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How Behavioral Retargeting Could Save Yahoo September 25, 2006

Posted by Bill in Online Advertising, Search Marketing, Yahoo Search Marketing.
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So what happened to Yahoo? Last week, the online giant announced slow ad sales; Wall Street responded by forcing Yahoo stock down 11.2 percent. There’s been a flurry of speculation as to what went wrong, with suggestions ranging from launch delays in the Panama ad platform, to a trickle-down from woes in the financial and automotive sectors. And for what it’s worth, I think most of the speculations have real validity.

But pointing to any one problem misses a crucial underlying issue that’s giving Yahoo trouble. That issue is the disconnect between Yahoo’s search engine and the Yahoo Publisher Network. Simply put, Yahoo’s hurting because its publisher side refuses to learn from its search side.

My reasoning comes from an examination of what’s going wrong at Yahoo, and what’s going right. As Majestic Research’s John Aiken told the New York Times, Yahoo’s search arm seems to be doing just fine. It’s the publisher side–which is in the business of delivering graphical display ads–that’s to blame for bringing ad sales down. (It’s also noteworthy that analysts see Google as still on the rise; Google is much more search-centric than Yahoo is.)

Meanwhile, a recent Reuters story links Yahoo’s troubles with the pain that publishers of all kinds–including The New York Times and Dow Jones–are currently feeling . The trend across publishers would imply that Yahoo’s problems don’t originate with Yahoo. They originate with problems faced by publishers everywhere–including Time Warner, which is busily trying to sell off 18 magazine titles as I write.

What’s the reason for the publisher slump? Marketing strategist Laura Ries, president of Ries & Ries (quoted in the Reuters article), suggests that while ad spending overall hasn’t dropped, marketers are shifting ad spend “all over the place, because they’re looking for something that works.” And if they’re shifting ad spend away from publishers, then they see the publisher model as something that doesn’t work. By keeping their money in search advertising, they’re demonstrating their faith in search as a medium that does.

To get the publisher model back on track, then, publishers need to make display ads work as well as search ads do.

How could publishers close the gap with search? There are several avenues that they could take; for now, I’d like to focus on just one. Publishers need to make their ads more targeted.

From the very start, search has been a personally targeted medium. Each searcher typing in a query has a unique question in mind, and a unique Web page and online experience that will satisfy his/her needs best. Both the search engines and search marketers understand this; that’s why search’s last 10 years has been the story of engines, and search marketers, trying to improve their understanding of who’s searching, and of how to reach out to that exact person in the most effective way. Search’s personalization methods range from delivering the listings that are most relevant for a precise keyword, to serving up geographically targeted search landing pages.

And search’s targeting works wonders, because consumers respond to you based on how relevant they feel you are to them. The more targeted your outreach is, the more personally relevant you can present yourself as being–and the more your customers will respond.

But in stark contrast with search ads, display ads are rarely personally targeted. They’re certainly not personalized in print; and they’re rarely well-targeted in digital display ads, either. Instead, digital ads are delivered to wide segments of online viewers in the hopes that someone, somewhere, will respond.

There’s no reason that the publisher model can’t change. And search-style thinking, and search itself, can lead that change. The new method of behavioral search retargeting, for example, uses individualized search data to deliver highly targeted ads to the most conversion-likely customers. Another example of the new targeting is MSN’s behaviorally targeted display ads. MSN’s display ad targeting isn’t search based; but the thinking behind it clearly derives from the same source as MSN’s targeting-heavy search platform, adCenter. This kind of fusion of search thinking and display ad presentation will be crucial for the ongoing health of the publisher model.

And Yahoo, which is a clear leader in both the search and publisher spaces, is in a unique position to close the gap. So far, it hasn’t gone very far in that direction–hence its ad troubles in Q3 and stock troubles last week. But by letting its search thinking guide its publisher side much more, Yahoo could have better success in Q4–and a stellar year in 2007.


Out-of-Home Is the Next Auction Medium September 18, 2006

Posted by Bill in Online Advertising, Online Auction Tips, Search Marketing.
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You know those ads you see on screens in airports, office building elevators, and on the  occasional person? They’re called out-of-home digital ads. And my prediction for them is that they’ll be almost entirely auction-based by 2010.

Last week, marketing consultancy Profitable Channels came out with a report on the medium. The report is definitely a worthwhile read; the point that stood out most in my mind–the point that led to my conclusion about auctioning out-of-home spots–comes from the report’s description of out-of-home’s value. This value, the report observes, stems largely from out-of-home’s proximity to the point of sale.

In July, I wrote a piece about why Google’s attempt to auction print ads didn’t work. Since auctions are so competitive, I argued, buyers tend to avoid them unless they’re absolutely necessary–unless the auctioned item is scarce, and there’s no other place for auctiongoers to shop. That’s why fine art get sold ub auctions–because it’s one-of-a-kind; but vegetables and pants are almost never auctioned, because vegetables and pants are widely available.

Print advertising goes into the “widely available” category. Print publishers add pages to their newspapers and magazines as they sell more inventory, so they can always make space to accommodate more advertisers. That’s hardly a scenario of scarcity, and so it’s hardly a scenario for offering an auction model.

That logic also explains why keywords are sold in auction. Since only a finite number of searchers will search a given tem, keyword traffic is limited. It’s also highly valuable, as keywords represent consumers who are headed towards a point of sale. The combination of high value and limited availability makes keyword traffic a thoroughly auctionable item.

