Harley Norrgren studied Statistics at University College London and after a two year tenure is currently heading up Infectious Media’s Analytics Team. Being with Infectious throughout their entire working relationship with RTB he’s had the opportunity to watch the space develop since the start of RTB’s European adoption.

If you’re spending large portions of your media budget on brand activity, you’ll want to ensure that you’re getting the best performance for your money, yet the effect of brand activity is typically hard to measure as it poses a few difficult questions to advertisers:

• What metrics can we use for measuring brand engagement?
• How can we get access to user level data from predominantly offline channels?
• How can we integrate cross-channel data to get a full picture of the effect of our branding spend?

It is our proposition that buying via RTB on Ad Exchanges makes brand advertising measurable and increases the accuracy of any direct response path to conversion analysis and attribution modelling. We currently create bespoke branding metrics (in conjunction with our data partners) and marginal attribution models, which help to give advertisers better insight into the effect of their brand spend and facilitate optimisation towards branding goals. These bespoke metrics are called ‘Brand Units’, and are a standardised unit of any combination of different brand measurements, such as exposure time or brand related search uplift, which can either be a proxy for conversion or reflect other incomplete path brand objectives.

Exchange generated impression level data feeds provide unique opportunities for data providers to integrate their data with unprecedented granularity. We are currently working with data partners to provide us with impression level exposure time metrics, enabling us to optimise towards advertising face time and to buy display in terms of view duration rather than per impression. The combination of engagement, search uplift and on-site activity density means that we can measure brand effect on a per user basis, rather than resorting to surveys, and optimise campaigns against these metrics in real time.

The unique user level insights generated from brand activity can be coupled with post brand engagement and ultimately conversion/post-conversion activities, allowing us to fit brand activity directly into the conversion path, as well as attribution models, providing advertisers with more insight about the path to conversion than was ever available before from a single channel.

One of the main considerations about running brand activity through exchanges is the perceived ‘remnant’ status of most inventory available. It’s important to remember that just because an impression is remnant, it doesn’t mean it’s of poor quality. Through the use of ad exposure times we can identify and optimise towards the best value Cost per Face Time inventory sources, giving advertisers more clarity and better value than direct buying could. Furthermore, the presence of private exchanges and the market wide increasing adoption of ad exchanges means that more and more ‘premium’ inventory is made available every day. Via exchange buying, adverts can be purchased on premium inventory on a per-impression basis and made measurable enough to get a stronger indication of the real value of each advert shown.

These insights represent a large step forward for a communication goal which is generally hampered by industry standard attribution models. We hope that the unprecedented feasibility of marginal attribution models and access to user level data means that more opportunities can arise for branding activity to be bought on exchanges and start to drive a shift away from historically retargeting heavy DR budgets.

For more information please visit http://www.infectiousmedia.com/index.php?page=our-products

Rocco de Filippis is an intern on the client services team.  Rocco studied Behavioural Economics at University of Maastricht and the Sapienza University in Rome.  He spends much of his working day at Infectious Media analysing and optimising campaign performance.

As other forms of online advertising develop, the role and effectiveness of display online banners has been a source of much debate. Research (Dreze and Hussherr 2003; Ilfeld and Winer 2002; Internet Advertising Bureau 1997; Sherman and Deighton 2001) has shown that exposure to banner advertising leads to increased brand awareness, purchase intention, and site visits but the relationship between advertising exposure and actual purchase is still uncertain.

The main problem is “how do we measure the effectiveness of a banner?” The first and easiest way is through exposure based metrics: computing the number of impressions served gives an idea of the campaign’s reach. However, many advertisers prefer to allocate budget based on the sales target of the campaign rather than purely on its reach. Since they are not directly linked to sales volume, the number of impressions served has not been considered a good indicator for display advertising effectiveness. The next measurement evolution for banners, was then to look at click-through rates (number of clicks per impression served), but why is a click any better than reach? After all a click simply means a user has visited the advertiser’s webpage, but we know only a small number of these visitors actually go on to buy.   We then come to CPA (Cost Per Action) commonly considered the most reliable indicator for the efficiency of an online advertising campaign.  It is my opinion that CPA has its place but that it shouldn’t be considered as a measurement panacea for all banner advertising.

