SAN FRANCISCO -- Online publishers and portals want to beg, borrow or steal media dollars from marketers' TV and other offline media budgets, but exactly how they do so? Broadband video advertising is at least one strategy, according to publishers, portals and technology providers attending the Ad:Tech trade show here. Their rationale: If the eyeballs are online, so should the dollars should be. Just how to aggregate TV audiences online was the topic du jour on Monday during the conference session "Leveraging Interactive Broadcast and Broadband." Chas Edwards, vice president-business development, CNET Networks, said consumers find TV commercials online less intrusive than when the same spots are viewed on TV. He cited Yankelovich research showing that 64 percent of consumers find TV ads extremely annoying and 77 percent of TiVo users skip commercials. Edwards said CNET would eventually replace most of its graphics with video. ESPN Motion Director and General Manager Ed Davis, and AtomShockwave CEO Mika Salmi both said their video products were designed to be downloadable in order to maintain control over the quality of the video delivery. Davis said a new feature on ESPN Motion would enable users to send video clips to friends who haven't downloaded Motion. Despite the fact that the application must be downloaded versus the company streaming it, ESPN's Motion product has been popular with advertisers and users. ESPN.com is selling Motion inventory during the broadcast network and cable upfronts. In fact, one-third of the ad inventory on ESPN.com is earmarked for Motion, according to Riley McDonough, VP-advertising, ESPN.com. Microsoft's MSN, by contrast, is in no hurry to sell MSN Video Service inventory. "We are now preparing our sales force for general sales [of the MSN Video Service] but our business is not guided by the broadcast TV upfront," says Stephen Moss, general manager, advertising and sales, MSN. Moss, who's been heading the east and central regions for MSN ad sales, has recently segued to a larger role, managing national field sales. Moss says MSN took a conservative approach to selling the video service which launched in January, "This wasn't about seeing how many advertisers we could sign on as quickly as possible; our goal is to manage the process well." Disney Travel and Sprint PCS have recently begun appearing on the service and MSN's streaming video evangelist Todd Herman says "6 or 7 new advertisers will start to appear" on the service in coming weeks and months. MSN's deal with Fox Sports, the portal's deal with ESPN expires June 30, is also likely to spawn new advertisers for the Video Service. The rise of consumer control, a la TiVo and the Web, is fueling online creativity, according to participants on a panel called "Leveraging Interactive Broadcast and Broadband, Impact of Brand Exposure Duration." Karim Sanajabi, executive vice president, Carat Interactive, showed attendees a campaign the agency launched for Adidas. The "Impossible is Nothing" campaign featured video ads that ran on MSN and Yahoo!. Sanajabi said the effort generated 5 million views and lifted brand awareness by 6 percent. Carat's campaign promoting MTV's Sunday Stew yielded a cost-per-thousand of $3.17 and generated a 50 percent increase in viewership. Maven Networks CEO Hilmi Ozguc showed an Internet video campaign promoting the film "Master and Commander" which generated a 26 percent click-through for ticket purchases. Maven technology powered downloads of the movie trailer and behind-the-scenes footage. A campaign to promote Virgin Music artist Ben Harper offered a "send to a friend" feature whereby senders could get a free, previously unreleased single to download. Ozguc says the online promotion helped triple Virgin's fan database for the artist.
