Great to be here and we are going to run through 5 basic truths that every buyer should know. There are certainly more than 5, but these are the big ones that you all should know and recognize in order to help you be better buyers for yourselves and your customers.But before we get started, let’s see who is in the audience:How many of you are direct advertisers?How many are agencies?How many are technology providers like DSPs?Great. These trends are applicable for all of you so let’s get rolling
First, the very good news for all of us. Display spending continues to grow. More digital media consumption means more opportunity to get digital advertising out to the growing audience of digital consumers. Whether those page views are seen through PCs, smart mobiles devices or TV devices of some kind, the world is seeing more digital content and that means more digital ads.
How big can it get? My executive chairman Eric Schmidt says says we are going to keep seeing exponential growth and given what I have been seeing with Google’s display business over the past 18 months, I have no reason to doubt him. The business of showing graphical ads on digital pages is big and only getting bigger. eMarketer has us going from 10.2 to 15.9B by 2014, which is 56% growth and could be conservative. We are going to be seeing massive growth over the next decade due to the fundamental shift we are have seen over the past 3-4 years in the display business where both inventory and data have become liquid.What does this mean? This means that unlike 10 years ago when display world was ruled by the walled gardens of the big portals, today’s media landscape allows for very free trade of inventory so inventory is not trapped, but rather it is traded. You can access inventory freely and what is great is that you can understand the value of that inventory because the data that provides you the value of each page and the audience that is looking at that page is also freely available. Access to the customers you wants is free and liquid. Information about that audience is free and liquid – the marketplace for buying and selling display is much more efficient than it ever was and the market is growing in kind.
So this makes the next trend sort of obvious: Audience buying will prevail. Was there really any doubt? If you can find your specific audience segments at scale globally, why would you buy any way else?
Folks used to say context was king, and that was true mostly because it was the ONLY way you could figure out what an audience cared about. There is a British site that caters to women’s issues, so this must be a great place to find woman of certain age. Even if you have no clue if the site is viewed really by woman or men, or woman who are 13, 20, 50 or 60, you make broad assumptions and advertise away.
But when the Dot Com bubble burst 10 years ago, performance display pioneers like Ad.com started teaching us that sites were a signal, but only one signal, and in fact the real value was in determining what the user cared about at any given time regardless of the site they were on.Now we can directly buy audience segments based on data collected about them.The focus is now on PEOPLE and who they are rather than sitesThe results are that we buy with precision and we can drive much more measureable ROI results across all digital media.
And we see that the vast majority of the industry is buying audiences. The range of buying density still varies, with about 19% of that 83% doing it 20-30% of the time and 17% of that 83% doing it 91-100% of the time. We are still early days in the audience buying phase, but the world of digital media buying has clearly changed and we are not going back from doing audience specific buys.
If we see a future of audience buying as being inevitable, then Trend #3 won’t be much of a shocker. Now that we can measure audiences with precision, we also want to BUY those audiences with precision. The most efficient way to buy is through real-time bidding, or RTB and we certainly believe that that RTB traffic will continue to grow and grow agressively.
But first let us take a look at what we mean by RTB. We as an industry have to realize there are two distinct layers to the act of real-time bidding. There is the pipe that allows access and the brain that is doing the decsioning work. There is sometimes confusion because RTB is by definition a type of Application Programming Interface or “API”, but the practice of doing bidding in real-time means that you use the API to access the inventory sources, but then you apply some kind of machine learning or algorithmic approach to the actual buys– you need a brain making your decisions in real time as much as you need the pipes.
We are all super smart folks, but not all us are brains per se (at least not by our definition). Here you can see those who create the API pipes, really the inventory sources of some kind, and those who have the platform brains who are making the decisions. In one workflow case we can see the DoubleClick AdExchange providing the API which is used by Invite’s brainy DSP platform and perhaps can be utilizing proprietary algorithms from Vivaki. Perhaps not just making the buy smart, but as my Boston buddies might say “Wicked SMAAAT”
The combination of pipes and brains is catching on and you can see about 76% of the industry is going to increase RTB volume this year. You see the distribution is spread out, but good news to us is that about a quarter of this planned activity has folks increasing their activity by MORE than 200% and that is an incredible growth stat. Should make this room and conference very happy in particular– we should all have jobs in the coming years.
