and press.  However, it is simply not true.  Microsoft is already credible to online advertisers and agencies through their MSN portal and properties.  However, Google owns the search market and will continue to own a vast majority of query share and a DoubleClick/ Microsoft merger will not change that at all.  The reason this makes sense is for Microsoft to be defensible to Google becoming the marketplace for online advertising as it has for search marketing. 

Yahoo! owns a piece of Right Media. AOL owns Advertising.com. Google has been cutting syndication deals for contextual marketing for years, and has recently focused on graphical ads and CPA pricing.  A Microsoft/ DoubleClick merger would make this a much more interesting battle, one that I would have to give the edge to those who already own content and are in this game… my force rankings at this point for the online marketing marketplace (OMM) would be:

1.  Yahoo– top portal on the Web, minority ownership of the best exchange technology in RMX
2.  AOL– best performing online ad inventory in the industry coupled with know-how of Advertising.com
3.  Microsoft with DoubleClick– MSFT still needs to fully embrace the ad-supported model and have an inventory syndication strategy.  If they do, they move to #2 on the Wise List with the DoubleClick assets
4.  Google– graphical ads are very different from text links; fear of Google becoming too powerful will keep them grounded here

The sleepers I would watch out for would include Quigo, Fox Interactive Media, and to a lesser extent, eBay.  It is a shame that IAC Advertising Solutions is not on this list… they once had the assets to make this happen.

 More to come on this…

The below article appeared in MediaPost’s Online Media Daily today.  While words in these articles can be twisted and interpreted many different ways, in the end I have a lot of respect for Did-it as a business, I am confident in their future prospects, and the employees over there are great and remain close to my heart.  I am proud of what we were able to accomplish while I was CEO, and I will continue to cheer for them from the sidelines.   

How do you think Panama will impact the Yahoo advertiser and searcher customer experience?

The focus of our old system was pay for placement. After you met the basics for editorial relevance, you’d be in the top spot if you paid enough money. That didn’t always lead to the most relevant search listings.

With Panama, the heart of the system is about making the most relevant connection between searchers and advertisers. We’re rewarding ads based on relevancy factors, like click-through rate. All things being equal, better ads get better click-through rates; so we’re incentivizing advertisers to focus on the quality of the ad message, and not simply on the bid price.

Meanwhile, our old system didn’t allow for enough testing. But in our new system, advertisers give us multiple creatives, which we rotate to see which has the most impact. So we have more quality ads to choose from, and ultimately more relevant listings for our searchers.

Everyone wins. Searchers see more relevant ads. As searchers see relevant ads, advertisers get more click traffic. Publishers on our content network get more clicks as well. And Yahoo gets greater revenue through our advertisers’ success.

How do you think the Panama migration is going?

I’d say it’s going extremely well. We’re well ahead of schedule on migrations, with tens of thousands of advertisers using the new system today. And call center volume is below expected, which means that people are pleased.

Of course, every company has customers with concerns, whether you’re talking about Apple, Nike, Microsoft — or yes, even Yahoo. When concerns come up, the most important things for us is to let the customer know how we can help, or that solutions are coming that will satisfy their needs.

One common challenge we’ve faced is the customers with very specific needs — customers with unique set-ups that really depart from the norm. Our No. 1 goal is to help them with whatever issue they have as the migration proceeds.

What has Yahoo done to educate advertisers about the migration?

We set out months and months ago to create the best migration possible for our advertisers. We talked to advertisers of all shapes and sizes — both to educate them, and to understand how to best educate them further as the migration progressed. We have provided every type of communication — brochures, e-mails, tutorials, letters, live seminars, webinars, and we placed our customer service numbers prominently.

Everything has been built from the customer perspective, and we’re working to make sure we get in front of advertisers so they know what’s coming, how to deal with change, and how to get help if they need help.

What do you think could have been done better to prepare advertisers for Panama, or to help them along the way as the migration proceeds?

The only thing we could have used is more time. A few days or a few weeks later gives you more cycles [of preparation], and would give you another opportunity to catch that bug or to prepare just a bit more — not just preparing the application, but readying the customer service side as well.

But all in all, we’ve done very, very well for an extremely complicated and complex job. And you can see that success in our low call volume to our help centers.