In few years there has been a proliferation of online advertising vehicles, so that today we can choose from:
* Banner Ads
* Mobile
* Paid-search (PPC) and SEO
* E-mail
* Video
* Social Media

It is my contention that, each has a different function. The time gap between becoming aware of a product and buying it can be quite long, and along this path to purchase different display ad formats can perform better than others: Social media ads can spread awareness among friend networks: Video ads are more suitable in convincing someone of the attractiveness of a product; SEO optimization can enhance the likelihood of a direct conversion, but what about banners?

Have you ever seen this picture?

It was shot in Burkina-Faso, one of the poorest countries in Africa, and one of the poorest countries on the planet. There are several examples all over the World of similar Coca Cola boards placed in villages where people are so poor they cannot afford to buy water and food, not to mention Coke…so why does Coca Cola spend money on ads which have a likely conversion to purchase of almost 0%?  I believe the answer is that they are not aiming for conversions at this stage of the ad-process.

In order to understand and measure the effectiveness of an advertising campaign a number of advertising hierarchy effect models have been developed. The most basic and interesting in my opinion is the Lavidge and Steiner’s one (1961) since it links the different steps a customer takes with three main psychological stages (see diagram below).  The idea is that rather than directly jumping to a purchase, consumers have to fulfil each step before moving to the next psychological stage. The gap between one step and the next can be short but reaching the next psychological stage generally requires a longer time.

This is why certain ad types perform better than others during a specific stage or step. There isn’t an absolute “best ad”, but: banners tend to be better than SEO in the cognitive stage, while video ads perform better in the affective stage. Using CPA as the only indicator for the efficiency of an online campaign will actually maximize the likelihood of a purchase but only once that the user is already in the Behaviour Stage. Getting rid of banners is an easy way to lose a very big slice of the pie, represented by users that potentially could buy the product but without banners may not even know it exists. I believe the efficiency of banner ads can go even far beyond this model: in fact this is a model based on “consciousness”, since in every stage described something is happening at a conscious level…but what about our sub-conscious? In the last 10 years, studies on the brain activity has been widely quoted in the academic and marketing frameworks: As part of my academic studies I looked at Neuro-economics and the first thing you learn about the brain is that we do not know the brain We know what happens at a conscious level which is only 2% of our brain activity, but the remaining 98% is the “un-explored sub-conscious” which accounts for almost all of our decisions. When we choose something, we think we are evaluating data to take the best decision but actually most of our mind is already made-up and we are just fine-tuning what our sub-conscious has previously evaluated using a huge amounts of data (most of which are images and keywords) stored through perceptions in some “un-reachable” part of the brain. Data that we aren’t even aware of but that have had an impact upon us.

That’s why it is more likely that a man from Burkina-Faso will buy Coca Cola rather than any other soda. That’s why it is wrong and reductive to measure the efficiency of banner ads using a last-click attribution model (see the previous blog article from Harley on this issue) or to say expenditure on banner ads should be reduced.  For an advertiser wanting to maximize the efficiency of his/her campaigns it is important to understand the synergies between adverts. CPA with a last click-attribution model will often show SEO and PPC to be the best performing advertising vehicles. Using this logic, it then seems wise for advertisers to transfer all their funds to this kind of advertising. Nevertheless, by doing so, it is my conjecture that they will observe a drop in the overall conversions as they lose those customers in the Cognitive and Affective stages. SEO and PPC seem to perform better than other online advertising simply because current measurement practice is completely tailored to them. A smart advertiser will use mix of online advertising,  measured in different ways. CPA can be used at a “universal” indicator but then the attribution model must change appropriately to take into account how every different advert along the path to purchase has contributed to the actual sale: the focus has to be redirected to the big picture rather than on a single vehicle of advertisement.

to put it another way, strategic planning is pivotal to maximize the efficiency of a campaign: you can build the most beautiful table with a surface of ebony but if you want the table to stand properly, you should not forget to take care of the legs as well.

Rachael Morris is an Account Analyst at Infectious Media working on campaigns for clients in the telecommunications, technology, retail and travel sectors. In her day-to-day role, Rachael analyses large amounts of data and ensures campaigns meet their targets. Here she discusses issues around data privacy, recently brought into focus by the EU ePrivacy directive.

