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.

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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.

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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.

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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.

Will New OPA Creative Sizes Help Redefine Display?

I’ve been pretty adamant that new creative sizes were needed to help advertisers so when I woke up this morning to see the OPA has announced three new ad sizes I was thrilled. Clearly my excitement has not been matched by a lot a folks who see this as “shouting louder” and in fact if theses sizes are being used to just create bigger billboards that is not going to help anyone.

However, if they are weaved into the distributed web and are more like landing pages than ads these sizes offer phenomenal potential to share content and functionality that will possibly redefine display by bringing back higher CPMs to pubs, huge ROAS to advertisers and great experiences to people.

Here’s a look at the new sizes I put together since I have not seen anyone lay these out yet:

O P A New Creative

View more presentations from jonathanmendez.

I have little interest in the 970x418 pushdown. Any interruptive experience is a bad one for your audience. This should be killed on sight. But the other two formats are incredibly interesting.

Let’s take a look at this from a transactional advertiser perspective. Let’s say Old Navy is the advertiser and we use those sizes to deliver the kids clothing section of their website in an ad for a back to school campaign. The ad has full site functionality up until a product page or an add to cart.

Let’s say the ads run at $30 CPM as a direct buy with top tier publishers. Here’s a numbers crunch.

$100k buy = 3.33M Impressions
Assume 5% of audience engages in the ad= 166,666
Assume 3% of engagers convert to a transaction (industry avg.) = 4,998 conversions
Assume AOV (average order value) is $40 = $199,920

That’s a whopping 99% ROAS!

Of course these are just estimates but I think they are exciting. The key is getting the proper advertiser functionality in the ad so that is a useful utility rather than a billboard. But as far as I’m concerned, been there, done that.

The other nice part about this is working with direct sales teams can offer a greater understanding and ability to provide contextual relevance with the ad content and the publisher content. My semantic tech brothers and sisters should be stoked about this as well.

So, I’m immediately in the market to build these ads and test them in July. My contact information is above if you’re an advertiser or publisher interested in being a part of it.

Search Becomes the Display Operating System

I first wrote about the idea of search strategies working in display to deliver more relevant ads two years ago. In the ensuing two years as followers of this blog know I’ve become passionate about the opportunity to build creative technology that makes display ads more relevant. One advantage I have working on these solutions is that I’m an outsider. I don’t think the way people in the display world think. I’m wired differently. I am and will always be a search guy.

That mindset helps because search is more than a channel. Search is the way people use the web. People don’t just fire up a browser without a goal in mind. We are all taking actions on the web based on our goal. Information we notice and content we experience along our goal path may change our goals, but it does not change the two basic natures of how we use the web – recovery and discovery.

Therein lies the key functional distinction between display and search. Search (as an app on the platform) is weaved into the web and the way we use it. Display is not. Display is layered on top of the web. This is why despite twelve years and countless millions of investment it has never performed. Frankly, it was doomed from the get-go. It never was a web service but rather built to be its own parallel platform (ehem, “Platform A”). The problem inherent with that is the medium is itself a platform. Ads will never control this medium. Here the medium (users) should control the ads.

These ideas formed the basis of RAMP - to shrink dynamic landing pages and serve them to people based on any number of rules - effectively reverse engineering the search experience into display's near limitless inventory and producing higher ROI through lower display CPM than search CPC. One year later we are doing all of this with some amazing technologies supporting these endeavors. We are creating display ads to be off ramps to existing goal paths and on ramps to changed goals. We are using keywords to define the ad that is shown and allowing users to maintain control over the content experience within the ad much the same way one would use a SERP.

That brings me to this:

"The increasing marginal returns of search advertising are now doing more than taking market share from display advertising, they are en route becoming display advertising's operating principle."

I read this from Scott Rafer (Founder of MyBlogLog, Mashery & Lookery) this past October. It encapsulated my own thinking and at the same time made me think the ideas I was working on with RAMP were part of something much larger and something that it was time to talk about.

So when it came time to pitch session ideas to SES New York I contacted them and led off my pitch with Scott’s quote. They immediately agreed to add this session, give it primetime slot on the agenda and kept Scott’s quote in the summary.

I’m psyched that Search Becomes the Display OS will be the first conference session explaining and exploring the many ways search strategies, technology and innovation are making advertising more relevant, creating better experiences for people and delivering increased performance for advertisers and publishers.

