Jonathan Mendez's Blog

Audience: Display Advertising’s Cat in the Hat?

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!

Transcendence: The Power of Publishing is Marketing

This is getting tired. Recent comments by Jim Spanfeller and remarks at yesterday’s hearing on The Future of Journalism are just the latest show of disregard for the major changes that have taken place in the digital medium over the past five years.

As Grove said about technology, only the paranoid survive. Publishers haven’t been paranoid though, they’ve been sleeping through the transformation of the digital media landscape. Wake up! You can’t operate strategically the same way for 5 years in a row in digital. The technology moves too fast.

While content channels like search, mobile and social continue to rise and technology like APIs, JavaScript, XMP & RDF continue to advance publishers have made little to no investment innovating to provide better experiences with their content or revenue generation for themselves. Instead, they sat there like fat cats measuring all the free search traffic and impressions of countless display ads on their pages – and God forbid they do anything with that data.

**********

What’s become clear in the morass of low CPM and poor performance is that publishers can no longer rely on third parties to deliver revenue. The plunge has magnified an online ad ecosystem fraught with multiple inefficiencies – creative agencies, media buyers and planers, ad ops, networks, and on and on. Recent innovations like yield optimization and real-time bidding are only anesthetic on a wound bleeding from both sides.

Solving the revenue problem requires publishers to look in the mirror and take matters into their own hands. There have been small moves in this direction with marketing technology/services acquisitions by Cox, Glam and Meredith. Still, too few publishers understand to survive they need self-reliance.

**********

Ironically or not, the best example of these ideals for publishers springs from the same area as Emerson himself, TechTarget (full disclosure: TechTarget is a previous client while I was at Offermatica).

If you don’t know Tech Target your sys admin does. They operate over 50 websites in the IT space. Here’s a brief description of the company:

TechTarget Inc. is a provider of online content for buyers and sellers of corporate information technology (IT) products. Its product offerings address both lead generation and branding objectives of advertising customers.

That’s right, TechTarget has its own product solutions for advertisers. They are marketers as much as they are publishers, an agency as much as they are authors. They understand the traffic on their site, there to view their content, is theirs and the onus is on them to find the best ways to monetize it.

Really, who better to do it? Who knows more about their audience than they do? It makes perfect sense then to discover and then help meet the goals of their audience. With all the explicit and implicit data about their audience shouldn’t they be able to do this better than anyone else?

Once you have that mindset everything changes. You focus on the goals of your visitors, not the goals of your advertisers. You focus on gaining expertise on page optimization to derive the highest revenue per visitor. You focus on loyalty by knowing who your visitors are and what interests them. Your buyers become partners, not faceless networks and agencies. You do it yourself and you keep all the rewards, never for a moment aligning with revenue streams that don’t properly valuate your visitors and the content you created for them.

**********

Don’t tell me this will not work outside of B2B. While content may differ the user goals of information recovery and discovery and the ways to optimize and monetize them are agnostic to verticals.

I shed no tears for publishers. I’ve been beating the drum for three years that every page is a landing page. We even had a name for it at Offermatica, Content Merchandising. It never really caught on like we expected but then again it didn’t matter. There were lots of performance-based businesses that needed our services. Not surprisingly there are even more of them now (both optimization tools and performance marketers). Publishers can’t continue to be run into the ground by these savvy marketers exploiting the delta between the value of the publisher’s content & audience and what they are paying for it.

I see no other option. Use your content as the basis for your own advertising and marketing services. Be innovative, control your destiny, own the page, own the next page and deliver relevance, great experiences and utility with every pixel. Most of all help your visitors to make decisions and take actions with your content. Inherent in those actions resides the value of your content.

Related Posts:

Platforms, Applications and the Future of Digital Marketing

Mashing Up the Value of Ads & Content

How Semantic Apps Can Deliver Relevance to Implicit, Explicit & Latent Intent

Google Stripping Referring URL Parameters Will Leave Many Naked

Back in early February Google did a little test. It decided to test an AJAX SERP. This meant Google sent natural search result traffic to sites without any passing identifying parameters except the top-level domain google.com. Message Boards and Blogs lit up immediately. They stopped the test (to 10% of traffic) quickly but in March seemed to try it again. Two weeks ago, Google followed-up with announced change of URL parameters. Some good and some bad. This week Google again seems to be rolling out AJAX SERPs this time more extensively for Firefox users. Something is happening here.

It has become clear that we are all Google’s Mr. Jones. The Google Mothership seems to be leaving and we can choose to get onboard for the data ride (Google Analytics would likely still be able to capture queries and the like) or we can live in a netherworld of insufficient data. With some sites getting 50% or more of their traffic from Google natural search not using GA in this scenario relegates them to a sort of third world of data and renders their subscription-based analytics platforms limp.

