Trends in online display (or why I invested in AdSafe Media)

This week was a fairly big week for me.  On July 4th I officially emigrated to the US, a date I am not likely to forget.  Wednesday, we announced our new investment (my first in the US), leading a $7.5M round in adtech company AdSafe Media.  Previous investors include Founders Collective and a serious group of ad tech insiders (chek out the advisors), some of which are reinvesting in the round.

Rather than wax lyrical about my new company (PR here), I wanted to take a look at some of the major trends in online display as I see them:

  • Brands advertisers have yet to significantly migrate.  In 2009, P&G still open spent 4% of its advertising budget online; I think l'Oreal was only 1%.  We know the web has created the users and the engagement, but that ad spend is still badly trailing the level of engagement achieved.  To bring that wall of cash into the market, which the industry so badly needs, we need to give brand advertisers an environment they feel comfortable in, so they can ensure the proper stewardship of the products that they promote.
  • Advertisers buy audience, not media.  This may not be music to the ears of the publishers who so carefully built their rate card and their USPs with brands and agencies, but the reality is clearly that we are moving away from allocating that working media to the top names in a given category to a much more distributed audience-centric media buy, which makes the media plan more extensive and complex. 
  • Content also goes real time and complexity ensues.  Have a look at the Guardian which is at the forefront of content syndication and is now experimenting with automated news generation.  Content is increasingly real-time, free of tight editorial guidelines, repurposed and redistributed continuously.  A New-York based entrepreneur told me this week that fully 80% of traffic on news sites was driven by the fresh content, with archives only representing about 20%.  If you bring all this together with social media, it's clear that keeping track of the content inventory is tough, whether you are an ad network, a blog network or an advertiser trying to buy across media types.
  • Brand exposure is coming back into focus.  For a while, display ads were derided ("people just don't click on them").  But as the web matures, the online advertisers are coming to appreciate what their analog forefathers already knew; you cannot simplify media planning to the last click.  You need to measure the entire exposure path and track across channels from first exposure to conversion / repeat conversion.  So yes it probably means you keep buying back your own traffic and you don't really know anymore which part of the your ad budget is wasted, but the reality remains that brand exposure matters … and that it can be done well online.
  • Media planning goes algorithmic: media planning used to be a game of allocation of working media according to relatively stable and planned grids; the job of campaign planning being quite manual and artful.  Now the level of complexity, whether we are talking about real-time bidding or not, is quite staggering.  It's the domain of technology-enabled solutions, of maths and data science.  I have repasted my Prezi on this topic (which was only an intro to a fireside chat with Dataxu CEO Mike Baker but hopefully interesting).

Let' rehash: we have moved from classic, publisher centric media planning to a complex world of fragmented audience targeting, ever-evolving and fluid publishing environments, and the advent of real-time media buying.

To serve this new world well, we need standards, we need tools, we need tech.  Welcome to the age of display ad platforms.

Atlas Venture had recently invested in Dataxu, which is a leader in the demand-side platforms space and can best be thought off as the very powerful brain behind automated, real-time campaign execution across multiple supports.  

Now we are adding AdSafe Media to the portfolio, a company essentially focused on making sure that brand advertisers feels comfortable with going online (how's that for plain English, I was told by my mum that my blog was too wordy).  If you want to learn more, there is a good writeup on paidcontent or adexchanger.  Beside the self-congratulatory (yes it's really a fab team and yes the industry traction is very impressive), the thesis here is that brand advertisers and publishers alike need:

  • What I call "Trust Metrics": standards of content quality they can agree on to help them maximize campaign effectiveness and inventory monetization.  Right what tends to happen is publisher bashing when brand guidelines are not respected which is not helpful to anyone.
  • Pre-emptive action: if you are not supposed to advertise a diabetes drug to a specific set of users, it's limited use to be told after the fact.  AdSafe can function in so called "firewall mode" to act in real-time (and hopefully still allow the publisher to monetize the impression).
  • A holistic solution: ad agencies and demand-side platforms want peace of mind that their campaign guidelines are being respected, publisher and publisher networks want to understand when and why they screw up, yield optimizers want to be able to serve their clients well and maximize the yield lift and so on.  You cannot solve this problem without getting the ecosystem to collaborate around the issue as a whole.

Whilst I am somewhat concerned about the big boys commoditizing most forms of adtech to zero, I am very excited to be part of this company given its ecosystem friendly approach, the great buy-in and commercial momentum it is demonstrating, and the very clear customer need it is solving.  I am frankly also grateful to Helene and her team, as well as Eric Paley and the other members of our board and team to trust a newcomer to the scene with this exciting company.

Stay tuned and let's see how far out of the ballpark we can hit this one (see, Red Sox analogies already).

Real-time advertising trends on Prezi

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8 Responses to Trends in online display (or why I invested in AdSafe Media)

  1. I don’t mind the company itself and the market it is serving but I think your premises for the display market are pretty out of whack with reality.

    “Brands advertisers have yet to significantly migrate”. The implicit assumption is that they will and they will ‘follow the usage’. But that’s been wrong for 15 years and every year the same assumption that it will change is made and every year the percentages become even more out of whack. P&G is a great example: Every year some VP goes to an online ad conference and says they’re changing their mix and every year they don’t.

    “Brand exposure is coming back into focus.” What evidence is there of that? Certainly not dollars spent. Quite simply, brand advertising online is dormant, has been for a decade after the initial Internet crash and there are no near term catalysts to suggest it will change (maybe online video but that’s separate to what you are talking about here). Indeed, online display advertising is becoming more and more direct-response in nature.

