Over the last twelve months the focus of our industry has moved from a strong emphasis on 'the site' to an emphasis on 'the audience.' But why? And what about focusing on something at least as important... 'the placement'? 

When you think about it, the 'why' seems simple enough.

From an advertiser's perspective, any given site certainly has a high percentage of a specific audience that can be described and targeted. Still, though, on average the targeted audience is not anywhere near 100%, but rather more like 60%.  If that holds true, then one would assume 40% of a budget targeted to a site is, at least, semi-wasteful. Hedging against this wasted marketing budget has been one reason that 'audience' targeting has gained in popularity.   In addition, there are lots of sites where the core audience may be an undesirable demographic, but a handful of the visitors are of the desired demographic and therefore valuable to the campaign.  This is yet another  reason why we are seeing the current shift from site buying to audience buying.

 At CPX we have focused on audience buying since we started in the direct response realm, and, as anyone in direct response knows, to achieve the highest CPMs on the traffic you purchase, you need to find the exact right product to advertise to the exact right person every second. 

Brands have seen the clear success in direct response and it seems they’re following that model. Still, one other thing CPX has always focused on that brands have yet to catch on to, is the importance of 'placement'.  Regardless of having the exact right message to the exact right user, it will never be of use if the ad isn’t seen.  The ability to make sure that the user actually SEES the ad being served is one factor which has lead to the great success that CPX has achieved. 

Our campaigns generally have some of the highest CTR and Conversion Rates in the industry, and it’s no secret as to why.  We’ve made sure the placements we buy are immersed in the content the user is viewing. This is why our response rates are so terrific.  Whether we are serving a pop up on a parked domain page or a cube sized advertisement right in between the content of one of our publishers, we can be sure that if it’s the right user, they will click, and they will convert.

At CPX, we have spent the past two years bringing that same quality to brand advertisers who want their messages to be seen as we have been doing for seven years in the direct response world, with significantly positive results.  So if you’re wondering why your campaigns aren’t performing as well as they should, or why, even though you have the perfect audience on a mix of the highest quality of sites, from an ad network/site you feel comfortable with, then ask yourself this: Is that ad being served in the most desirable position?  If it isn’t, then I’m sure you know what to do...and while I don't necessarily mean 'call CPX'... it couldn't hurt.

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Last week, I had the pleasure of taking part in the IAB Long Tail Alliance Fly-In. I joined with small publishers in an effort to explain to Congress how the new proposed legislation from the Boucher Bill would affect small business online.  A handful of small to medium sized publishers, along with some members of the IAB board, and a representative from Burst! Media, joined myself and a colleague in attending the meetings. 

We were split into about eight groups of people who would each petition 5-6 members of the Senate or House.  The process was very straightforward and interesting: our lobbyist walked into each office, confirmed the person we were meeting with was ready, and in we went. Ultimately, the reps were very personable and seemed very interested to hear what we had to say...and talk we did.  We explained why we believe cookies are beneficial, and the importance of the fact that IP addresses are non-personally identifiable pieces of information. 

It was clear that the staff of each congressperson had a different level of education on the matter.  Some understood the clear problems the bill would create, while others didn’t really understand cookies and how they worked at all.  In the end, they were all interested in hearing about the cause, and were happy to help in any way they could.  Although we are still far away from real legislation on these privacy concerns being enacted, it is still going to take a lot of work to convince everyone to be on the same page.  In the meanwhile, I hope that if you know someone in Congress, you can help us pass along this great video which clearly explains why a world without cookies would destroy the Internet as we know it.

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So what is an ad network's take on the recent acquisition of Invite Media by Google? What do other DSPs think of the acquisition? Was 70 million a good number, an okay number or a great number? What does Google plan to do with them, and why did they buy them? I can't answer all these questions, and most are just my opinions, but I'll take a shot.

Being in this space so long, one tends to know things, such as what margins your competitors take. I've heard through the grapevine that the average DSP takes 15%, so let's assume what I've heard about Invite getting 12x net revenue is accurate also, and we can assume Invite was managing somewhere between 35 and 40 million in revenue. Considering the overall landscape of online display, this is a small number. So, why did Google rush to acquire them? Do they see a lot more revenue coming from this channel, or did they just want to bury it before it took off? What doesn't add up for me is, if Google thinks enough revenue is coming that it's worth 70 mm to buy it, then why did the VCs and owners collectively decide to sell out so short? One can assume if display continues to ramp worldwide, and a platform like Invite could manage 1 billion in ad spend, then they could be doing 150 mm in net revenue and be worth over a billion.