So on March 25th at 2:15pm I hope you’ll join me in New York when Scott Rafer, Amit Kumar (former lead of Yahoo Search Monkey now VP Product for Dapper) and Bob Dillon VP of Product Marketing at Yahoo help usher in a new era of technology, functionality, relevance and performance in display.

Previous Posts on Bringing Search to Display:

Intelligent Web: Where Search & Display Advertising Meet

Display Becomes Us

Real Behavioral Targeting Focuses on Intent

Behavioral Targeting is Not Just Banners

Advanced Landing Pages - SMX West

For years, first with javascript testing and content targeting tools and now adding APIs and semantic technology, I have maintained that landing pages are the most advanced forms of digital marketing -- the ultimate marriage of technology with creative.

So it was great to finally get an “advanced” landing pages session on the schedule this year at SMX. I guess advanced landing pages have arrived. I enjoyed seeing the interest in the crowd and also how the other presenters defined what an advanced page is.  Here is my definition.

Advanced Landing Pages

View more presentations from jonathanmendez. (tags: api semantic)

@jonathanmendez now live on Twitter

It took a year of observation but I’ve decided that even though I could continue working with and evangelizing APIs & real-time web and not be on Twitter, it was starting to feel weird. I mean c'mon, how would you feel buying a Mercedes then finding out the owner of the dealership drives a Pontiac?

Also, while there are many things I don’t like about Twitter (and I’ll post about that once I’m off my self-imposed hiatus writing about social media) at this point there are conversations happening about me, the things I do and the business I’m in  -- and I haven’t been able to be a part of them -- until now.

Hopefully I’ll do more listening that talking, be more inspired than inspiring and connect with people smarter and more interesting than myself. If I learn one new thing a week about the way people interact and experience real-time web it will be worth it. With that said, I invite you to follow me. 

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.

New York Times Landing Pages: All the Irrelevance That Fits the Pixels

I’ve often used my hometown paper, The New York Times, to exemplify the disconnect between digital publisher content strategy, the goals of visitors and the resultant impact on advertising. The root of this disconnect is the way search, social media and the landing experience fracture content hierarchies. Behavior has changed and so too must the content experience.

Let’s face it, taking the 300 year old idea of a newspaper and essentially throwing it on the web while likely the only option 13 years ago is not optimal one for anyone today. So why has the optimization needle moved so little in the right direction?

Huge amounts of traffic to NYT.com bypass the homepage. With the growth of search, the opening of the Times content archive and the rise of Social Media, success for the Times, its advertisers and most importantly its visitors, relies on the quality of the landing experience. The current NYT landing experience is quite simply dreadful.

It was a link from Social Media that brought me to this page. Keep in mind I'm at 1440x900 so ideally I'm getting the most of this page above the fold.

 

After now having this awful NYT landing experience a number of times from Social Media and Search links I felt compelled to figure out exactly how irrelevant is the content above the fold on the typical New York Times landing page.

New York Times Landing Page Irrelevance

Space:

• 622,740 pixels above fold (970x642)
• 145,500 pixels given to relevant content (485x300)
• Only 23% of the page above the fold dedicated to relevant content   

 

Words:

• 235 words (approx) on the page
• 60 of those words are the relevant content
• Only 25% of the words on the page (above the fold) dedicated to relevant content 

Information

• 18 Distinct content areas (color coded below) above the fold (including the piece of content that is relevant to me). Many of these are navigation. Many have multiple links. Really, do we really need two search query fields?
• Only 5.5% of the content areas on the page (above the fold) dedicated to relevant content 

 

No "Next Click" in the Archive

I mentioned the Times’ has opened their historical archive. This is an amazing contribution to the web (and the correction of another NYT digital content strategy failure, TimesSelect). These archive landing pages while offering less clutter also represent another missed opportunity.

See this first New York Times mention of the Internet. It is a fascinating historical read but it is also a dead-end. Visitors landing on this page as with most of the archive have goals that are discovery. Yet, there are no links to the subsequent 15 years of Internet related content! This is analogous to Amazon’s product pages not having “add to cart” buttons. Even if this is exactly the content the visitor was looking for most of these visitors will likely hit the back button (to Google). This is simply inexcusable strategically and poor business financially.

The Times needs to do better. Its future depends on it. Spending less time selling ads on the front page and more time into creating better digital experiences offers their best hope for survival.

Related Posts:

Optimizing Content Pages

Social Media Landing Pages

Landing Page Utopia: 7 Lessons from Google