How far do you think Panama will go in helping Yahoo with its corporate challenges?

Like I said earlier, by giving the searcher a better experience, we’re also helping Yahoo’s bottom line. Panama will help everyone monetize better — the advertisers, the publishers, and Yahoo.

Beyond that, this is a platform we can iterate on. Our old platform was from 1998, and was built by a startup. It ended up becoming very popular, but it wasn’t designed to be what it eventually became. Panama is built with the future in mind: it isn’t just for 2007 — it’s for how digital marketing will evolve in the future. We’ve made it so it can be upgraded very fast, which means any new additions can be rolled out quickly, to better help all of Yahoo’s digital advertisers.

So Panama won’t just be for search ads?

We designed Panama not only around text and search listings, but around all kinds of digital advertising — including rich media, mobile, etc. We made it an ad platform, not just search platform.

Will there be offline ads through Panama as well?

I suppose that in theory, Panama’s ad configuration model could work for any type of ad. But for now, our goal is to be the first buy for advertisers in the digital world.

Last Wednesday, megapublisher Meredith Corporation (publisher of Better Homes and Gardens, Family Circle, and Parents, to name a few holdings) purchased interactive agencies Genex and New Media Strategies. It was an incredible deal for Meredith, as it brings advertising accounts like Honda, Unilever, Citigroup, ABC, Coca Cola, Ford, Sony, and AT&T under Meredith’s roof, and most likely onto Meredith’s magazine pages. It’s also a move that would have been utterly unthinkable ten years ago.

The Wall Street Journal’s Emily Steel puts it this way: “There used to be a clear division between media outlets… which sold ad time or space and ad agencies, which designed and placed the ads on behalf of marketers. One reason [for the division]: the potential for conflicts of interest if an ad agency owned by a media company was seen to be unfairly directing ads to its sibling media outfits.” But times are changing. Steel goes on to cite other examples of the new pubvertisers, including Conde Nast and Wenner Media, both of which have created in-house ad divisions; Gannett Media, which now owns interactive shop PointRoll; and Google, which has “expanded aggressively into ad sales.”

I think it’s Steel’s last example–Google, or, more broadly, the whole world of search–that’s the key catalyst in the pubvertising trend. That’s because search has placed a whole new level of analytics and transparency into the publishing world; and it’s this analytics-based transparency that makes pubvertising possible.

Why? Because advertisers would mistrust pubvertising in environments in which there’s little recourse for evaluating the agency’s suggestions. It’s only when good analytics can show advertisers when they’re being lied to, when they’re being led astray–and when they’re being offered sound advice–that makes it safe to take advice from a source that may have a conflicting interest. Analytics create transparency, which creates trust, which is the crucial element for pubvertising to get off the ground.

And it’s the search engines that are leading the way in both providing and leveraging this kind of transparency. From free keyword tools to human sales reps, search engines are kings in advising advertisers how to manage keyword spend. But while they’re pushing keywords, the engines also provide clear data on how those keywords actually perform. That transparency makes customers feel secure both listening to the engines’ advice on buying keywords, while purchasing those keywords directly from the engines themselves.

Of course, it’s obviously in publishers’ interest to have ad agencies in-house, because having an in-house ad agency places advertisers within immediate reach. Publishers know this, which is why pubvertising is a trend that will only grow. And to allow that trend to grow, publishers of all kinds will look to offer better analytics and transparency to make that pubvertising possible. I’m not just talking about the MSNs, Yahoos, and Googles of the world entering into an arms race to create better targeting and analytics. I’m talking about even the lowest-tech of ad formats getting into the game, as was the case when print classifieds joined forces with Google late last year.

This has serious ramifications for the future of the ad agency. As publishers look to beef up their analytics and transparency so they can get into advertising, ad agencies will have to beef up their analytics capabilities to get closer to the publishers they’ll need to work with–or be purchased by–to survive. That’s exactly what happened in the world of search, in which a transparent, analytics-heavy publisher model (the engine) gave rise to a new kind of transparent, analytics-heavy ad agency (the SEM firm).

And so as pubvertising shifts from yesterday’s impossibility to tomorrow’s new standard, look to a huge surge in the analytics-based publisher, the analytics-based ad firm, and clients who expect analytics-based transparency from both. Meanwhile, Madison Avenue firms who can’t keep up–because they can’t get up to speed with their data–will face a real uphill battle in the new ad world that looks more like the search world every day.