So what am I missing here? Is the reality that no one values DSPs as much as the hype? Are there hinderances that we don't see or know about since we're not on the inside, that would prohibit them to ramp up so heavily? Not to mention, will holding companies like Publicis really accept Google managing their buys across multiple exchanges, including their own? Does this leave Cadre On and Vivaki without a home? Are they going to build their own Invite and that's why they didn't try to acquire?

I, for one, don't know the answers to all these questions, but as a strong company in the display space, I'm certainly glad Google is spending 10+x multiples of net revenues on companies in this space. At the end of the day, good for Invite, good for Google, but something doesn't seem right to me. What about you?

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Not only have ad network and publisher relationships changed over the years, but so have the relationships between ad network and advertiser.  No longer do advertisers need to rely on ad networks to bring them inventory from publishers in bulk. They have choices: exchanges, marketplaces, supply side platforms, demand side platforms, and more.  The advertiser now has the ability to execute on his own, whether an agency, direct marketer, or just a broker, they no longer need the traditional ad network.  However, that doesn’t mean that today’s new age ad network isn’t needed, and can't provide a true "out of the box" solution to increase the likelihood of success for advertisers.

Today’s advertisers need to force their ad networks to provide more than inventory to arbitrage, or they should find a network that provides these new options.  At CPX, we focus on providing value through service, and the ad network landscape needs to change towards that model if we are to survive.  The things ad networks can bring are: insight into inventory trends, high quality relationships with publishers, enhanced technology for arbitraging these new options, as well as the strategy behind how our advertisers can increase their objectives through online media.  

While many agencies may say this is their job, the truth is, their job is so much more. By allowing the ad network to help with the strategy of how to increase goals through online display media, both the ad network and agency can benefit from happier clients who want to spend more dollars on online advertising.  As media becomes a commodity, agencies and ad networks have decisions to make: we can change the way we interact, or we can continue to bump heads until one of these new entities cuts us out altogether.  We may not be able to see how agencies could get cut out of online advertising in the future just yet, but then again, we never thought media would become such a commodity that the traditional ad network would become futile.

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As I sit at my desk, a little bored towards the end of a long Wednesday, I decided to just ramble off points about what I think will happen to DSPs and ad networks in the next 24 months in 10 points:

1 – All agencies will own a DSP, and if you are a DSP and not owned by an agency, you will wash away.

2 – DSPs will become less and less relevant, as exchanges begin to build more intuitive interfaces for themselves.

3 – CRMs will be created to manage all exchanges that will be licensed, and not take a % of media, making all agencies realize they might have made a mistake buying a DSP and not waiting.

4- Exchanges will never break out of the lower end of the ad chain, and it will still continue to be Direct Sales/Ad Network/Exchange.

5 – Agencies and advertisers will soon realize they cannot execute an effective campaign utilizing exchanges, and while it’s a nice addition to running a campaign, it can never make a campaign. Therefore, ad networks will still be the best alternative to direct media buying.

6 – Ad networks will continue to innovate, in terms of plugging into exchanges and supply side platforms, to build custom audience segments using data. This will finally be perceived as of tremendous value for agencies and direct advertisers.

7 – Supply side platforms will still exist, and become more and more like exchanges, and less and less like ad networks.

8 – Ad networks will buy more and more unique inventory by arbitraging site traffic at proper cpms, ensuring publishers they will get what they need for their inventory.

9 – Publishers will start to see the real value of ad networks as they gain higher cpms from them. They will also realize that an exchange cannot give them control over cpms, and therefore will only put bottom of the barrel inventory on them.

10 – The ad network and agency relationship will go back to the way it was before all the exchanges and DSPs, except now the ad networks will be back on the cutting edge and continue to innovate for agencies and direct advertisers.

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1704 – First Newspaper Advertisement Placed

1742 – First Magazine Ads

1843 – First Advertising Agency

1882 – Proctor and Gamble Start Advertising

1917 – First Agency Trade Association Developed

1929 - $12 Million Spent Advertising Lucky Strikes

1939 – TV’s First Baseball Game Aired

1954 – CBS Becomes Largest Advertising Medium in World

1976 - The Supreme Court grants advertising First Amendment protection.

1980 - Ted Turner creates CNN

1986 - Needham Harper Worldwide, BBDO International, and Doyle Dane Bernbach merge to create Omnicom Group, the largest advertising company in the world

1988 - WPP acquires the Ogilvy Group for $864 million, the highest price paid for an agency

1993 - The Internet becomes a reality as 5 million users worldwide get online

1997 - WPP combines the media operations of JWT and O&M to form The Alliance, the largest U.S. media buyer with more than $2 billion

1999 - Internet advertising breaks the $2 billion mark and heads toward $3 billion as the industry, under prodding from Procter & Gamble, moves to standardize all facets of the industry

Okay, so now you can start to see how advertising and mediums for advertising started in a linear fashion.  I haven’t added anything from 2000 on, because that’s when it just starts to get crazy, and the exponential growth goes wild.  Think about how long it took for advertising and agencies to start moving when magazines or TV first started accepting advertising, and look at how short a period it took for online advertising to explode after the Internet was embraced by millions. 