There is no question in my mind that Google owns this referrer data though I have heard it argued otherwise from the analytics vendors. The click action takes place in the Google domain and though the link data is generated from publisher content, publishers are under no obligation to have their sites indexed. There is also no question to its value. Huge. It is worth mentioning that much of the URL shorteners now driving an ever growing amount of web traffic pass even less useful referrer parameters to the linked sites.

This is Google's nuclear option to the world of web data. The fallout will be an analytic winter for many. The face of the analytics, SEO, online publishing, testing, targeting and even the public markets will all change. Does the very fact that Google has so much data leverage mean they are likely to use it to their advantage at some point? Would it be so bad to live in a world of (free) GA? They have made great strides with segmentation and continue to add data visualization. Of course there are plenty of reasons ethical, historical and rational that Google must leave their URL passable and parseable. It appears now less likely than ever to happen.

Busy Being Born: Creative Technology & Analytics

Twice in the past week I have had conversations about the creative use of technology. My point was that technology by itself has all the elements necessary for creativity to flourish. Coding is creative. The web has progressed to date only because of those who thought about technology from a creative perspective. It’s something many people don’t appreciate.

However, we’ve now reached a point in the development of the web where the inverse has become just as important. Technology’s use with creative will powerfully change the web experience for people by delivering more relevance and more engaging experiences. Creative is becoming part and parcel of the platforms where it resides and applications that deliver and present it.

Right now testing technology sits at the forefront. It’s been amazing to witness the rise of creative testing over the four years I’ve been speaking about it on the conference circuit. From 0-70% of the audience in 4 years and every one of the major testing players acquired by companies like Omniture, Interwoven, Accenture & Acxiom.

As we move towards a real-time intelligent/dynamic web, content targeting and analytics will play a larger role and get rolled up into creative technology. It’s important to understand at its core creative tech is about two things - rules and results.

Data Driven Design

In the past few weeks two high profile events took place that illuminated the role of technology on creative.

Facebook’s redesign: Whatever you want to say about the design it was driven by data (or FB needs to sell NOW). As Scott Rafer mentioned at SES the design really was about revenue metrics as much as it was copying Twitter. It still amazes me how many creative decisions are not about revenue. Which bring us to…

The departure of Google’s Visual Design Lead Doug Bowman: He could no longer work at a company that made most every design decisions based on testing and revenue data rather than an opined aesthetic. There is a great discussion of that conflict here.

What we can learn from Facebook and Google – two of the most technically savvy organizations on the web. Both are at their core about delivering rules based content. Both use data on revenue generation to drive design. They are the blueprint.

Design Power

For all the Silicon Valley geekery and new found fascination with quants on Madison Avenue there is a giant issue playing out. Design power. You see, as soon as your audience has the right answer the rules of creative change. Design becomes a question of how well you know your audience. To paraphrase Steve Jobs design is not about what it looks like, but how it works. This is not an ad agency strong suit.

The agency problem (and one I’ve experienced once over twice) is that literally and figuratively they can’t afford to test. Testing creates too much conflict (fearful Creative Directors) and inefficiency (training, increased costs & multiple creative). I’m aware that some like WPP are talking the talk but change would require ground up realignment of their workforce, business operations and structure. Even if they tried they may simply be too big and too old to succeed at this.

Additionally, the progress of creative technology is in many respects making testing more difficult (but more valuable). As mentioned, moving the needle now is becoming more about targeted content and the dynamic real-time web. Testing informs these rules but this scales at a content delivery/management platform, something Madison Avenue is once again far behind on. In the web's next phase technology needs to be your Chief Strategy Officer and the data collected from your audience needs to be your Creative Director.

Creative Distribution

The irony is that there really isn’t anything more creative than testing. Testing allows creativity to flourish within a company. I call it creative distribution. Getting more creative variation in front of more people to measure results is a good thing – always!

Testing democratizes the creative process. Good ideas can come from anywhere. Testing also allows the ultimate creative license. Radical ideas can have a place right beside the status quo. Often those radical ideas are the ones that get the best results. While other times it may something as simple as the color of a button that matters.

Most importantly testing allows you to learn and get better as a creative. Measurement lets you know how good you really are as a creative. Business is competitive – why shouldn’t creative be as well? Maybe one day we’ll see a league of optimizers where we keep track of their stats on an ROI basis. Maybe even Rotoptimization.

Results

Testing, targeting, data and analytics have continued to pick up speed in the digital world with the explosion of PPC and continued velocity towards a “pay-per” economy. There is no going back. This is exactly what the web’s “services” model should be and it remains the web’s economic destiny -- many would say we’re already there.

Those of us working on developing creative technology are now in a period of tremendous innovation. Our Newport 65 is upon us and we're going electric. As with everything creative there will always be people with rigid ideas of what creative is and whom they look to for creative ideas. There will also be another group of people. People who just get better results. People busy being born, not dying.