Online ad spending expanded at six times the rate of the overall advertising economy during the first quarter of 2004, proving that it has reemerged as the fastest-growing segment of the media economy. During the quarter, advertisers invested nearly $2.3 billion on Internet advertising--an increase of 39 percent over the first quarter of 2003, and the greatest rate of expansion for the medium since the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers began tracking online ad spending in 1996. By comparison, the overall marketplace for ad-supported media is projected to grow only 6.5 percent during the first quarter, according to estimates from ad tracking firm TNS Media Intelligence/CMR. The TNS estimates are based on a forecast released in January 2004. TNS has not yet released its final estimates for first-quarter 2004, but another ad tracker, Nielsen Monitor-Plus, is expected to release its first-quarter estimates next week. While the first quarter was expected to be the weakest of 2004 in terms of overall ad spending growth, the IAB data indicates that the Internet is expanding at its fastest rates of growth since the original dot.com boom. In fact, first-quarter 2004's $2.3 billion total is actually $177 million more than the medium's previous peak of $2.123 billion in the fourth quarter of 2000. Internet Takes A Bigger Share Of Overall Ad Market Internet Total* Ad $ Ad $ Growth Growth Q1 '04 +39% +6.5%** Q4 '03 +38% +4.2% Q3 '03 +24% +7.3% Q2 '03 +14% +8.6% Q1 '03 +7% +4.9% Source: Interactive Advertising Bureau's and PricewaterhouseCoopers' Internet Advertising Revenue Report; TNS Media Intelligence/CMR. *Local newspapers, network TV, consumer magazines, spot TV, cable TV, B-to-B magazines, local radio, Internet, national TV syndication, national newspapers, outdoor, national spot radio, Spanish- language network TV, Sunday magazines, free-standing inserts, network radio, local magazines. **Forecast.
Local search is poised to take off. All it needs now is advertisers. This is a well-known problem in the local search market, and a new partnership between YellowPages.com and Interchange Corp. aims to address this issue by offering recalcitrant local advertisers a one-stop solution in the often confusing and fragmented local search marketplace. As MediaDailyNews has noted in the past, partnerships may be an answer to the disparity of fragmentation in a market used to consolidation. There are lots of interactive Yellow Pages (IYP) providers on the Internet, and it has been suggested in the past that this is one of the deterrents to growth in the local classifieds and listings-driven market. YellowPages.com and Interchange Corp. on Monday announced a private-label partnership that will marry the bid-for-keyword cost-per-click (CPC) paid search technology and distribution network of Interchange with YellowPages.com's reasonably well-known brand, traffic volume, and existing directory of advertisers. The new service will be called YPclicks; it will be powered by Interchange's Keyword DNA local search technology, which will create campaigns for advertisers on the YellowPages.com Web site in addition to Interchange's Search Distribution Network. Interchange serves over 100,000 national advertisers through its ePilot Web site and distribution network of over 170 search engines and Web sites, which delivers 3 billion searches per quarter. Alternately, YellowPages.com will have access to Interchange's ePilot paid search network of advertisers, whose text ads will be displayed on YellowPages.com by Keyword DNA. "Interchange is an important next step in our product offering. It allows YellowPages.com to provide more targeted search results for users and allows advertisers to pay only for potential customers that click on their ad," Dane Madsen, president and CEO of YellowPages.com, says. According to Heath Clarke, CEO, Interchange USA, it's not that local advertisers are reticent to move online because they don't have the budget for it: "I'd say that it's more likely that (small- to medium-sized enterprises) don't necessarily understand the online product at this point." "(Interchange) has worked with YellowPages.com to reduce the complexity of signing up, creating a keyword campaign, and managing that campaign," which he says in turn should simplify the crossover process. Clarke adds that adoption of the new medium is inevitable: "As long as there is a platform for advertisers to get in front of those consumers, then the advertisers will follow naturally."
