Federated Media uses conversation targeting to refine ad targeting without reducing inventory. Conversation targeting groups related topics into conversations like "small business" rather than targeting individual topics. This increases the amount of inventory an advertiser can purchase and lifts click-through rates by 39-49% compared to broad targeting. Conversation targeting works by making advertisers comfortable purchasing outside their usual categories. Further refinements could target ideology, reading level, attitude and other dimensions to provide "better, smarter, deeper" targeting.

1. Conversation Targeting
How to refine your targeting
without reducing your inventory
Tim Musgrove
Chief Scientist, Federated Media Publishing
©2012 Federated Media Publishing, Inc. All Rights Reserved.

2. Who is FM?
Founded in 2005 to help hundreds of high-quality independent
publishers band together to earn sponsorship and ad revenue
Now a top-ten US audience (comScore) and growing fast
Historically: have paid out well over $100 million to our authors
and publishers
John
Battelle
http://FederatedMedia.net

3. An open secret
• Supply-side advertising players (including
content networks like FM) often don’t like
targeting to be too good
• Why not?
• Because the math isn’t nice to them
• Let’s see that…

4. Run-of-network
With no The Math:
targeting, the
advertiser buys 1 billion
every page in impressions
my network
@$1 CPM
= $1 million
ad revenue

5. Broad targeting
With some The Math:
broad targeting
(“Sports”, or 400 million
“Finance”), the impressions
advertiser buys
fewer pages in @$3 CPM
my network
= $1.2 million
But the CPM ad revenue
goes up
So I’m OK

6. Narrow Targeting
With narrow The Math:
targeting, the
advertiser buys 100 million
only select impressions
pages in my
network @$8 CPM
Sure, I get the = $800k
highest CPM ad revenue
But I have a ton
of unsold
inventory and
total revenue is
down

7. Ssshhhh…….
To sum up:
It looks like $1,400,000
narrow
targeting $1,200,000
represents a
sharp decline $1,000,000
in revenue
$800,000
So, it isn’t $600,000
done much.
$400,000
$200,000
$0
Run-of-network Broad targeting Narrow targeting

8. Ways to get around this
• Set conditions on
sale of narrow
targeting
• Just don’t let ‘em buy
it unless they also
buy other stuff – use
it as frosting on the
cake
This model is not so strange…just take a look at the ball
park…

9. A familiar model
• VIP parking
spaces are
limited and
lots of
people want
them
• But you can
only buy one
if you have
bought
luxury box or
club seats!

10. A familiar model
• Every body
wants tickets
for when the
Yankees
come into
town
• But you can
only buy that
as part of a
four-game
ticket pack!

11. Is there another way, on the
implementation side?
• Q: What’s the one case when narrow targeting
can have the effect of expanding the inventory
purchased by the advertiser, instead of
shrinking it?
• A: When it makes the advertiser comfortable
going outside their usual content category
• Let’s see that….

12. Typical buy pattern
(without conversation targeting)
Suppose: Advertiser comes to FM w/a “cloud computing” campaign.
This is what their buy usually looks like:
Tech Finance Sports
$ $ $ $ $ $
$ $ $ $ $ $ $
Government & Lifestyle Small Business
Law

13. Modified buy pattern
(with conversation targeting)
But when the advertiser learns about Conversation Targeting,
this is what their buy starts to look like:
Tech Finance Sports
$ $ $ $ $ $
$ $ $ $ $ $ $ $ $ $
$ $ $ $
Government & Lifestyle Small Business
Law
$ $ $ $ $ $

14. Another implementation technique :
Target conversations, not topics
• What’s the difference?
– Topic = a particular theme of subject matter
– Conversation = a cluster of related topics comprised of
various themes
• Results: simplicity for advertiser, and way more
inventory!
• Let’s see an example….