Now consider the out-of-home ad. Out-of-home advertising, again, is so attractive because it puts your ad very close to the point of sale. Your ad for kids’ cereal might be nice during Saturday morning cartoons; but think of how valuable it would be if you displayed it right in the cereal aisle. Or how valuable an ad for Pepsi could be if it was delivered right next to the soda machine. And since there are only so many spots in the world that are next to a point of sale, out-of-home advertising offers something that’s highly scarce. And, once again, scarce + valuable = auction-worthy. It’s only a matter of time before networks realize this, and sell out-of-home impressions accordingly.

Auction-based out-of-home ads will be a big news for auction marketing, because out-of-home advertising is big business. In the same report, Profitable Channels predicts a total of $1.2 billion in out-of-home ad sales this year–about the equivalent of a major TV daypart.

And the out-of-home market is still largely untapped. A second study released last week, this one by media research firm Arbitron, found that  a third of the people who watch Sunday Night Football in Houston watch it out of home. And I’d say it’s a safe assumption that a substantial number of those out-of-home viewers watched their NFL games in a bar. That creates a real opportunity. Given the sheer numbers of viewers watching football in bars, imagine how valuable bar-specific advertising would be to a beer distributor who could reach viewers, in a bar, in the middle of NFL programming.

Such a network would be so valuable, I’d like to suggest, that it’s only a matter of time before we see bar-specific networks that overlay bar-specific ads, and deliver them to bar TV screens during the commercial breaks of sporting events. And it would make perfect sense to sell the ad slots by auction: it’s a scarce resource (there are only so many commercial breaks in a game, and so many bars that the networks will reach); and, since a bar is a crucial point of sale for beverage vendors, it would also be incredibly valuable.

And bars aren’t the only location that would attract networks. Arbitron finds that, with TV sets in a slew of other places–like airports, hospital waiting rooms, hotels, and gyms–a lot of television, including daytime TV, gets major out-of-home viewing. Many of these out-of-home views could support their own overlays, with hospital TVs getting ads from insurance companies; gym TVs getting ads from diet products; hotels getting ads from tourist attractions and restaurants, and so on. For nearly every location where there’s a TV, there’s an industry or two that would see that TV as incredibly targeted real estate. Those industries would gladly participate in a bidding war to place their advertising there, and to keep their competitors out.

How long before out-of-home goes auction-based? It won’t be overnight. But it will, most likely, be within the next three years. It’s a possibility I’d put a high bid on.

Why Display Ads Are Looking More Like Search Ads September 11, 2006

Posted by Bill in Online Advertising.
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This week, MSN rolled out behaviorally targeted display ads. MSN monitors audiences for Web page views and search history; it serves up relevant ads accordingly across the MSN network. And with that rollout, MSN has done a lot more than just offer a new app for advertisers. It’s blurred the lines that divide display ads from search.

Ask any search marketer why search is a different kind of medium, and they’ll tell you two things. They’ll tell you that search offers unparalleled targeting: TV ads might shoot messages to 20 million viewers at a time; but there’s a good chance that 80 percent of those viewers won’t care about your product. With search, the keyword alone–to say nothing of more sophisticated search targeting–gives you a very good chance that the person who sees your ad is actually interested in what you have to sell.

The second differentiator any search marketer will point to is that search is customer-forward. In traditional media, viewers are bombarded by messages they haven’t requested; and that, by and large, they don’t want to see. Search is the opposite: searchers come to engines because they want information.

With behaviorally targeted display ads, the sharp distinctions are changing. First, behavioral targeting brings the targeting of display ads that much closer to the targeting capabilities of search (even if those capabilities still are very far apart). And second–and perhaps even more surprising–behavioral targeting makes display ads a lot more customer-forward.
There’s a wide spectrum, after all, of how customer-forward a medium is, and how forward-facing a customer can be. On the one hand, many ads ask consumers to buy items they’ve never considered buying, from brands they don’t know. On the other hand, there’s search–in which customers already know what they want, and are only turning to the medium to fill in specifics.

And there’s also a middle ground. There are people who aren’t looking for an item right now, but who are, more broadly speaking, “in the market.” It’s not that they’re not looking, or that they’ve stopped looking. It’s just that they’ve put their search on pause, or that they’ve tuned it down a notch–they’ve shifted from aggressively seeking, to researching where it is they’d like to turn next. To take an example at random, someone who’s “shopping for a house” might be haggling with a real estate agent; or she might be reading the real estate section; or she might be playing golf, and won’t take steps to look for a house until tomorrow. Searching isn’t just an activity–it’s also what takes place in the back of your mind, and the general direction in which your purchase is heading–even if you’re not making a purchase at this very moment.

Behaviorally targeted display ads fill the vacuum that’s been needed to address that middle ground. And when you couple their ability to encounter the middle ground with their ability to pinpoint precise viewers, you’ve got a medium that brings display ads a lot closer to search than they’ve eve been.

For marketers and agencies, that means that the niches we’ve filled until now are all becoming less distinguishable from one another. And it means that, if we’re to continue to give the same level of service to our clients that we’ve provided until now, we need to acknowledge that fact.

For those of us in search, that’s a tremendous opportunity. Search marketers have already cornered the market on targeted marketing and on reaching out to forward-leaning customers. As those elements become more prevalent in media outside of search, our clients will increasingly turn to us to guide them in leveraging those elements in other media. Already, you can see that shift taking place, with search firms providing new offerings like behavioral search retargeting.
Am I advocating the return to the one-stop shop? Not for the next 10 years, anyway. But I do think we need to start thinking about how we need to reconfigure media as everything comes a little closer together.