SES Presentation: Search Becomes the Display OS

75% of the audience was agencies and amazingly 80% of those people were running both Search and Display campaigns. As my fellow presenter Scott Rafer has noted on more than one occasion the falling cost of Display can bring back better returns than search. Believe it! I saw it myself three times this week for clients. As I alluded to in the session, no one is more prepared to manage campaigns with multiple segmentations, heavy analytics and performance required better than search advertisers. Our time is now.

Search Becomes the Display OS

View more presentations from jonathanmendez.

Speaking and Clinic at SES New York

Next week Search Engine Strategies rolls into my home turf and I’ll be involved in a couple of ways.

On Tuesday March 24th in the Expo Hall I will running an audience based clinic.

3:00pm Expo Hall: CPA Optimization Station
With advertising dollars more accountable than ever optimizing your Cost Per Acquisition or Cost per Action (CPA) has never been more important. Take advantage of this rare opportunity to sit with Jonathan Mendez as he finds ways to improve your ROI. Jonathan will perform strategic evaluations and provide actionable insights on the consumer touch-points in your conversion path - keywords, ads, landing pages and registration/checkout. Jonathan will also offer test ideas for use with Multivariate & A/B testing and advice on how to use emerging marketing technologies to further improve your results.

On Wednesday March 25th I am very excited to usher in something close to my heart; the first search engine conference session exploring the rise of search-based strategies, technologies, analytics and performance moving at high velocity into the world of display.

2:15pm Advertising Track: Search Becomes the Display OS
Search advertising, the onetime bastard stepchild of internet marketing which only five years ago barely existed, is now poised to double the spend of display advertising in 2009 (eMarketer). With the continued decline in Display performance, some people believe the only thing that will save Display advertising is making it more like Search. This session explores these leading edge ideas, technology and provides some early case studies the effectiveness of making Search the Operating System for Display. We will provide case study examples of the above and the amazing results achieved and ads that are not only search applications themselves but that can be purchased and targeted based on the keyword.

Moderator: Gregg Stewart, Senior Vice President, Interactive, TMP Directional Marketing
Speakers:
Jonathan Mendez, Founder & CEO, RAMP Digital
Scott Rafer, CEO, Lookery
Amit Kumar, VP Product , Dapper

Let me know if you’ll be there. I would love to connect at the show with anyone working on interesting things.

Why Is Recovery.gov Making Online Access to ARRA Difficult?

Note: This post has bias to no political party -- other than the optimizers of freedom.

There has to be a reason that the good folks at recovery.gov want to make it difficult to view the full ARRA (American Recovery and Reinvestment Act) bill.

First, I had to fish around before finding the actual law that the entire site is built for. WTF? Right now what else is of more interest on the site! 

The link is on the homepage placed in small text well below the fold. It is also below the fold on an internal page and the FAQ.  Let’s remember, these folks are not optimization beginners. One has to think with their acumen this placement is intentional.

What’s most amazing however is that once you click the link a PHP call (the site is built on Drupal) brings a shadow box requiring a second click to perform the link request. WTF II?

 

Maybe the data they intend to share with the public will include the drop off rate after that first click (they are running WebTrends SmartSource Data Collector). It would be interesting to see how many people who wanted to read arguably this Nation’s most important legislation in a generation were prevented in doing so by the site design.

This raises one last but important point I’ve been thinking about (mostly because of Google’s dominance as a source of information). As we develop our nation’s technology policy there should be certain standards and conventions around universal digital access to documents, especially public ones. Vint Cerf alluded to this idea from a historical perspective (information decay) at his SMX keynote. My perspective is one of equal and simplified access to our nation's laws right now! This seemed to be a position Obama endorsed as a campaigner which is why this recovery.gov situation is even more surprising.

Let's start by pressing recovery.gov to change this experience and then ensure query enabled search and one-click access across as many browsers and operating systems as possible to the American Recovery and Reinvestment Act. Who’s with me?

Up Close with YouTube - SMX West

I love YouTube and have written about it extensively on this blog so I was really excited to participate and present on this session at SMX. My highlight was hearing from Matt Liu, a pre-GOOG YouTuber about how YT is starting to tackle advertising. I really expect YT as a media and ad channel to start taking off towards the end of this year and explode in 2010.

I evangelized a little and then presented results from a highly successful awareness and demand gen campaign by GotVMail that readers of this blog might recall from last summer. YouTube is here to stay folks. Start experimenting with it.

Up Close w/ YouTube

View more presentations from jonathanmendez. (tags: social ugc)

Speaking & Pushing the Envelope at SMX West

I’m going back to Cali. Next week I’ll be in SF/SV with my primary purpose speaking and attending SMX West in Santa Clara. 