Images of Big Brother spring easily into the minds of a generation brought up on endless dystopia novels. We feel surrounded by governments whose desire to know all about their people is exceeded only by their fiendish organisation and ability to sift through reams of data almost instantaneously. Stories of leaked data abound*, growing ever more worrying as we realise just how much information we routinely put out into the world. And, much as we might like to say otherwise, this isn’t entirely unjustified: 90% of people have shared information with at least one site**. There is a lot of information out there about all of us. On the other hand, the sheer volume of data floating around is one of the very things that makes this sort of nightmare scenario so unlikely – the difficulty already involved in getting meaningful information about any given individual is only increased by the amount of noise that is now out there. Equally important is the fact that none of the information being made available is personally identifiable. It sounds like a small point, but the difference between the knowledge that Susie Johnstone was recently looking at flights to Italy and bought a bikini and the knowledge that computer 856076815463 did the same is huge.

Interestingly, the more people know about how the information about them is collected and what it is used for, the happier they are about it – after hearing details about behavioural advertising, 74% of consumers felt more comfortable with their data being used**. This kind of data and the ability to tailor the advertising served to someone’s needs and wants is what differentiates digital advertising from other forms, so it is vital that we reach some kind of consensus on what is and isn’t acceptable. The only way to do this is going to be opening a dialogue with consumers, asking their opinions and ascertaining exactly where their limits lie as well as making as much information as possible freely and easily available. Until consumers feel comfortable with the information we hold about them and how it is used, we will not be able to move forward and exploit the full potential of online advertising.

The recent EU ePrivacy directive heralds a change in the industry’s attitude to privacy. The requirement to obtain informed consent for all non-essential cookies will force advertisers into clear disclosure of the implications of a visit to their website. The difficulty lies in striking the appropriate balance – we do not want to adhere to the regulations at the expense of user experience. Over the next year, we will all need to work to reach a consensus on acceptable forms of consent, which best achieve this balance. As members of the IAB, Infectious Media is actively involved in policy development and best practice data usage in advertising, and we see this as a real opportunity for positive change.

*http://www.guardian.co.uk/technology/2011/apr/27/playstation-users-identity-theft-data-leak

** Statistics from IAB’s September 2009 study, in partnership with Olswang.

Hashmi Parmar is an Account Analyst at Infectious Media, responsible for strategy, set up and the day-to-day delivery and optimisation of client campaigns. Here she talks through some of her best practice guidelines around ‘network’ builds and optimisation.

In a business revolved around display advertising, one of the essential parts of getting a campaign to perform is to build an appropriate Network (a Network is a list of sites on which we choose to display our campaign adverts on).
Remember the phrase “Location, Location, Location”! Well, location can, arguably, play a major role in determining the success of a business. E.g. A clothes shop located on a high street will attract more customers than if it were located miles away from civilisation.

The same concept applies for online advertising. To get the best out of our campaigns, we need to locate our adverts on sites with high reach to our target audience.

Now we understand the importance of a Network, let’s look at how to build one. How do we decide which sites to add to our Network?

What not to do….

1. Rely only on standardised industry classification methods
2. Judge a site by its name
3. Classify sites once
4. Label sites- black and white
5. Adopt a “one size fits all” policy where you use one Network for multiple campaigns

Building Networks may seem simple, however, if you don’t get the basics right, it may be harder than you think!

What to do…

Start by answering these questions

• What brand safety measures should you take?
• Who’s the target audience?
• What are you trying to achieve? (e.g Conversions, Brand Awareness…)

Always bear in mind the answers to these questions while building your network.
Search for sites you can bid on, use keywords and categories.

CHECK THE SITE! Checking the content of the site is the simplest and most effective way of deciding whether or not it is appropriate for the particular Network you are building. Remember, if you label a site inappropriate for one Network, it could still be appropriate for another Network.

Now you’ve got the basics down continue building the Network with some smarter insights. What sites worked well in the past when similar goals were required? Could they still be relevant? Why would the audience be likely to convert? What sites are they likely to visit because of this reason?

Remember, be brand safe, reach your audience, optimise towards your goals. Get these right and you’ll get a network that works!