On the heels of AT&T’s acquisition of BellSouth, the newly-ginormous AT&T announced last week that it would enter into mobile advertising. If all goes well, advertisers will purchase their first mobile ads through AT&T later this year; AT&T hopes to make several billion dollars in ad revenue (through sales of mobile, online, and TV spots) annually through 2012.

I, for one, think it could be a great idea for AT&T to serve as a mobile ad network. But if it wants to succeed, AT&T should start thinking about Wikiasari.

Wikiasari is an upstart search engine (still in development) from the people who brought you Wikipedia, the wildly-popular user-generated encyclopedia. Like Wikipedia, Wikiasari will rely almost entirely on its community–this time, to determine search results. (The initial sorting and ranking will be done by technology, but humans will determine the end product). Wikiasari, a culmination of sorts in user-generated content, is a real watershed in the history of media.

There are two ways that user-generated content has changed everything. First, it’s flipped the traditional platform/content dynamic on its head: in traditional media, content is king and platforms play a supporting role; in user-generated content, it’s not always clear which one is the star. Newspaper readers focus a lot more on the news than on the paper; moviegoers pay more attention to the movie than to the screen; but it’s the YouTube and MySpace interface–and not the bevy of amateur-produced clips of dancing beavers and shoddy personal pages–that really shine in the user-generated media.
A second change user-generated media has brought is a shift in the nature of the communications conversation. In the traditional world, mass-communication high priests (Hollywood, the press, Martha Stewart) talk to (or at) the media consumer. In consumer-generated media, users engage in a community-wide conversation, and the high priests are largely left out. “The one thing that I feel like I know how to do is build communities,” Jimmy Wales, co-founder of Wikia (Wikipedia and Wikiasari’s parent company), told Noam Cohen of The New York Times. “I mean people who know each other, who have discussions.”

User-generated content, in other words, is making the media world a lot less like the traditional mass media, and a lot more like the telephone–a medium for enabling consumer-generated conversation, in which the business ignores content entirely and instead focuses on building platforms that make peer content-sharing (i.e., phone calls) function a lot better.

Wikiasari is a major moment in this consumer-generated evolution. Consumer-generated search, even more than a consumer-generated encyclopedia, marks a shift towards consumers’ looking to a community for answers about their questions and needs, rather than looking to an all-knowing, ready-made information source. If Wikiasari takes off (and if it doesn’t, another wiki-based search engine surely will), it will mark a point at which the bulk of shared ideas comes from information-seekers turning towards their colleagues, rather than information being decreed from on high.

It would be well for AT&T to consider all this as it jumps into mobile advertising–at a time when mobile advertising is clearly failing to live up to its hype, and search is about to catapult consumer-generated media light years ahead. The two developments, after all, aren’t entirely disconnected. Users want their media to act like telephones; it’s clearly bothering them that mobile advertisers–who introduce unrequested, industry-produced content onto mobile screens–are trying to make telephones into the old media that everybody’s ditching. No wonder there’s a backlash, with 79% of online consumers bothered by the concept of mobile ads.

That’s not to say that mobile advertising has no future. For one thing, mobile ads can leverage the phone as a communication device, rather than trying to subvert it. That was the secret behind last summer’s “Snakes on a Plane” mobile campaign, in which mobile users sent friends a personalized message from an automated Samuel L. Jackson, demanding that the recipient see the action flick ASAP. The campaign clearly got the point that mobile is about peer communication–and 1.5 million “Snakes” calls were forwarded in the campaign’s first week.

A second way for AT&T to leverage mobile media is to provide phones that better enable the communication that the user-generated world craves. This could be as basic as improving mobile filesharing capabilities, or as sophisticated as helping two drivers in two different vehicles find one another via GPS. The bottom line is that the new-information consumers don’t just want to receive information; they want to communicate. And AT&T, which now owns Cingular and stands above a vastly huge telecom empire, is in a perfect position to offer that kind of capability.

If it’s thinking of going further into mobile content before the end of this year, AT&T should think seriously about the meaning of user-generated content now. And if it’s stuck for answers? I’d suggest it start its search at Wikiasari.