Now, the choices are endless, between TV, Print, Online, and Mobile, then it breaks down to Video, Display, Search, Wap, Mobile Apps, In Game, Virtual Currencies, and on and on it goes.  Mix that in with all the choices today for managing your ads, ad servers, crms, optimization, transparency tools, online exchanges, supply side and demand side platforms, ad networks, and who knows what’s next to come.  I guess the overarching point of all this, is that the landscape of advertising is in such a rapid state of change that agencies and advertisers can no longer expect to be able to do it all, they need to start relying on companies that understand the ever-changing landscape to help get their clients' messages out to the world.  

So, I propose the new ad network is one company that can do just that, and at CPX we plan to make sure we understand every inch of the landscape, to provide our clients with the most sophisticated capabilities on the market every second. I could sit here and write a book about this concept and really dig into every last date to show the real exponential growth, but I have way too much work to do, and writing books is not my forte... but, who knows, maybe one day I will. 

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Over the past few years, the publisher ad network relationship has changed, as it should, but that doesn’t mean we can’t adapt to this ever-changing landscape together.

When I started my very first ad network, it was clear that, although the main purpose of an ad network was to aggregate publishers so that they could monetize some of their unsold inventory, it wasn’t going to stay that way.  And sure enough, it didn’t.  Today, publishers have so many choices, they can not sell their inventory to ad networks and monetize everything through in house sales, they can use an exchange, or they can even use a supply side platform so they don’t have to deal with any of the hassles.  While these new options certainly give the publisher choices to have their inventory for sale, none of it allows the publisher to truly understand the exact way his inventory is being monetized and how he can do it better.  The truth is that it's the ad networks that messed up by looking at inventory as our commodity rather than the publishers' commodity, and now it’s just that, a commodity. But, it doesn’t have to be.  

The roots of what should be underlying the ad network and publisher relationship are about partnerships and service. Any piece of technology on the market today (exchanges, supply side, marketplaces) can put your inventory up for sale, but to truly extract the real value needed, a relationship must be created.  By creating a close relationship with your ad network, you can be in control of how your inventory is being sold, for example: What channels it’s being sold on and for what prices,  what units will bring you the most value,  how you can offer outside the box deals to close more sales, how cpa deals can be arbitraged to make you the most money, on your terms, not just un-approving creative, but by working with the ad network direct to change those creative to what you need while getting the visibility into how that will change pricing.   Together with an ad network, you can create value on new ideas that they may be able to monetize for you, you can start a new unit and have a full sales team behind you, and so much more.
 

At CPX, we value our publisher relationships, and we challenge our publishers to prove that a quality relationship with your ad network won’t bring you increased cpms, increased revenues, and new ways to monetize your sites.  No technology can replace the true value in a dedicated sales partnership between a publisher and his ad network.  

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Being a successful entrepreneur, I get this question a lot. It took until my second nomination for E&Y Entrepreneur of the Year Metro NY to realize the answer was more than just a lot of luck and hard work, and although that had a lot to do with it, it is so much more.  

Looking back at when I started my own company, I realize that true vision and risk was what it was all about.  Every step of the way, I always had so many opportunities to take the “easier” road, whether that was getting a job out of college, or taking some startup capital, or taking VC money at valuations I didn’t agree ,with or futures I didn’t feel were right for my company; risks were the real success.  

To be a successful entrepreneur especially in today’s world, a great idea is nothing.  Everyone has a great idea, and everyone wishes they could execute it. The reality is you can, you just have to commit.  Commit to a life of hard work, a potential for failure, and a clear vision, and you just might be able to make it as a successful entrepreneur.  So, if you have that great next idea, I implore you to heed my words and go for it. But, if you're not going to give it everything you have and risk it all, then wait until you can.

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So, while watching TV last night, (on DVR of course since I rarely have time to catch my shows when they're live), I decided to see what commercials I was skipping and if I was the right audience for them.  So, instead of fast forwarding through the commercials during 60 Minutes, I watched and saw the following:

• Commercials for drugs I don’t need, and symptoms I don’t have.
• Commercials for food I don’t eat.
• Commercials for cars I won’t buy.
• Commercials for the kids I don't have.

