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MicroClick, DoubleSoft… Microsoft/ DoubleClick Merger? March 29, 2007

Posted by Bill in Ad Serving, Auction-based media, exchanges, Microsoft, online marketing, Search Marketing.
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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…

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The Eagle Has Landed… on a Mission… March 12, 2007

Posted by Bill in Auction-based media, exchanges, Online Auction Tips, online marketing, Search Marketing.
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 http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=56890

Ex Did-It Chief Bill Wise Lands At Remix Media Ad Network

FORMER DID-IT CEO BILL WISE, who left the search engine marketing firm last month citing a disagreement about the direction of the company, starts today as president of Remix Media, a division of auction-based ad network Right Media, OnlineMediaDaily has learned.

Right Media made headlines in October when Yahoo bought a 20% stake in the firm for $45 million. In December, the company created the new brand Remix Media for its ad network, which allows advertisers to bid on display ad impressions from specific sites.

Wise will oversee the growth of Remix, having experience with both auction-based media from his role at Did-It, as well as ad network management from his experience as general manager of DoubleClick Media.

“It’s really kind of bridging the ad network business and the concept of an exchange with search marketing and everything else,” he said.

Currently, Remix represents mostly lower-cost inventory, but part of Wise’s job will entail attracting both big-spending advertisers and more premium inventory, he said.

“They’re now serving two billion impressions a day. They’ve gotten large very quickly. Right now, they’re representing a lot of remnant space,” he said. “But clearly, the strategy is how to go upstream, and that’s going to be a large part of my role.”

Wise said the company aims to help marketers manage entire campaigns on an auction-based level.

“More and more marketers and agencies need to embrace the concept of auction-based media, and Right Media has the online advertising piece figured out,” he said. “Remix Media, and we’re really establishing that as another brand, can really help marketers manage their inventory holistically.”

The Cat is Out of the Bag… February 19, 2007

Posted by Bill in online marketing, Press Mentions, Search Marketing.
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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.   

Did-It CEO Resigns
BILL WISE, CEO OF SEARCH engine marketing firm Did-It, has resigned following a disagreement about the direction of the company.

Wise, who has worked with Did-It since January 2005 after being hired away from Ask Jeeves’ sales department, said his departure stemmed from a fundamental disagreement about the direction of the company. “I wanted to take the company in one direction. As CEO, and as a guy who really, really helped scale and create the brand that it has in the marketplace, that’s what I wanted to do,” said Wise, whose last day of work was Feb. 7. “We parted amicably.”

Kevin Lee, the company’s executive chairman, who held the CEO spot before Wise, agreed the exit stemmed from a difference of opinion about long-term strategy. “We talked about the direction of the company, and decided that where we want to take the company is not the best fit, so he’s going to be moving on to other endeavors,” Lee said. “It’s just really a matter of prioritization of different things.”

Did-It co-founder Dave Pasternack will take over most of Wise’s duties until a new CEO is hired.

What Search Can Learn from the Aqua Teen Fiasco February 5, 2007

Posted by Bill in Outdoor advertising, Search Marketing, traditional advertising.
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You probably already know the facts by now, but I’ll give them to you anyway…

To promote its late-night show Aqua Teen Hunger Force, Cartoon Network  placed light-up signs of one of the show’s characters in surprising but noticeable spots throughout several US cities. Boston was one of those cities.

In Boston, terrorism-suspicious passersby saw the signs placed in sensitive areas—like bridges and overpasses—and called the police. Cartoon Networks, which is owned by Turner Broadcasting, neglected to mention to the police that they had put the signs up. Mayhem ensued.

Bomb squads came out. A major highway and a portion of the Charles River were closed off. The two men who placed the signs were arrested. And now the city of Boston is calling for heads to roll at Turner, and for Turner to foot the $750,000 bill for the day’s antiterror precautions.

Something like this was bound to happen, as the public has long been on tense relations with outdoor marketing. Mini Cooper’s supertargeted opt-in billboard campaign, which displays birthday wishes and other extremely targeted greetings to Mini drivers, has been criticized by driver safety groups as a distraction. An LA billboard for shoe inserts was removed over complaints around its tagline, “Shoe-icide is not the answer!” In San Francisco, a “Got Milk” outdoor display was yanked after groups took issue with the smell (it smelled like cookies).

Outdoor advertising is a lightning rod, for the very same reason that it’s so powerful. Outdoor and out-of-home advertising weave themselves, literally, into your life’s landscape. They’re with you when you look out from your car window, when you’re waiting for the bus, or when you’re in the elevator. They integrate brands into your life.

But injecting yourself in people’s lives is bound to rub some people the wrong way. Somebody’s bound to think your joke isn’t funny, that you’re creating a nuisance (which you very well might be), or that you’re engaged in a bomb plot. And there lies the conundrum of outdoor.

For those of us in search, there’s a cautionary lesson in this. Like outdoor, search is also built around injecting your brand into the ebb and flow of real life—as, at this point in the 21st Century, search has become one of life’s basic tasks. Until now, we search marketers have avoided the unpredictability that’s haunted outdoor advertisers, because our control over keywords lists gives us immense control over who sees our ad, and how.

