Fixing Advertising via Audience Investment Management – The most sophisticated targeting technique available to digital marketeers
October 2011Since 2003, online display ad spend has nearly doubled while CTR has dropped by a factor of three.” Something isn’t working.
The online advertising system consists of three primary constituents: advertisers wishing to market their products; publishers intent on selling the advertisers space; and consumers visiting the publishers’ sites for the content. Currently the system is flawed. The publishers aren’t getting fair market value, the advertisers aren’t reaching their intended audience; and the consumers are swamped with ad clutter. Ad exchanges, properly managed, via Audience Investment Management change that.
Exchanges bring transparent audience and content targeting for advertisers; natural price optimization for publishers; and less clutter and ad irrelevancy for consumers.
Publishers aren’t getting fair market value
How does the current trading model work for publishers? A user visits a webpage, the page’s publisher sends an ad request to their own inventory management system. If there is no buyer in the direct sales queue, then the ad impression is presented to a secondary channel, such as an ad network, which is sold as ‘blind’ inventory to the advertiser. The ad networks do not value the ‘context or environment’ of where an ad is served paying the same for a click for a behavioural or a re-targeting campaign if the ad appeared on the Wall Street Journal as on a niche “long-tail” website.
Brand sensitive advertisers, who would pay higher cpms for more valuable inventory if it could be identified transparently, view blind inventory as risky to their brands. Since networks don’t value context or environment, they don’t provide a mechanism for advertisers to pay higher cpms for higher quality inventory and no incentive for premium publishers to make their inventory available transparently. The lack of transparency means brand sensitive advertisers, who care where their messages are viewed, don’t have enough of an incentive to allocate large budgets to the secondary digital display market. Both sides withdraw.
The remaining advertisers are price shoppers often with ‘punch the monkey’ creative, reinforcing the disincentive for publishers to provide transparency, and so on. There is zero value to holding on to inventory for publishers so they again sell blindly, thereby creating oversupply of nontransparent inventory. Essentially, while there is a glut of inventory overall, there is an undersupply of premium inventory. This dynamic is driving down the overall budgets committed to digital display media and ultimately driving down the CPM’s across the entire sector.
Advertisers aren’t reaching their intended audiences
Over the course of 2010 there has been a significant rise in the ad exchange as the dominant secondary channel within this process. An ad exchange is a neutral auction platform where buyers of media (advertisers) meet sellers (publishers). This in turn has promoted the rise of the Demand Side Platform (DSPs) which act for the advertiser on the ad exchange (like an auction agent) and Supply Side Optimzers which act for the publisher.
Whatever secondary channel it is very likely that the ad request is eventually presented in an auction format that uses Real Time Bidding (RTB). In an RTB auction the seller releases a set of bid-request data that includes a consumer’s profile to all qualifying bidders and then it waits for a response. While the RTB auction waits the competing buy sides get to work. They ingest all of the known data points in the bid request and then use various decision making processes to bid what they think will return value to the advertiser and win the auction. All the bids are then collected, the highest bid wins the impression, the ad is served to a page, and the page is rendered. This sounds logical and, given the reach and depth of technology today, isn’t too surprising, unless you consider that the speed at which all of these steps happen is between 10 and 100 milliseconds. That’s 10 times faster than an eye blink, or about as fast as one flap of a hummingbird’s wing.
DSPs are, simply put, a piece of bidding technology or ad servers with optimization and inventory links. They allow audience or optimized buying via RTB across multiple sources of inventory. DSPs aren’t very good at two, key functions: 1) distinguishing and valuing the quality of ad inventory; and 2) leveraging data that is distinct to the advertiser as most only add generic data from a supplier such as Bluekai.com.
DSPs leave both tasks to the user, either an agency or advertiser and most currently lack the specialist programming skills to incorporate bespoke data into the bid management programme. These inabilities foster prices dropping below “real” value. This in turn scares away high quality publishers and premium brand advertisers. In effect the DSPs, whilst seemingly acting on behalf of the agency and advertiser are running off good business by forcing the price too low due to their inability to identify more valuable inventory and pay a fair price.
DSPs that promote their extensive links to 3rd party as their core attribute are setting the stage for an unnecessary race to absolute value.[1] There’s no way to derive competitive advantage in this scenario. In the long run there are no audience “steals” that the competition unwittingly passed over because multiple competitors march into the ad buy with the same information. In effect, prices are lower than they would be for transparent inventory, but higher than they should be for blind inventory. Both the premium publisher and the brand sensitive advertiser lose. The incentives are misaligned, causing unnecessary friction and a suboptimal market.
The Audience Investment Management Approach
The only way to win the game is to harness data that is unique to the advertiser or process information that is unknown to competitive buyers, and combine it with the relevance of the Web property where the ad is placed. Such a synthesis determines the true value of the inventory for a given campaign for a given advertiser. This is the goal of AIM Quality Scoring, one of the products under the Audience Investment Management (AIM) umbrella.
AIM Quality Scoring from Adnetik
Adnetik created the AIM Quality Scoring system to set up media parameters that are unique to each advertiser. By reading millions of URLs and classifying each for publisher brand equity, contextual relevance to the advertiser, brand safety, level of ad clutter and content quality, AIM allows advertisers to control the ad environment through a tiered inventory valuation system. The advertiser can choose where they wish to be on the portfolio curve with a tradeoff between quality and price that normalizes value.
Advertisers Reach Intended Audiences
The foundation of data begins from the advertiser’s perspective combining the client’s historical data with AIM Data.
Data Aggregation:
First the data is collected from the advertisers data from ad servers, organized and modeled.
Data Intelligence:
From that data pool, for example, 5,000,000 cookies IDs are identified as a best match for a specific publisher campaign. Since this information was derived from the advertisers data this intelligence is unique to them.
Data Distribution:
The valuation from data intelligence is then distributed to the buying platforms. Adnetik can distribute via DSP or directly to an exchange. Occasionally the data can be distributed directly into the Supply Side Optimizers.
Havas Digital – Telco Case Study
Objective: A regional telecom company was looking to add new customers and increase purchases of new cell phone plans through digital marketing.
Setup: Adnetik was given a portion of the media budget and was tested against a traditional DSP and Ad Network.
Result: Adnetik’s AIM boasted the highest conversion rate and lowest cost-per-action (CPA) of all three providers. Cost-per-click (CPC) was also significantly lowered from their previous efforts, as was the impression-to-conversion ratio. Once again, Adnetik’s innovative process proved more efficient and gave better results than the DSP and Ad Network.
| Campaign Comparison
Comparison Criteria |
Adnetik | Campaign Average |
| Cost per Action | $30.00 | $43.60 |
| Cost per Click | $0.62 | $3.71 |
| Conversion Rate | .0037% | .0016% |
| Impression Ratio | 26,775 | 60,931 |
| Click-thru Rate | .06% | .04% |
In Summary AIM enables the intelligent management of data across Exchanges, Ad Networks, Publisher Sites and Supply-side Optimizers. AIM utilizes best-in-class technology to make educated buying decisions that get closer to the absolute value of each impression. Advertisers and Agencies who use AIM gain a competitive advantage because they are able to leverage the power of custom targeting to maximize the value of each audience investment.
AIM brings transparent audience and content targeting for advertisers; natural price optimization for publishers; and less clutter and ad irrelevancy for the 90 million unique users per day currently served ads purchased on exchanges.
Why is AIM unique? AIM differs from DSPs (Demand Side Platforms) and Ad Networks because of its unique ability to aggregate data from relevant sources in order to provide custom targeting across multiple points of distribution.
[1] “Absolute value” is here defined as the maximum dollar amount a party is willing to pay.