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Audience: Display Advertising’s Cat in the Hat?

Things

Display advertising, which at one time looked like the web’s glorious channel is now a glory hole for direct marketing. In many respects brand advertisers have themselves to blame, not believing that a click is branding and fumbling around with poor microsite driven strategies that have zero ROI. The fact of the matter is an interaction experience anywhere (in our case the click) is an opportunity to create an emotional attachment with your product or service.

So while half the blame for the display implosion rests with strategy the other half rests with technology. Listening to the display industry of late you might believe that the worst is over – that a second coming of display is upon us. Emerging from the wreckage are two saviors that marry new technology with emergent strategy to blend performance with brand. Let’s call them Thing 1 and Thing 2.

Thing 1: The new mode of buying display ads is about buying an audience

Thing 2: The new mode of buying display ads is about using data to optimize

If you recall in The Cat in the Hat, Thing 1 and Thing 2 fly kites around to amuse the advertisers err, children. Ultimately the kids capture the Things and the Cat in the Hat cleans up the mess that was created. Then they all disappear.

In our story Thing 1 and Thing 2 will not clean up the mess that is display advertising either and the disappearing part is ominous. I will follow up soon with a post on issues around data and optimization (in the meantime here is a great look at the challenge from AdExchanger.com) but first I want to first examine Thing 1 - the idea of buying an audience vs. the old way of buying impressions.

Audience: Audience is a group of people collected together in a single place and time. They don’t need to have similar attributes but they share some common interest defined by expressed actions or attendance. The presence of audience is by itself worthless (unless they have bought a ticket – subscription & pay4play models). The value resides in the emotional state that allows for the success of persuasive efforts. This disposition is almost always temporal in nature and as such is something that is most effectively targeted in realtime systems (like search). This is one reason why display consistently fails.

Audience information is useful to target messaging that triggers a response but the underlying emotional state is best mined deep inside the publisher’s content. Search works in a large part because it is content driven. But make no mistake, the dynamic content delivery controlled by the user is still present in publisher environments. What is not built in is effective solutions to derive revenue from the goals of the user and leverage that moment (the kairos).

So if at its core an audience is about interest, intent and action how does this fit in with the buying models now being touted? Data and observation have taught us that online demographics & personas are meaningless for optimizing performance. The web is a user-controlled medium so just like the actions that define people we need to segment and target based on what people are doing, not who they are (as defined by what they’ve done).

Don Norman calls this Activity-Centered Design. He also rightly points out the weakness of human centered design approaches to dynamic sequences -- the very backbone of the event driven medium that is the web. My own optimization work has only validated these same ideas qualitatively and quantitatively across dynamic content and advertising. People are not predictable, but their actions can be a window of predisposition to certain messages and information.

Impressions: If we are being honest with ourselves as an industry the only reason we are moving to audience buying after a dozen years is that impression-based buying/selling has run its course. The problem with buying impressions in display is only that no one actually clicks on the ads. The strategies and platform are of a different time and medium and consequently the ads suck. If we knew CTR would be this bad no one would have ever built this type of system.

On the back-end most of the problems stem from the different goals each participant (publisher, advertiser, visitor) has. This causes multiple inefficiencies or optimization conflict. Display as it exists now is further expanding the delta between the value of publisher’s visitors & content with the revenue generated from third parties. This is not sustainable business for anyone. Eventually in digital optimization no one wins unless everyone wins.

The funny thing with impressions is that when the ads are good you can actually give away the impression for free. In Search the goals of the users (relevance) the advertiser (ROI) and the publisher (revenue) work in lockstep, each helps optimize the success of the other. Search validates the idea of activity targeting vs. audience targeting. This is realtime and dynamic -- what people are doing and what is effective in persuading them to do something.  Proof that audience targeting isn’t needed? Besides language the Google homepage is the same in all 233 countries and has grown to dominate global search. 

Cleaning Up: As the web has become more complex band-aid after band-aid has been added to try and make display work.  Everyone has known about its poor performance for a decade yet few have done anything about it. Those few that have successfully created new ad platforms have not surprisingly had huge exits. However that innovation is now 5-10 years old. The “lost decade” for VC in digital advertising was due to investment in layered approaches to an underlying faulty system rather than brand new ad models (though entrepreneurs surely share some of the blame). 

It’s never too late to build new systems and it seems the need is becoming more obvious. Just yesterday Bernard Lunn of RWW made his siren call. It is my belief that in order to work new solutions must have a ground up approach where the core inputs are content and realtime events and the trigger mechanisms are visitor attributes. Just like the timing needed for ad persuasion, the current rise in APIs, realtime data, IR, semantic tools and desperate publishers signal that the time may now be right for a different conversion event.

More Thoughts:

Brand Marketing in the Digital Age

The Power of Brand to Influence Outcomes or Why Brands Will Always Rule Digital

Platforms, Applications and the Future of Digital Marketing

The Brand Optimization Revolution - The Metrics are Coming! The Metrics are Coming!


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