    If brand advertising becomes more important then real time bidding/media algorithms becomes less important. And vice versa. The two are a direct trade off. Algorithms and real-time are evidence that brand-driven campaigns are less important in relation to direct-response ones.

    As I said, AdSafe might turn out to be a great investment but if it does it will have nothing to do with your premises. With automated display buying appended with data streams, there is a need for something like this but it’s to protect the down-side (i.e. to prevent brand damage rather than to ensure positive brand boost).

    Advertisers care about a direct response formula and they just don’t want the ads shown in all but the worst environments. But the folks you are talking about are still wedded to traditional ad agencies who have huge direct economic incentives to maintain TV spending and unless that structure changes, then brand advertising online will always be small and unimportant.

    In every press release, AdSafe will likely tout P&G and Coca-Cola as trial customers but the folks paying the real dollars will be Netflix, University of Phoenix and other direct response marketers whose perceptions of brand building and marketing objectives are very different to the former group.

  2. Ad Guy says:

    I couldn’t agree more with the comment above. These are not trends they are hype. You have drunk the kool-aid. If you want to know the trends in display they are DR and Google.

  3. Fred Destin says:

    @AdGuy ok maybe i should have started with stating the obivous: DR dwarfs everything else. that’s also true in the analog world BTW. It’s the big trend of the past 10 years.

    @Niki agree with some but not all of your comments
    1/ see a strong trend towards the “whole ad buy” i.e. need to understand complete exposure path that leads to a conversion event and not just last click. This is from digital leaders(e.g. PriceMinister) and not self-serving comments from brands. Long-term path tracking, retargeting etc all participate in a more subtle and complex view of the media buy.
    2/ don’t why RTB and brand advertising are mutually exclusive although the DR guys should clearly outbid “pure” brand advertisers every time. Why ? Simply because RT is about capturing audience and this everyone cares about.
    3/ I do see strong behaviour change and budgets shifting although this is from talking to trading houses and ad networks as well as some brands. WE’ll see, market timing may be ripe finally.

  4. Jeff Coon says:

    Generally speaking, agree: ad-servers/exchanges (GOOG,MSFT), the major agency holding companies and others (RubiconProject,AdMeld) definitely seeking to provide more automated tools for media planning and purchase, naturally directly from their own platforms. GOOG has noted that while roughly 32% of online media consumption is addressed via display advertising only 14% of ad spend is in this area at present, and they foresee this being a major growth area in the near term. I think it’s fairly clear their vision of RTB is one providing agencies/buyers a broad spectrum of tools and data, enabling them to tune and optimize on a curve of performance metrics * brand impact metrics * pricing.

    This suits the agencies objectives of better leveraging more sources of data to simplify the purchase of target audience regardless of source media / destination, enabling them to purchase audience at far lower prices. Which is naturally terrifying to website publishers who rely upon their own strong brands and content to produce large, attractive audiences to monetize via advertising…

    AdSafe, Adometry, mPire and others enable the agencies to make this shift by validating the inventory being acquired via networks and/or exchanges. Given the agencies strong desire to reduce costs and improve performance by shifting towards more fragmented buys, I’d agree these types of ad validation metrics are a solid growth opportunity area.

  5. Davor says:

    Very good article about this interesting topic. By saying that, it is always good to take a big picture. Which could be:

    – traditional media (newspapers, mags, TV) are constantly losing their attractiveness/efficiency in terms of ad placing
    – brands are aware of this Media Paradigm Shift and are actively seeking for new, more efficient channels (they have no other option if they want to continue their growth)
    – Internet media so far failed to attract them because most advertising target websites are not ‘natural’ ad placing environments in the eyes of brand consumers (like newspapers were)
    – once brands discover new, more efficient channels, they will migrate quite large part of their ad budgets – that’s what I am 99% sure. Do they have another choice?
    – Google is NOT ideal target for brand ad campaigns. Most brands don’t want to be in the company of local flower shops (no pun intended), get-rich-quick schemes and all kind of DR

    Google is already king of DR advertising, but battle for specific multi-multi-billion brand ad budgets on Internet is still at the beginning. Facebook tried to compete with mixed success so far (many brands don’t like getting on nerves to majority of FB users, it can even damage their reputation).

    Brands have specific requirements. 1) They need their logos and slogans to be displayed to as many eyeballs as possible, click-thru rate is not that important as with DR advertising. 2) They also need familiar content environment extension for their consumers – average consumer cannot change habits easily. Newspapers and magazines were perfect ad environment because of a whole century of page fine layout culture which were familiar to generations of consumers. 3) They need quality environment, trusted screen content around their ads will boost their overall value and dignity.

    And 4) they may use new breed of precise targeting technologies to their own advantage. For example on our Tvinx user news project, we developed BrandAd display system which is really highly targeted. Advertiser can choose geolocation, type of news, keywords to be included (or avoided) in article, reader gender, reader preferences etc. And instead of deciding for a consumer what is appropriate and quality content/environment for displaying brand ads – we devised reporter evaluation algorithm where readers evaluate reporter’s credibility. Aleady targeted ads will be shown only under articles written by reporters evaluated by readers as ‘excellent reporter’.

    This is ofcourse not final nor only solution for brand advertisers, but is a sample how to go hand in hand with brands for the benefit of both, them and consumers.

  6. Jhimoff says:

    Really interesting article about advertising and online publishing. The dynamic suggests that only the really big publishers can make money online via RPM — and so many of them claiming their content is free and their costs are too high. So if online content gets cheaper and less edited, why would brands want to pay for getting lost in the noise? On the other hand, the speciality, quality content is always going to be niche and not have the reach. AdSafe seems to be a sort of trust network within all this, so it sure seems like a good idea. Maybe you can have quality and reach after all?

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