And we still have that control. But at the same time, times are changing. Search is becoming more deeply integrated into other types of media, and different types of media are diverging in more directions every day. Keyword lists just aren’t the only factor involved in dealing with who sees a campaign. Suddenly, we all need to consider the unique problems of search traffic off of MySpace—or even, as David Berkowitz points out, from Second Life. And as contextual advertising evolves into search-based retargeting, part of every search campaign will involve display advertising on publisher sites.

Which means that, as search gets more sophisticated, search is weaving itself into many people’s lives in many different ways than it ever has. It’s becoming less like old-fashioned search, and closer, in some ways, to outdoor advertising.

As that transition happens, we’ll see a real turning point in the search industry. Those of us who are as good at understanding who’s looking at an ad, and how to relate to that viewer—by making one landing page for searchers off of MySpace, and a different one for searchers off of Yahoo! Financial, for instance—will continue to thrive as we always have.

But those of us who can’t relate to the newly-diverse search audience will face the same challenges faced by the outdoor industry in terms of dealing with the viewer they couldn’t have foreseen. And being in the online industry is going to make those shortcomings even harder to surmount, since clients are willing to forgive outdoor agencies for a lack of precision, but expect a lot more precision from online firms.

If you’re in the first group of search marketers, then you’re probably in a good place right now. If you’re in the second group, then you might want to really rethink your approach.

Search Marketing « WordPress.com February 4, 2007

Posted by Bill in Search Marketing.
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Search Marketing « WordPress.com

Yahoo Talks More About Panama January 29, 2007

Posted by Bill in online marketing, Search Marketing, Yahoo Search Marketing.
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LAST WEEK’S WALL STREET Journal ran a piece on how Yahoo advertisers are faring as they migrate to the new Panama ad platform. I wanted to give Yahoo the opportunity to talk about the migration in its own words. What follows is my interview with Yahoo’s Senior Vice President of Advertiser Products and Platform, Steve Mitgang.

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.

How Search Turned MTV Into MySpace January 21, 2007

Posted by Bill in Google, Search Marketing, traditional advertising.
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For last week’s pronouncement that shook the new media world — but didn’t particularly surprise it — look to MySpace co-founder Tom Anderson. MySpace, Anderson informed German mag Der Spiegel, has “replaced MTV.”

The point is debatable. Between its acquisition of 10-million visitor RateMyProfessors.com and a rumored investment in social networking site TagWorld, MTV is clearly gunning for a return to empire. But at least for now, it does look as if the world’s sixth most popular site has stolen the lead from the suddenly presidentless MTV.

But the MTV versus MySpace competition is a bit more complex than just the old replaced by the new. That’s because MySpace isn’t as much the usurper of MTV, as it’s an evolution of MTV’s basic concept: a horizontal channel in which glamorous stars, the common folk, and the channel itself are all on surprisingly equal footing. And, like MTV, MySpace is a channel that’s built on reaching out to a youth generation who’s the first to have really grown up with a new medium. So MySpace hasn’t replaced MTV, as much as MTV has evolved into MySpace. And none of this evolution would have been possible without search.

Let’s start with MTV. MTV was first built around the ’80s generation, the first generation to really grow up with television — and even color television — as a given in the home. Their baby- boomer parents also grew up with TV, but the boomers often weren’t born into a TV household.

MTV also introduced horizontal media in 1992, when “The Real World” spawned reality TV a full 8 years before “Survivor.” And “The Real World” entirely changed the rules of how television works. Now, instead of a medium in which lofty stars appear on the screen while couch potatoes watch them, MTV’s invention of reality creates a model in which the stars and the mere mortals occupy the same space. MTV showed us how media can become horizontal. MySpace isn’t so different. MySpace is also built on capturing, and capitalizing on, the first generation of youth who’s grown up with new media — in this case, the Internet and mobile. In Anderson’s own words to Der Spiegel: “If you are 23 now, you probably started using the AOL Instant Messenger ten years ago. It’s totally natural for you to talk to your friends that way. A few years after that you started text messaging. I think the MySpace generation is these people who just have this experience. It’s perfectly natural.”

MySpace is also a truly horizontal medium, with everybody vying for the same attention: Madonna, Jamie Foxx, and the Honda Element all have to go head to head with your 12-year-old cousin to get noticed.

And so, again, while MySpace may have replaced MTV, it’s also just an evolution of the MTV model, brought online. Both MTV and MySpace gained success by providing young people with the opportunity to just be themselves, while understanding that technology had made young people “just being themselves” into something fundamentally different than it had ever been before. And they both did that while creating a new kind of horizontal channel.

It was search that allowed the MTV-MySpace evolution to happen. As New York Times columnist Thomas Friedman points out, search is the Web’s great flattening force: by offering a single window through which to jump to the Web’s billions of disconnected pages, search pulls the entire Internet together.