Day one I’ll be on the panel Up Close with You Tube. What’s an optimization guy doing on this panel? Well it is not because of my fascination and bullish outlook with all things YouTube. It is not because of my thoughts two years ago that SEMs are best suited to manage ads on what is essentially a video search engine. Nor is it the fact that this post on optimizing youtube tags is the most visited page on my blog due to my #1 ranking in Google for “youtube tags.” It is because I’ll be presenting a case study on how a RAMP client used YouTube as the base platform for a cross-media marketing campaign. Matt Liu, Product Manager for YouTube is also on the panel and I am very interested to hear Google’s thoughts on how to do well with YouTube. 

Day two for me is all about my beloved landing pages. At lunch I’ll be hosting a “meet and eat” table on landing page optimization so if you’re going to the show please come by and I’ll be happy to break some bread while attempting to answer your questions on A/B testing strategy, MVT technology, results confidence, or any other vexing LPO question you might have. 

After lunch I’ll be speaking on Advanced Landing Page Strategies. I’m excited about this session dedicated to looking beyond the idea of the landing page as a static experience that overlays A/B & MVT testing and looks at the landing page experience through the window and impact of real-time web technologies that create dynamic experiences. This is a profound change. I’ll be providing an overview of the technologies (APIs, javascript, semantic) and strategies (segmentation, targeting) that can be used to create these more relevant experiences. 

Looking forward to some warmer weather too. Let me know if you’re going to be there and want to meet up.

WTF? IAB Says Performance is a Bad Thing for Online Ads

I was really interested this morning when I saw that the IAB is making an effort to combat "creative shabbiness" in display. Unfortunately it was not what I expected to read. As someone who has spent a decade building and optimizing creative for the web and has worked with six of the top eleven brands in the world I’m stunned.

Instead of being an effort to promote more holistic ad>landing page creative or institute new IAB approved ad sizes or push for new metrics that better define creative performance or issue some guidelines for creative testing and optimization (I could go on), this is a PR campaign to get brand (read TV) dollars. In fact, the idea here is to move away from the notion of performance in display and decry the very advertisers that have been successful on the web.

From today’s article in MediaPost (this crazy meme was first published in Ad Age yesterday):

Rothenberg said the push… was an effort to overcome perceptions of "creative shabbiness" in online media, and to help prevent the slide toward a "performance-based" Internet advertising economy.

Whoa… a performance based advertising economy is a slide! This from the man who heads up the Interactive Advertising Bureau.

Step back for a second. According to this logic, ads that get the interest of people (clicks & conversions) are not creative. How does that make sense? Perhaps, the idea of what creative is needs to be redefined (or we need to re-read what David Ogilvy thought about creative).

No one has better captured or understood the web ad economy than the father of web based performance advertising, Bill Gross.

“The more I [thought about it], the more I realized that the true 
value of the Internet was in its accountability. Performance guarantees had to be the model for paying for media.”

Let me shout this into the halls of the IAB on East 26^th Street. The value of the media is in its accountability! This is the most accurate metrics/analytics driven medium that exists and it’s getting better at collecting data and more intelligent about what to do with that data everyday. Smart marketers and advertisers understand how to use that data and optimize their advertising. This is what the digital game is about.

Let me get something else off my chest while we’re on the subject of creative. Almost all the issues plaguing display advertising rest in the creative end. It starts with the ad sizes and locations. The problems continue with not understanding web user behavior and experience. They fester with the cost of serving rich media. Let’s touch on this for a bit because it is an important and unspoken aspect of the issues Mr. Rothenberg alludes to.

There is a huge cost consideration if you want to serve these really “creative” ads. Flash has opened up a world of possibility but at the moment the serving fees are outrageous, let alone the costs that most agencies charge for this type of work. Coming full circle most of the agencies that do this type of work haven’t a clue how to optimize Flash ads to get people interested in them. Testing these ads is non starter and fewer still understand how to optimize the media buy for performance. Oops, I said a bad advertising word, “performance.”

The problem will only be solved by continuing to move away from a banner economy and redefine what advertising is on the web. We need to stop putting up billboards and start paving roads. We need to stop taking ad strategies from other channels and throwing them on the web. That is the real "spray and pray."

I get that Mr. Rothenberg and the IAB have the backs of publishers here and they have every reason to be worried about the display economy (albeit a day late and a dollar short) but we are NEVER going back to the hey-days of high CPM so these ideas about creative and performance are ill thought-out and pure laziness. A much better tact would be to work on blurring the very notions of what is brand and what is direct for online.

Bottom line: if you are worried about the value of display then find better ways to create that value and better ways to measure it, based on performance.

Related Posts:

Brand Marketing in the Digital Age

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

The Next Generation of Digital Marketing Agencies

Platforms, Applications and the Future of Digital Marketing