Display Ad Landscape : Evolution, Terminology, Technologies and Players

Jai Rawat
CEO, Velocita Inc.
http://www.velocitainc.com
August 6, 2009
Display Ad Landscape
1
Velocita Inc. All Rights Reserved (www.velocitainc.com)

Evolution
Display technology
Static banner ads
Pop ups
Pop unders
Dynamic banner ads
Widgets
Video
Mobile
Relevance

Untargeted
Contextual targeting
Vertical targeting
Behavioral targeting
On site
Network
Intent targeting
Re-targeting

2

Following are additional online ad formats but fall under non-display ads:
Text
In-text or inline
Blog
RSS
Email
Audio/Podcasts

Evolution
Economics
Brand vs. DR ads
Premium vs. Remnant inventory
Rev share
Arbitrage
CPM, CPC, CPA, CPL payouts
Marketplace
Direct selling
Agencies
Ad Networks (Rep, Blind, Targeted)
Ad Exchanges
Efficiency improvements
Yield Optimizers
Buy Side Platforms
Sell Side Platforms
3

First Ever Display Ad

Sold to AT&T in October, 1994
468x60 pixels
Appeared on HotWired
Sprint, MCI, Volvo, ZIMA and Club Med soon followed
Banner ads became the rage by 1997

4

Ad Networks
Collection of publishers and advertisers – match makers
Over 300 ad networks exist today
Examples: Ad.com, Glam, Broadband Enterprises, Gorilla Nation, Specific Media, Undertone Networks, Value Click, Vibrant Media etc.
Rep Ad Networks
Represents a site, akin to outsourcing your sales to a consultant
Full transparency to advertisers, attracts brand advertisers
Financial model is rev share, may offer minimum guarantees
Blind Ad Networks
Low priced inventory but limited or no control over where ads will run
Bulk buy of remnant inventory combined with campaign optimization and some targeting
Attracts direct marketers
Financial model is arbitrage
Targeted Ad Neworks
Behavioral or contextual targeting
Attracts both brand and direct marketers
Financial model is arbitrage
5

Ad Exchanges
Bidded system for buying and selling inventory
Inventory contributors:
Publishers (remnant)
Ad Networks (remnant)
Inventory buyers:
Advertisers
Ad Networks
Monetization
Buy and sell side commission (10-15%)
Examples
Right Media RMX (Yahoo)
Double Click AdEx(Google)
AdECN (Microsoft)
6

Behavioral Exchanges
Partner with publishers to collect user demographic, behavioral and intent data
Classify data into various categories and sell it to advertisers looking to target specific user categories
Data is typically sold on a CPM basis / month
No PII is shared
Rev share back with publishers (i.e. data providers)
Players: Blue Kai, Exelate, Almond Net, Lookery (for demographic data)
7

Yield Optimizers
Sell side optimization (for publishers)
Help publishers maximize CPM by determining in real time which ad network or exchange will yield highest CPM for every impression
Rubicon, Pubmatic, AdMeld
Buy side optimization (for advertisers)
Variety of different strategies – dynamic ad optimization, landing page optimization, efficient media buy etc.
Ad creative optimization: Tumri, Teracent, Aggregate Knowledge
Landing page optimization: Optimost, Offermatica (Omniture), AdChemy
Media buy optimization: Media Math, Invite Media
Campaign optimization: Rocketfuel (auto learning to determine the best place(s) to serve impressions)
8

Measuring Ad Effectiveness
9
Dynamic Logic
Measures advertising and marketing effectiveness
Comscore
Syndicated and custom solutions in online audience measurement, e-commerce, advertising, search, video and mobile

Ad Categories: Brand vs. DR
Brand
Build brand equity – delayed return
Cares about high reach and right audience
Increasingly getting performance driven
~20% of online ad spend
~75% of offline ad spend
DR
Focused on immediate conversion
ROI driven
Points to ponder
Can conversion be assigned solely to the last click?
Disp+search ad exposure had 22% higher conversion compared to search alone1
39% of website conversions came from 10 disp ad views without a single click2
47% of paid search conversions are influenced by an online display ad2
Over 50% of website conversions had 5 or more events in the path to conversion2
“View through” traffic is 9x more than “click through” traffic3
1: Microsoft 2: Fuor Digital 3: Fetchback
10

11

Inventory: Premium vs. Remnant
Technically, it is the same inventory
Premium:
Time, placement guarantee
First impressions
Typically sold direct (or rep ad networks)
Premium Ad Networks: Value Click, 24.7 Real Media, Tribal Fusion
Remnant
“Leftover” inventory, pooled with other sites
Sold via ad networks or exchanges
Low CPM (~20x) compared to Premium
Even large sites running at 50%+ remnant
Growing faster than premium
Ad networks: Specific Media, Context Web, TMP, Undertone
Brand recall within 30 days of seeing the ad was 21% and 50% higher on content sites compared to portals and non-premium/bulk sites respectively
12
DynamicLogic study of 4,800+ campaigns over 3 years

Non Premium Display Fastest Growing Segment
Media Spend vs. Media Consumption
WW Digital Advertising Revenues ($ B)
2008E: $ 4.1 B
2011 E: $ 7.6 B
CAGR: 28%

Equal media time online and TV (~35%)
TV ad spending is 31% compared to Internet at 12%
Only 5% brand dollars have moved online
30% DR dollars have moved online

Source: Forrester: ThinkEquity Research
13

Targeting
Contextual
Ads served based on page content
Ad Sense, YPN, Quigo (Platform-A) etc.
Behavioral
User profile derived based on online activity
Heavy duty computation
Analyze a large number of parameters to determine behavior
Tacoda has over 100 consumer segments
On Site optimization
E.g. Customized offers on eCommerce sites based on BT
Choice Stream, Certona, Optimost, Offermatica (Omniture)
Network BT
Behavioral data collected from a network of sites, used for ads
Audience Science, Tacoda (Platform-A), Value Click, Blue Lithium (Yahoo)
However, behavior does not always imply intent!
Increasingly, networks are beginning to offer a combination of content, context and behavioral targeting
Rocketfuel, Collective Media
14

Targeting (Cont.)
Intent targeting
Attempts to determine current intent
Intent is usually short lived
Behavior may suggest fashion enthusiast but current intent may be to buy a fishing rod or concert ticket
Ads are targeted towards current intent
Re-targeting
Bring abandoning users back to site
These users have shown interest but did not convert
E.g. show an ad for a free trial for a visitor who has left your site
Claims to be very effective, 2-3x increase in CTR, 2-5x increase in conversion
Fetchback, Value Click
15

Reach: Horizontal vs. Vertical
Horizontal Ad Networks
Focused on getting high traffic sites
Good for consumer brand ads
Advertising.com, Value Click, Tribal Fusion ..
Vertical Ad Networks
Collection of vertical specific publishers
E.g. fashion, gaming, entertainment, shopping etc.
Growing rapidly, collective reach has grown from 21.5% to over 57% in one year
Adify, Glam, Martini, Federated Media
Adify is a platform to create vertical ad networks
Supports over 160 vertical ad networks currently
16

B2C Marketing Tactics and ROI
17

Market Trends
18
Source: Pubmatic

Market Trends
19
Source: Pubmatic

Market Trends
20