Instead of developing a relationship with just one site at a time — in the way that viewers watch one TV channel at a time — search turns the Internet into a single, unified Web. That puts all Web pages on equal footing, all Web pages at the mercy of the user, and all Web pages in direct competition with one another. (A similar point could be made about the effect of remote controls on TV, but search gives way more user control than remotes do, across billions of pages rather than just dozens of channels.) Search made the Web horizontal, and that horizontality enabled MySpace to use the Web to take MTV’s horizontality to a whole new plane.

This means a tremendous amount for those of us in search. If search is a driving force behind the new horizontality, then those of us in SEM — the first industry to make business sense of a horizontal universe — can drive unique value in the new horizontal world.

That’s also a challenge. As communications evolve — and search, and elements of search, become just one piece of a much larger media picture — SEM needs to turn its insights into ideas that can provide value, regardless of the directions that media take. And if we can’t make that happen, it won’t just be MTV that’s facing replacement.
* * *

(For a bit more on the future of search and social media, have a look at my recent interview with MarketWatch.

Welcome The Pubvertisers January 15, 2007

Posted by Bill in Online Advertising, Online Auction Tips, online marketing, Search Marketing, traditional advertising.
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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.

What Wikiasari Can Teach AT&T About Mobile Ads January 9, 2007

Posted by Bill in Google, mobile marketing, online marketing, Search Marketing, traditional advertising.
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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.

The Bubble Bath December 28, 2006

Posted by Bill in Google, MSN Search, online marketing, Search Marketing, traditional advertising, Yahoo Search Marketing.
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For SEMs and online advertisers, 2006 was a bubble bath. The tone was set at the end of 2005, when Google paid $1 billion for a 5% stake in AOL. That put AOL’s total value at $20 billion, or $1,000 per subscriber. Later this year, Google paid $1.65 billion in its well-publicized acquisition of YouTube, a company with sixty-five employees, no profit model, and a bevy of illegally copied material (complete with litigious owners waiting in the wings). But perhaps the biggest of them all, the granddaddy of all bubbles, is Google’s stock price itself, which at press time was hovering at a 57.85 P/E ratio. Indeed, analysts are also finally starting to catch on to Google’s hugely overvalued stock. Into this mess splashed an acquisition that finally made business sense: the Publicis Groupe’s plan to buy Digitas.

True, Publicis did offer Digitas shareholders a 25% premium over the closing price when the deal was announced, but this reflects actual upside, rather than perceived upside. As search marketers we’ve seen firsthand for years how advertisers have shifted their spend from offline into search and other online media. As the general public has spent more time consuming media online, advertisers have realized that the accountability of an online campaign greatly surpasses that of a traditional campaign. Overall advertising is growing at 4-5% per year, while digital advertising is growing at 30%. That statistic alone justifies the 25% premium that Publicis paid for Digitas.

The next step for advertisers is applying the highly touted accountability of online media to their offline campaigns. This requires the keen analytics and robust technology typically found in digital agencies, and notably absent from traditional agencies. These capabilities include measuring spikes in search behavior and traffic in response to TV, print, and outdoor ads. An agency that specializes in all media, both online and off, will be able to execute on initiatives like boosting bids on keywords mentioned in TV commercials, and building microsites as landing pages where consumers can easily read more info and purchase the product they saw on TV. This integration poses another huge advantage for Publicis’ clients, as they will not have to coordinate between two separate agencies. These factors further justify the 25% premium.

It’s always risky to speculate on the future, but there are certain outcomes that almost certainly will occur in some form or other. “Convergence” has been a hot buzzword in the industry, the idea being that users will take control of their TVs in the same way that they’ve taken control of online content. This, in theory will enable advertisers to target video ads behaviorally, demographically, and by keyword. But this theory presumes that TV will still be the only device used to consume video. In reality, perhaps “divergence” is a better word, because media will be consumed not just on TV, but on computers, mobile phones, mobile e-mail devices, MP3 players, and in cars.

Keeping track of and optimizing each ad’s performance, across a diverse user base with a diverse media-consumption device base, all while deploying targeting options and other optimization techniques, will require an even more advanced technology and even sharper analytics. A digital advertising firm is far better positioned to deliver these assets to clients than an offline media firm. This is perhaps the most insightful element of Publicis’s move, and even further justifies that extra 25%.

Much has been made of Digitas’ client relationships having real value, but in reality, the Publicis Groupe and the other offline advertising giants don’t need to buy client relationships. They’ve had clients’ trust for years. What they need are the technology and analytics to deliver a full suite of advertising options to all of their clients, with greater accountability and the ability to scale as technology advances. That’s the real value that Digitas brings to the table.

Holding companies should not be focused on buying aQuantive or paying a premium for client relationships. Rather, they need to focus on acquiring smaller, privately held companies that have built leading-edge technology platforms, embraced a culture where the statistician is just as important as the creative director, and with whom they can bring their pre-existing customers to the digital upsell.

What a refreshing note to the end of 2006. Just when we all thought the bubbles were rising over the rim of the tub, here’s a move that will allow all parties to soak in real, not imagined, value.