Harley Norrgren studied Statistics at University College London and after a two year tenure is currently heading up Infectious Media’s Analytics Team. Being with Infectious throughout their entire working relationship with RTB he’s had the opportunity to watch the space develop since the start of RTB’s European adoption.

Regardless of what you think about attribution modelling, we can all agree that whilst practically useful, last click models tend to see attribution as a yes or no decision. Is a model that negates all exposure¹  history, apart from the ultimate exposure, necessarily painting the most accurate and useful picture of which advertising spend is actually generating conversions?

Thanks to the increasing digitalisation of our industry, exposure level data is readily available for building much more sophisticated and informative models, which can inform more efficient budget allocation and increase ROIs for clients. Using statistical methods we can isolate the uplift on probability of conversion that each individual exposure has and therefore assign attribution on an ROI rather than binary basis: exchanging the notion of a single exposure driving a conversion with an each exposure has a small effect approach. Furthermore these models can be implemented at the start of a campaign and updated throughout the campaign at predetermined intervals, providing simultaneous analysis and reactive attribution which would reward the efforts of effective advertising rather than competing media buyers simply gaming some system for what is essentially a random conversion attribution.

Approaches like these do take more time and require more skill to implement than last click models but there are three compelling arguments for their use:

1. The potential return on investment and increased understanding of the conversion path for clients would outweigh the cost of implementation.
2. Advertisers are already implementing more complex attribution models for planning purposes.
3. The data is already available for use and the industry is coming to terms with dealing with data on a daily basis, change is coming so why should advertisers wait to be the last in line when they could be taking advantage of this data now?

To illustrate my point I’ve pulled some data from our platform on user behaviour under different retargeting conditions with a view to compare their behaviours against unexposed users.

We have chosen to examine the effect of aggressive retargeting versus less aggressive retargeting on a user’s propensity to make a return visit within 24 hours of the impression. Both types of retargeting will be compared against the natural return rate rather than against each other using a simple Chi2 test.

The aggressive retargeting (AR) group will be defined as users exposed to an advert within the same hour as the first site visit.

The less aggressive retargeting (LAR) group will be defined as users exposed to an advert between 24 and 48 hours after the first site visit.

For the AR group the results can be summarised as follows:

For the LAR group the results can be summarised as follows:

We found that there was no significant uplift on the return rate (p-value = 0.3354) for the AR group, but there was a significant uplift on the return rate (p-value = 1.327E-5) for the LAR group despite the overall return rate being lower. A last click model would have given attribution to the AR group and suggested that it performed better than the LAR group, but this is plainly not the case. An exposure level attribution model could discriminate between significant and insignificant exposures, assigning attribution to where behaviours were driven and painting a much more realistic picture of advertising effectiveness.

Furthermore, tying in campaign setup with attribution model insights generated on the client’s side has become easier than ever before: granular campaign targeting is available through most platforms so making the transition could be easily achieved on the buy side. On the client’s side, implementing and updating a multivariate attribution model based upon maybe billions of rows of data is no simple task. Yet the industry is already starting to rely on big data to inform their advertising decisions and when clients want the improved results others may be achieving they’ll be playing catch up if they don’t start experimenting now. So my advice is to start small and when the time comes for de-facto bespoke attribution modelling you’ll be ready for it.

Of course this is quite a small insight into a vast array of possible analyses that could inform attribution model specification and I’d be keen to hear your opinions on this.

¹ For more information on exposures and interactions, please see Measurement: The Elephant in the Attribution Room where we discuss measurement in attribution models.

Attribution is a massive issue right now and there are a number of innovative technology solutions that have been developed to give advertisers the ability to understand how different channels interact with each other. These solutions tend to focus on attributing value to impressions and clicks (interactions) further up the funnel and whilst this is a sensible step, it’s only half the story. It’s no good understanding that Display has a positive impact on Search without knowing how your activity can be altered to improve that impact. This has to start with measurement. We must delve deeper and assess whether these “interactions” were interactions at all.

Online was supposed to be easy. Actual, attributable intent and sales from advertising without having to spend the company’s pension fund on a piece of econometric analysis that you would neither understand nor trust. Last-click-wins gave us a benchmark to measure all our digital activity, allowing us to compare and contrast different channels and strategies in the same way.