Seeing how this is clearly ineffective marketing, and the broad audience of 60 minutes is wide enough to include people who would respond to these messages, as well as lots who won’t, it would make sense for these companies to turn to the Internet. But, the truth is, very few are, and even those aren't spending significant dollars.  Not only were these ads not targetted properly but notmally I would have just skipped over them.  In addition, when these brands do come online, they will want to just advertise on 60minutes.com, since that is what they are comfortable with, and even though I am a regular 60 minutes watcher, I have never gone to the website.  In fact, I’ve seen more relevant ads on my USA Today Ipad app, as well as a few of the websites I regularly view.  Taking that into consideration, as well as the wealth of data available for targeting online today, why would brands continually choose to advertise on such an inefficient medium?

On TV, they can try to hit a type of audience that watches a certain type of show. Online, I can target a guaranteed consumer who has previously shopped at my store, or been to my site, someone who has personality traits similar to others interested in my products, or even demographics that are similar.  Yet, these big brands waste their dollars, and since they are mostly public companies, their share holders dollars, on completely wasteful advertising.  One day, there will be no TV and we will all be watching on our portable devices with efficient advertising, but until then, I’ll keep begging these big companies to try something new, well, newer than TV anyhow.

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Over the past few years, you have heard things like this over and over again.  A network announces that it is now able to do a survey in a creative, or they can prove brand lift by plugging in dynamic logic, or we can optimize based on data.  These announcements are nothing more than smoke and mirrors.  The truth is, any quality ad network is capable of doing all these things at all times.  The top 20 have been doing this in survey banners, video ads, pointroll, page takeovers, eye blasters and more.  Every day I log into my email and see another imedia daily with some other small ad network announcing this huge partnership or new unit they’ve launched that is phenomenal for CPG, or Pharma etc…  I hate repeating myself, but don’t get caught up in the hype, these things are nothing new. Again, all of the top ad networks have been doing this for years and will continue to do so.  Agencies just need to work more closely with their ad network partners on strategy so they are fully aware of the real capabilities.  This is all about planning. With proper planning, most things you can dream of can be accomplished in the digital space.  At least at CPX we feel confident that we can provide you with exactly what you need for your brand if we just spend a little time and energy together.  The next cookie cutter tool announcement is not the answer to getting big brand dollars online, it’s strategic thinking.

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Okay, so maybe the title is not that accurate as to what I’m talking about, but it’s a great analogy as to what has been going on in this digital industry.  If you peruse adexchanger.com, you will see down the right hand side of the page, various categories of digital businesses, followed by links to companies websites that participate in that sector.  Things like Yield Optimizers, Data Exchanges, Exchanges, Servers, Analytics, Creative Optimization, etc...  All of these new technologies have been popping up month after month now, so much so, that an entire business has been created around reporting on them.  I know a lot of people in the digital space, some very high on the totem pole, and I can guarantee that not a single one of them can define each category accurately.     

The real problem is that there are hundreds of billions in advertising dollars that need to be pushed online, and rather than work together to create partnerships that can bring these dollars online, we are all fighting to take a small percentage of the dollars currently online.  All of these companies are being created because brand X wants visibility, so they will try and create a technology that can provide it for another 10% of the dollar.  All this does is create increased confusion, more work for the agencies, a longer thought process for the brand, and significantly less dollars going to the publisher, who, at the end of the day, is the only piece of the puzzle that truly adds value. Without them there is no online advertising.

We are all at an interesting crossroads right now where we actually have the ability to band together and force all of these extra pieces out.  This will allow the true pioneers of this industry to continue to sell cost-effective media, and make the margins we deserve, including the publishers.  I will put this challenge out to all you pioneers, meaning the agencies, ad networks and publishers:  Let’s partner. Brands need transparency, let’s provide it. That doesn’t mean they have to peer into the cpm of every site, but let’s provide real visibility into where the ads are running.  Brands need optimization. Guess what? The ad networks have it. Brands want more cost efficient media, then partner with your networks to allow us to acquire the media you need at the price you want, rather than allowing hundreds of aggregators to control the publishers, instead of those who are paying the bill.

My COO recently had a meeting with a large agency, and the conversation was spot on. The future is in partnering with each network and giving each one a single brand to work on, so we can extract maximum value and there can be clear focus.  If an agency has 10 brands they work on, they can find 10 networks, one for each brand, so there can be true efficiency.  This way, each network can do what they do best and there doesn’t need to be overlap, uncontrolled frequency, fighting over post impression conversions and attribution, etc... If only every agency thought like this, maybe we could bring some real dollars into this space.

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