January 2010 – RTB transactions in the millions per monthJanuary 2011 – RTB transactions in the billions per monthYou can see this growth a very stark way in the AdX business. Last January we were measuring transactions in the millions per month and a year later we measure in the biliions per month. You can see 640% growth year over year from 1H10 to 1H11 and that is just crazy high and to the right stuff. BTW, I started overseeing AdX sales in April of 2010 when the curve started to get really steep…just sayin’…Expecting 2011 growth to accelerate in 2nd half of 2011 due to cyclical nature of online advertising from increase in demand during the holiday season
So have more people buying display and more people wanting to target audiences and more use of better, more efficient technologies to make those buys…what else is happening trend-wise to increase ROI? Well remember that ROI is a division problem: The denominator is all about cost, which we want to go down. The buying efficiency I have been explaining does a great job of bringing down that cost and helping marketers make that ROI denominator small. The numerator – the stuff on top– is another matter all together. I will use the P&G version of the numerator, which is where you multiply reach, recall and persuasion. Now reach we have plenty of because I just told you how liquid the market is today and it is getting more liquid every day. The recall and persuasion aspects have to do with delivering a more effective message, which means better creative. How do we create a better message? Well, it certainly means that delivering a static jpeg is probably not the best idea for ALL your campaigns….
Cross format is obviously the answer and you guys out there all know it. Rich Media SWFs and Dynamic rich media is where 68% of the industry sees opportunity and that just means that we all realize that works in the reserve market should work in the spot market– create a more engaging ad and get better performance. Video is about half of that, but we all know that usage is going to explode as the year goes on. I personally think the second half of the year is going to be huge in terms of video growth– great news for our Amy and our buddies at TubeMogal. Mobile will be interesting and you will see mobile inventory in the AdX before the end of the year, but still unclear how it will best be utilized– great targeting opportunity that is for sure.
Rich Media is a complete no-brainer. Everyone wants to see how audience buying will go up funnel and translate into brand buying and the answer is all about how the creative is used as part of the advertising strategy itself. The spot/exchange market can give you all the reach you want, and sight/sound & motion gives you great engagement, so the issue becomes how you measure. Everyone is looking for some magic bullet from the “the industry” around measurement, but I say make up and use what is best for you and customers. Optimize to interactions! Optimize to expansions! Rich media is great for both. In terms of video, you can get pre-roll in AdSense and in AdX; fabulous 15second inventory that let’s you tell a very rich message. Optimize to the completeness of that message! Measure how much of your message a very broad audience is seeing.Rich MediaPlace rich media in-page AND expandables in an exchange / RTB environmentWho will be the first to optimize to interactions or to expansions?In-StreamBuy in-stream inventory across YouTube, AdSense sellersPrimarily 15s Video Ad inventory with some 30s inventoryWho will be the first to optimize to video completes?
Dynamic rich media, or dynamic ads are of course, that much cooler. I say this not just because I was the CRO of Teracent, but because 10 years Ad.com taught us the very most basic lesson of digitial media, which by the way, is the most basic truth of any marketing--- that if you get the right ad in front of someone, they will be more engaged with the message and will see that message much more as valuable content than advertising per se. The problem in the Ad.com days is that they did everything by hand so at most they could have 5-10 creatives running at any one time as they optimized the buys to the message and swapped assets in and out…must have been tiring stuff!Today we have data feeds that let you create thousands or even millions of ads for the vast audiences you want to reach because you should not guess what the right ad is for a particular person– let the platform figure it out for you and in the process make the top of that ROI calculation– he reach, recall and persuasion get HUGE in the process.
After all this talk about machines and APIs and algorithms, I have to bring you all back to reality, which is not quite as cool as the flying car future that some say we are taking this world of advertising. Trend #5 is again good news in the job security department– people still matter and doing negotiated deals between humans will still matter, even in this new world of RTB and platforms. The trick for we humans is understanding how to use the platforms and use them for the strategies that we know will drive our respective businesses.
As we can see from the stats, we see another big surprise in that buyers and sellers are not quite on the same page. I made the joke in the last OMMA that AdX knows it is doing its job when buyers and sellers were equally pissed at us, and now we can see that they don’t have any other choice– they simply want different things.But even in these differences you see some great opportunity to create new models for private exchanges, which are auctions with limited buyers participating and also Direct Deals, which are not auctions at, but rather fixed price deals that target fixed inventory. Publishers want to sell everything directly, sure, but they won’t be able to do that, so to maximize their yield they will look for options where they have more control and that is the world of private exchanges and Direct Deals.
So thankfully, the cocktail party still has value…we will need to talk to each other to continue to grow the business. Direct Deals in particular is a very cool new development because it creates a fantastic bridge between the world of the spot market and all the great value of audience buying and that of the reserve market where you know what you are getting in advance. But with Direct Deals you know the inventory and you know the price, but the AdX platform lets you leverage RTB so you get true “First Look” value and only make the bid when the person you want comes along. We had a dinner in NYC a month ago and we did 8 deals before dinner came just by getting the conversation started between buyers and sellers.Human conversations still matter even in our platform age.
AdX, of course, has all the options you need.
Shared with the permission of The Center for Media Research. Permission expires January 15, 2012.And we must be doing something right because according to The Center for Media Research, we are the most used exchange in the business. I just saw this slide last week, but I am a fan of it, so let’s leave it up here just a moment longer…34% gap between us and the next guy…I like that!