But it was broken. Assuming that only the last click (or impression if no clicks were recorded) influenced a user to make a sale was not just wrong, it was misleading. Yet Display and Affiliate networks made huge sums building CPA businesses on this flawed methodology and when Search exploded on to the scene, no-one seemed to realise that Google had effectively stumbled upon the best exploitation of last-click-wins, using it to build the largest online advertising business in the world. Even now we have Criteo-style product retargeting and Affiliate voucher code sites that often snipe the last click like a seasoned eBay auction bidder, winning the best deals just before the timer runs out.

Times are changing, however. Marketers are now more savvy and are demanding a more accurate solution to the attribution problem. But before this can happen, we need to understand the complexities of online tracking a little more deeply.

When analysing online path to conversion data, you can typically find between 5 and 100 events that may or may not have influenced a customer before conversion. Since most adservers only record clicks and impressions, your conversion path will only include these metrics as events. Herein lies the first problem. Impressions are not ad views. In other words, just because your adserver has recorded an ad call, it doesn’t mean that the ad was actually served. Even if the ad was served, it maybe was not even seen, especially if served below the fold. In essence, although impressions appear more tangible, they are no more accountable than newspaper impacts.

The second problem is clicks. Clicks are seen as the only measure of engagement and intent online. But advertisers should be asking for more. Anyone who has done some click to page landing analysis will know you see anywhere from a 15% to 50% drop off. If your clickers aren’t even waiting until your landing page loads up, how engaged were they? Similarly, what about all the people that read the ad, maybe played with it a little, then returned to what they were doing before?

Clearly not all clicks/impressions are equal and on their own, do not provide us with enough information to form robust attribution models. Whilst you can create a model based on your current media activity, all it takes is some additional spend on some cheap, below the fold inventory or some incentivised click sites to skew attribution and devalue the sites that actually do generate true ROI. What is required is more information. Impressions need to be augmented with above / below the fold data, time and position on page and page context / quality. Clicks need to be supplanted by interactions and page landings. With these enhanced metrics we can begin to understand whether our adverts were indeed seen and how they engaged our target audience. Once we understand this, we can start to model it.

Luckily there are now many companies that can provide this data. The likes of AdXpose and Flashtalking can all provide interaction data and some of the impression tracking enhancements mentioned above. Page landings can already be recorded using existing pixel technology and many data companies such as Peer39 can provide page context. What stops us from running all these technologies across all campaigns now are the current incremental costs of such solutions as well as the technical difficulties in integrating this data with standard adserving data in one place.

Of course, having the capability to record this data is only half the story. Storing and analysing it at a time when most companies struggle to store and analyse their click and impression data is arguably a larger issue. Add to this the lack of statistical and analysis skills in most marketing departments, is it any wonder that marketers hide away from the problem and merely discuss the fact that last-click-wins needs to be improved but have no idea where to start?

Here is where RTB can help. RTB provides an environment that allows any company to exchange data with another, server to server, in order to better understand the impression being served. By providing the APIs to allow companies such as AdXpose, Peer39, etc. to integrate directly with DSPs and adexchanges, the integration problem goes away. Data can still be collected in two separate places but you have a common unique user id to match up the sets. Once integration is solved, costs can come down as more advertisers will take up the service introducing economies of scale.

This still leaves the data storage and analysis issue, but creating a fast and scalable storage and analysis infrastructure is not as difficult as it used to be. Companies such as Netezza and Greenplum can do it for you for a price. Alternatively, if you can afford the time to investigate and implement open-source platforms, solutions such as Hadoop and InfoBright can also work just as well.

2011 is going to be a year where these technologies combine to allow us to better understand all that our advertising is delivering. Soon there will be no excuse for marketers to stick with last-click-wins as we will be able to provide robust attribution models to support or oppose our hypotheses. When this happens, we will not only be able to better understand the value of events leading up to conversion, we will also open up the door to more branding activity being placed online.

There’s something happening at Facebook.  Almost under the radar it seems that they have established one of the strongest online advertising platforms available which is disrupting the established digital media buying landscape.  A simplistic view of digital media buying is that there are two very clear disciplines, ‘search’ and ‘display.’  Search is 100% platform traded whilst a growing portion of display is now starting to be platform traded via real time bidding (RTB).  This certainly seems very neat and Google have been in pole position to offer an over arching digital advertising management platform, the acquisition of Invite Media being the latest display addition to the existing, ubiquitous Adwords search platform.