15. The Small Business Conversation
(just a subset of the topics)
affiliate marketing facebook marketing series online advertising small business week
better business bureau family business payroll tax social entrepreneurship
business advice family businesses product marketing social media marketing
business succession planning franchise association quickbooks startup catalyst
center for entrepreneurship franchise business review referral engine startup company
chamber of commerce franchise consulting rieva lesonsky startup magazine
customer service franchisee association ryan hanley startup weekend
dell small business franchisee of the year s corporation susan payton
digital marketing global entrepreneurship week sba 504 loan tj mccue
direct-response marketing guy kawasaki search marketing toilet paper entrepreneur
duct tape marketing ivan walsh small biz tech tour twitter marketing
entrepreneur corner linkedin small business book awards u.s. chamber of commerce
entrepreneur of the year marketing management small business expo viral marketing
entrepreneurs marketing strategy small business influencer viral video marketing
entrepreneurs roundtable multi-level marketing small business jobs bill yahoo small business
facebook marketing national small business week small business trends young entrepreneur council

16. Another implementation tip:
Set a threshold for quality!
• FM’s premiere and partner publishers are hand-
picked for quality
• Our partner WordPress, will supply hand-picked
sites as well
• Publishers represented by our subsidiary Lijit
(long-tail RTB-based ad network) will be vetted
for quality as well
– Take-away: Don’t expect refined semantics to yield
anything if the content isn’t good!

17. Does it work?
• Aligned CTR: 49% higher than broad targeted
ads
• Global CTR (including non-aligned): still 39%
higher than broad targeted ads
– “Aligned” means the subject matter targeted has
an obvious connection to the ad campaign.
Occasionally this isn’t the case!

18. Exceptional lift in CTR
This charts the first 50 campaigns we put
through Conversation Targeting at FM
0.70%
0.60% RED: the industry standard CTR
ORANGE: the typical CTR for the parent category in FM (Sports, Business, etc.)
0.50% PURPLE: the CTR attained by Conversation Targeting at FM
0.40% Channel CTR
DFA-IB CTR
0.30% CT CTR
0.20%
0.10%
0.00%

19. Exceptional lift in CTR
CT frequently outperforms the channel it is in.
0.70%
0.60%
0.50%
0.40% Channel CTR
DFA-IB CTR
0.30% CT CTR
0.20%
0.10%
0.00%

20. The exception that proves the rule
CT rarely underperforms the channel it is in.
The few exceptions are unaligned campaigns
0.70%
An unaligned
0.60%
campaign is, for
example, a car ad
0.50%
targeted to art,
museums, fashion
0.40% Channel CTR
DFA-IB CTR
0.30% CT CTR
0.20%
0.10%
0.00%

21. Overcoming barriers to clicking
CT can lift up channels where they underperform
0.70%
0.60%
0.50%
0.40% Channel CTR
DFA-IB CTR
0.30% CT CTR
0.20%
0.10%
0.00%

22. Other selling points
• It’s the only way
for an
advertiser to
“buy out a
conversation” in
a network,
against
competitors

23. Other selling points
• It gives back fantastic business knowledge,
showing where the ad message resonates,
and where it doesn’t
Small Home Workplace Auto Travel
Business Improvement Security

24. How far down will they go?
Tech
• Advertisers presently Computing
Green-
Tech
seem to prefer “mid- Bio-tech
level ontology” Enterprise Consumer
for targeting Computing Computing
• As this market Cloud
Computing
Servers &
Net-Ops
matures, will
they keep Cloud
Cloud SaaS Cloud PaaS
Storage
driving down
the tree? Google
AWS
Storage Dropbox Cloud
Storage
AWS AWS
Storage Storage
Tool Kits Integrators

25. What’s next?
“Better, smarter, deeper”:
Improved modeling of blog and news
content will enable more ways to target
Ideology (conservative?)
Reading level (7th grade?)
Attitude (optimistic?)
Cultural dimension (youth-hip?)
Seriousness (urgent, or whimsical?)

26. Contact
Tim Musgrove
E-mail: tmusgrove@federatedmedia.net
Twitter: @tmusgrove
http://tech.federatedmedia.net/
http://about.me/tmusgrove
http://www.slideshare.net/TimAtFM