So continue to watch this space because there is a lot going on and things are going to continue to grow and continue to get more exciting. Thanks very much.
1330 omma adnets sponsored lunch double click
5 Buying Trends Every Ad Intermediary Should Know<br />Presented by Chip Hall, Head of Buyer Development for DoubleClick Ad Exchange, Google<br />July 18, 2011<br />
An exciting time for display advertising<br />“Display advertising can be a $200B industry in less than 10 years.”Eric Schmidt,<br /> Executive Chairman, Google<br />AdWeek<br />3<br />$200B<br />$15.9B <br />in 2014<br />$10.2B <br />in 2010<br />Source:eMarketer, Nov. 2010<br />
Moving from websites as a proxy for audience…<br />Reach X% ofWomen 25-34<br />5<br />
… to connecting with audiences precisely with data<br />83%of ad intermediaries use audience targeting in their media buying<br />Interests: food and restaurants<br />In-market: highly likely to buy a luxury vehicle in the next 6 months<br />Offline: attends country music concerts<br />Demographics: 25-34 year old woman<br />Source: Digiday and Google, Real-Time Display Advertising State of the Industry, February 23, 2011<br />6<br />
Some intermediaries are doing more with audience targeting than others<br />7<br />Source: Digiday and Google, Real-Time Display Advertising State of the Industry, February 23, 2011, total survey respondents n=317, buying intermediary respondents n=106, question respondents n=58<br />
8<br />Real-time bidding (RTB) volume will increase<br />
9<br />What is real-time bidding? Two distinct layers of technology<br />
10<br />Real-time bidding is supported by a vibrant ecosystem of companies<br />Ad networks<br />Ad exchanges<br />Demand-side platforms (DSPs)<br />Sell-side platforms (SSPs)<br />Trading desks<br />Other media buying<br />intermediaries<br />“Brains”<br />“Pipes”<br />Have a real-time bidder<br />Have a RTB API<br />
76% of intermediaries plan to increase RTB volume in 2011: some more bullish than others<br />11<br />Source: Digiday and Google, Real-Time Display Advertising State of the Industry, February 23, 2011, total survey respondents n=317, buying intermediary respondents n=106, question respondents n=58<br />
RTB volume trend on DoubleClick Ad Exchange<br />12<br />6.4x<br />impressions purchased in 1H 2011 versus 1H 2010<br />Source: Internal Google data based on DoubleClick Ad Exchange impressions purchased via RTB, not including inventory won by AdWords. January 2010 through June 2011.<br />
13<br />More formats will be bought via RTB<br />
Biggest Opportunity in Rich Media, Dynamic and In-Stream Formats<br />14<br />Source: Digiday and Google, Real-Time Display Advertising State of the Industry, February 23, 2011, total survey respondents n=317, buying intermediary respondents n=106, question respondents n=53<br />
Rich Media and In-Stream<br />15<br />Sight, sound and motion<br />Scale, reach and audience<br />Brand<br />Results<br />
Dynamic<br />16<br />Use dynamic creative when no one ad will be the perfect ad. Instead, have many ads, perfected for each impression<br />
Handshake deals will be filled via RTB<br />17<br />
Mismatched Expectations?<br />18<br />Networks & Exchanges<br />Private Exchange<br />Direct Publisher Deal<br />Direct Sales<br />Exchange / SSP / Network<br />Private Exchange<br />30%<br />18%<br />14%<br />7%<br />79%<br />14%<br />Buyers<br />of respondents<br />of respondents<br />of respondents<br />of respondents<br />of respondents<br />of respondents<br />Will increase the most this year<br />Will increase the most this year<br />Will increase the most this year<br />Will increase the most this year<br />Will increase the most this year<br />Will increase the most this year<br />Publishers<br />Source: Digiday and Google, Digital Ad Buyer – Seller Marketplace, June 2011, total survey respondents n=433<br />
19<br />Direct deal making between buyers and sellers will continue to thrive, even as RTB volume rises<br />
DoubleClick Ad Exchange: Great inventory plus…<br />20<br />Flexible Deal Types<br />Auction<br />Direct Deals<br />Fixed Price,<br />Pre-Auction<br />Private Bidded<br />Branded<br />Anonymous<br />Three Ways to Place a Buy<br />RTB API<br />API<br />UI<br />Multiple Formats<br />Display<br />Video(beta)<br />Mobile (coming soon)<br />Rich Media<br />
Among exchange buyers, the largest use is with DoubleClick Ad Exchange <br />21<br />Source: “Ad Exchange Study” by The Center for Media Research. Conducted with Dynamic Logic. June 2011. Total survey respondents n=331. Question respondents n=69<br />