However somewhere in the middle of this neatly bisected landscape, Facebook have started to build their own advertising empire, ignoring this equilibrium, and fast creating what would appear to be a completely new channel. In 2008 this quiet revolution started with the release of their self service buying interface for ASU’s (Facebook’s proprietary ad unit) and to complement this came a buying API on which they have allowed a limited number of third parties to build out campaign management tools.  At the start of this year, the walled garden approach started to pick up pace with the removal of all third party banner advertising and the under reported but very significant release of the Facebook conversion pixel.  Add to this an unwillingness to accept third party view tracking (at least for self service buyers) and the platform becomes a hybrid of the existing search and display models that are already prevalent but powered by Facebook using micro-targeted demographic and interest data.  Walled advertising gardens are the preserve of the audience or perhaps more crucially the data rich, and Facebook has both in abundance.

Rumour has it that their standard ‘banner’ CPM’s were incredibly poor with response rates for advertisers to match.  With the new system, advertisers now have the opportunity to tap in to the vast (and bettered only by Google) data treasure trove that Facebook holds on its users and create highly targeted campaigns.  Our experience of advertising on Facebook via their self serve platform is that it performs incredibly well for advertisers and justifies the ‘channel’ label with an emerging trend (in the UK at least) being Facebook specific pitches separated out from the rest of digital media buying.   Revenues are growing exponentially as well, up to $700m in 2009 and predicted to be over $1bn in 2010.  It’s safe to say that with this type of revenue and growth that banner advertising will not be returning to Facebook any time soon and they will push on with new ways to mine user data for advertising purposes all within the confines of Facebook.

So an interesting dynamic is emerging with Paid search, RTB traded display and now Facebook all having bespoke buying systems that are needed to operate them.   A couple of platform companies from both the search and display space backed up by large amounts of VC money are trying to solve these interoperability problems with the vision being a universal buying platform.  However, the further down the walled garden route Google and Facebook go, the more difficult it will be for this to become a reality as data is not portable between these environments.

From a media buyers perspective this is frustrating, but then it’s only from this side of the fence that interoperability make sense.  After all, would you share your data, if you were sitting on the monopolisitic advertising goldmine that both Google and Facebook are or would you keep it behind closed doors? It’s a smart play and the early signs are that Facebook could well be here to stay as a channel in its own right.

There’s been no shortage of informed comment and speculation recently about what Google are planning to do with their latest acquisition - Invite Media. The announcement this week that Google has announced a partnership with Omnicom to build them a global trading desk in return for ‘millions of dollars in display ad spend’ offers more than a few clues as to what Googles strategy may be.

Let me throw one possible scenario out there.

Invite becomes the UI gateway/ optimisation engine for Google’s display business. They integrate it with their dynamic creative solution Terracent (another recent acquisition). They give this away for free to their large advertiser and agency clients (such as Omicom), under the guise of a supply agnostic platform, and slowly start to integrate and sell access to proprietary data and audience segmentations (Google Analytics, and Search data cover pretty much the whole of the funnel)!

It makes operational and commercial sense that they would….

Adsense and Google owned and operated (e.g YouTube) inventory represents a massive slice of supply in AdX, and generates ‘high margin revenue’ for the Big G. They also make money (less) from every other supply source flowing through the Adx (e.g Doubleclick inventory) .  Seems quite obvious that Google would offer media buyers a free tool-set to help them buy more from them. The cynical of you out there may take the view that packaging it up and spinning it as a platform/ supply agnostic DSP makes their clients less suspicious of their motives.

Another reason why Google may want more control of the DSP trading interface market is that it will allow Google to take more control of the audience segments (data) that ad buyers build when they trade via a DSP. Presumably someone at Omnicom has thought about this, and has a tight contract with Google around data ownership and usage.

Microsoft (AdECN) and Yahoo! (Right Media) have got some serious catching up to do. At the time of writing, both are still in closed beta trials of their RTB capabilities. What happened last time Google were given the space to develop a lead like this…?