Marketers, long frustrated by not knowing which half of their ad spend is wasted, have found a new ally in pay-per-click advertising models. Search and contextual marketing are good examples of this, but often, marketers have to bid against each other for placement. Performance-based marketing may be the next step in the evolution of pay-per-click advertising. Because of its direct response-oriented nature, many sponsored links providers--from Google with their new Smart Pricing plan to smaller sponsored players like Kanoodle--are also beginning to incorporate performance into their placement models. ValueClick subsidiary Commission Junction unveiled a more Darwinian variation of the performance-based model at the Ad:Tech conference in San Francisco Monday. Called CJ Evolution, the new product will make placement entirely contingent upon performance, placing optimal importance for advertisers on creative. The program uses optimization technology that grants more frequent exposure to ads that perform well while reducing the exposure of ads that perform poorly on certain publisher's Web sites. Currently, only text ads are supported by CJ Evolution, but Jeff Pullen, Commission Junction's general manager, says he sees an "opportunity to expand in the future. (CJ Evolution) is meant to be a complementary channel that is built on performance." He adds that the program is less an alternative advertising channel than an optimization tool. (The program) looks at conversions--"if it happens to be a contextually relevant place, great," Pullen says. Pullen maintains that Commission Junction will continue to evolve into a primarily cost-per-acquisition (CPA) network, even though advertisers currently bring their offer to Commission Junction for participation in CJ Evolution. Initially, Pullen says, the placement process for advertisers in the program is somewhat random, but as performance metrics are built, the program automatically optimizes the campaign for advertisers and publishers by placing ads on sites that perform well more frequently and by reducing placement on sites that perform poorly. Pullen says that beta-test results from advertisers and publishers have been "very positive." Commission Junction declined to disclose the names of participating beta-test companies. For the publishers, the process for admission to CJ Evolution is selective. Publishers are pre-screened; the program is generally reserved for top-tier publishers. As with most pay-for-performance models, direct response advertisers running concurrent search and affiliate marketing programs stand to benefit most from this type of program. Advertiser participation requires no additional up-front fee, and advertisers can choose to set caps as well as increase or decrease their spend at no additional cost.
Car dealers have "inventory." Storekeepers shutdown to do "inventory" once a year. Just what is online ad inventory? It is simply all the places on a website where an ad unit might run. Each site has a different amount of inventory. For example, if your entire site is a single page, you might have three places where you can place an ad. If you decide to turn over those spaces say, every 10 days, to new advertisers, your total monthly inventory would be 30 units. Those would seem to me to be fixed positions. What about ad units like interstitials, pop-ups and shoshkeles (that appear for a moment then evaporate). Are they also part of my inventory? And if so, how many do I have per month on my hypothetical one-page deep site? Yes, they too, are part of your ad inventory. How they are counted in your inventory depends on how long they run on your site. For example, since most buyers want to register clicks on their ads of this kind, you might have to run the units until you have served up all the clicks (or alternatively "impressions"). Let's say you get 100 unique visitors to your one-page site each month and you have sold a shoshkeles ad promising that it will get 75 clicks. You then are obligated to run the ad until 75 of your 100 monthly visitors have clicked on the ad. That could take 5 minutes, it could take 25 days; you might end up at the end of the month not delivering 75 people, so you either have to rebate some money to the buyer or "make good" the ad, that is, run it until finally 75 people click on the ad. How am I supposed to keep track of the inventory I have on my site, and for what period of time? Well, if you really only have a few pages on your site, you could probably manage with Microsoft Excel spreadsheets to track what inventory is available overall, as well as the inventory that's reserved by each sales person. But, using a spreadsheet becomes difficult to maintain as the website grows and more salespeople are added, or if you are partnering with a rep firm that is helping to sell along with your internal sales staff. Additionally, accounting for overlaps of inventory becomes difficult to do and many turn to using pivot tables within Excel. Not everyone is an expert in pivot tables. Overlaps occur when inventory must be accounted for on many locations of the website so as to not overbook available spots. Therefore many websites turn to outside vendor solutions to help them manage inventory in a more automated fashion. How can an outside system know the status of my inventory and further, help me decide how to price it? What's past is prologue. Outside systems can use historical delivery from the client's adserver as the basis for building inventory forecasts. This is how most inventory forecasting is done today. Capturing many data points over the past year gives a more accurate view of what the inventory should be. This is done for ALL locations of the site, so the client can run a query for any location to determine what the forecast is for any date. After the inventory management system builds all of this upfront information, it then maintains, in real time, what the site has for reservations ("reserved" inventory), booked contracts ("booked" inventory), and what is still available. This means that any time a reservation is made or contracts are booked, systems like ours will automatically update overlapping reservations to reflect this information. This helps the site keep from overbooking or underbooking valuable inventory. Outside systems cans tie in cost models and pricing at the reservation level, and thus track pricing for every aspect of the site's inventory. This translates very easily to tracking, over time, how the site is pricing their inventory in correlation to what locations of the site are selling out. The client can then proactively reprice their inventory up or down as necessary, depending on demand. Tom Pace is president and CEO of Solbright, a provider of sales and revenue management software for online advertising.