There are many knock on implication of this recent acquisition and potential strategy outlined above. Here are a few of them….

1 - It commoditizes core DSP technologies and RTB supply integrations.
2 - It changes the exit scenarios for other DSP’s and will undoubtedly intensify pressure for quicker exits from major DSP investors. Will Microsoft and Yahoo! make similar moves for other DSP’s?
3 - It changes the focus of the value proposition for other DSP’s and demand side trading organizations away from predominantly tech focused, towards smart data and service layers (on top of good technology and infrastructure).

I may be totally wrong about all of this, and no doubt Google are already thinking 15 steps ahead of anyone else, but it will be interesting to see how things play out in the next 6 months.

Picture the scene. It’s 2004 and Scott Ferber, one of the founders of Advertising.com, is giving one of his inspirational companywide speeches via WebEx. The slide is showing “Ad.com 2.0” when Ferber delivers his vision: “We want to be the eBay of online advertising!”

He went on to explain about how their AdBid technology, which allowed customers to set their own CPMs, CPCs and CPAs every day, had ended up increasing rates as customers saw for themselves the effect on volume as each rate was entered into an auction for each impression. The natural progression for this technology was setting up an advertising marketplace where buyers and sellers could come and trade inventory, setting their own rates depending on volume and ROI goals and all benefiting from AdLearn, Ad.com’s proprietary optimisation algorithm.

Fast forward to late 2007 and I’m sitting in a Right Media introduction meeting whilst working for Media Contacts (Havas). They talk about marketplaces, buyers and sellers trading inventory and auctions for each impression, all benefitting from a unique optimisation algorithm. All the agency people around me are becoming excited and start discussing how best to make use of this new concept. I’m sitting in the corner looking at my peers wondering where they’ve been for the last 3 years.

Then it hits me. #1 Ad.com never ended up releasing its marketplace to the masses. Whilst it had the technology, it instead used it to bolster its own network preferring to keep the concept proprietary. #2 as a result agency people had never been given the ability to buy inventory in this way before. This 2nd revelation turned out to be a bit of a curse as well as a blessing, but that will be the subject of another article…

So fast forward again to 2009, Real Time Bidding is all the rage, and I’m once again scratching my head wondering what all the fuss is about. Surely exchange bidding is real time? And if not, surely this is a simple natural progression of the technology that would happen behind the scenes with no big song and dance, after all, exchange bidding had certainly been sold as real time up until now. Then I read Mike Nolet’s excellent blog on the subject and, happy to be away from marketing hype and down to some proper techie speak, he provided the gem that made everything fall into place.

No more redirects. Proper, back end integrations. Smart software running on big iron. It all seemed so much more elegant than our current discrepancy ridden, chaos ensuing redirect methodology. By doing all the complicated stuff in data centres housed in military style bunkers rather on users’ desktops, you not only make the whole process much more efficient, but through the easy and open exchange of data, companies can become truly specialist in a particular niche. Instead of all adservers having to have their own retargeting technologies, you can just plug in someone else’s data. Similarly behavioural companies will not have to build their own adserver in order to sell their data.

Mike Nolet talked to me about the problem with the Right Media ecosystem. For it to work, everyone had to be using Right Media. This was the same with Advertising.com’s version a few years previously and both these companies have suffered as a result. RTB is different as no one company “owns” the standards that build this ecosystem. Much like the growth of internet, the use of open, agreed standards should provide the basis for every kind of company that wants to trade in the ecosystem to flourish, instead of being held back by a poor adserver, reporting system, or other commoditised technology service.

So what’s holding it back? Well until a critical mass of companies buy into the concept, it will remain niche. Up until now, trying to be the one stop shop for online advertising was the goal for many a network (and agency for that matter) and this may take time to unlearn. However, much like Microsoft, the once great monopolist, is now seeing the benefits of using open standards across at least some of its products, so too will networks, data companies, behavioural specialists and dynamic creative providers (to name but a few).

Of course, these companies could follow Apple’s lead and try to keep everything proprietary. It certainly works for Apple (most users do not care that they are locked in to a single platform since the product is so good). But are there really any online ad companies that would boast that their products / services are as good as Apple’s? I await with interest…

Martin wrote an interesting piece recently for AdExchanger on the European 3rd party data market.