Unfortunatley there continues to be a real dearth of European-focused events covering the area of automated ad trading and media optimisation. With the intention of fostering informed debate on the evolution of the display market and indeed online advertising as a whole, ExchangeWire is today announcing details of the Ad Trading Summit 2010. It will be the first dedicated European event of its kind, and will look to attract decision makers form agencies, advertisers, ad traders, ad nets, ad exchanges, ad-tech vendors and publishers across Europe. The best minds in the industry will be brought together to discuss and debate the changing face of the European display advertising market, the increasing influence of automated trading platforms and the explosion of the data economy.

Confirmed speakers for the day include: Mike Nolet, AppNexus CTO and Cofounder; Curt Hecht, President, VivaKi Nerve Centre; Martin Kelly, Cofounder and Managing Partner, Infectious Media; and Konrad Feldman, Co-founder and CEO, Quantcast. Additional details on the speaker line-up and agenda will be announced in the coming weeks. ExchangeWire will also bring you the thoughts and opinions of the event’s speakers in the run up to the actual event on September 23. Tickets are now on sale – but please note that the numbers are limited. Further event information can be found on the Ad Trading Summit 2010 site.

The company said it had no choice due to a lack of interest in a new funding round. It seems difficult to believe given the amount of VC money around at the minute. A lot of investors, it would seem, have passed up a good investment opportunity given the significant growth of the audience-buying market. Maybe some were spooked by Wunderloop’s misadventure in the UK which turned sour last year, forcing a retreat by the company. This of course is all pointless retrospective analysis now that Wunderloop has been acquired by AudienceScience.

What are the implications of this acquisition for the European data market? AudienceScience practically owns the UK data market. Its tags are everywhere and it works with all top-tier premium publishers – everyone from the FT to the BBC. Best-in-class data segmentation tech has won it a lot of market share. But it hasn’t featured as much in other European markets – due mainly to its focus on the UK. The acquisition of Wunderloop gives it instant access to other lucrative European display markets. Germany is obviously the big prize. The move towards audience buying is gathering momentum there, and pro-active agencies are looking for more innovative solutions to deliver more ROI to clients. AudienceScience will be able to leverage existing Wunderloop relationships, to build bigger market share – and introduce new products to the European market such as its Gateway platform.

AudienceScience could well be the largest data specialist in the European display market – that’s if you don’t count Google or Yahoo as pure data players. The acquisition has given AS a foothold in some interesting markets and access to technology that is used so differently across Europe. For instance, German agencies and publishers prefer Wunderloop for straight-up audience segmentation and audience buying. In France, the technology is used by ad nets to enhance their own targeting capabilities. The platform has also being white laballed by many big European media companies for internal use. Won’t this all-encompassing approach by Wunderloop make life a little more complicated for AudeinceSceinece? Maybe a little tightening on marketing message and product offering might be required. But wholesale changes will not be necessary. AudienceScience resource and investment will be able to strengthen and build on these existing partnerships.

Perhaps the most intriguing part of this deal is what happens to the AdAudience partnership. AdAudience is the joint venture audience exchange run by several of Germany’s big publishers. Will the current agreement be affected by this new development? Not likely. The current arrangement will survive. AudienceSceince operate similar publisher partnerships in other markets so we’re not likely to see AdAudience seeking a new tech partner anytime soon.

This was a good strategic acquisition by AudienceScience, giving it some decent tech and access to new markets. Given that Wunderloop was bankrupt, this acquisition was the only logical course of action. The newly strengthened AudienceScience is arguably the biggest player in the European data market – and looks set for more growth. How long will it be before the big G comes knocking on its door? I’d say six months at the most.

» In case you missed it, there was an excellent presentation from JEGI Capital at Internet Week in New York earlier this month. Entitled, “Are Publishers ****ed?”, the presentation provided analysis on the evolving sell-side space. Focusing on the rise of the data economy, it gives a synopsis of the intermederies now working in the data space. It also outlines some of things publisers should be doing to not only leverage their data to return better results for clients but also develop sustainable revenue streams around data. Folowing on from that, all publishers should have a read of Tom Chavez’s piece on Adexchanger this morning on the subject of data monetisation. It must be stressed that the US is still well ahead in innovation, and that the data market here in Europe is still relatively immature. But with Adjug rumoured to be launching a data exchange, and the likes of Bluekai and Quantcast becoming more active in the European market, publishers here ought to be looking at implementing strategies on how best to monetise their data. What vendor should I work with? How do I manage it? Who should I trade with? How do I price data? How do I make it portable? All these questions should be top of the list of concenrs with publisher execs at the minute. [JEGI Capital]

You’ve recently went through a rebranding and a repositioning of the Infectious offering. Can you explain the Infectious Media proposition in more detail?

MK: Yes, it’s simple, we make display advertising work for our clients. Clearly there’s a lot more to our business in terms of how we do that but that is our proposition and how we sell our services. We operate exclusively in the ad exchange space and offer these services to both advertisers direct and to agencies. We’ve purpose built both a team and trading platform, Impression Desk, to service this opportunity in the UK and Europe.

The rebrand and new website was about reflecting this focus.

How in your view has the exchange market evolved in the UK since the launch of Infectious Media?

MK: There wasn’t really one when we started so it’s come a long way! Right Media was the only place we could trade and was in itself the preserve of a few very smart networks, it’s incredible really that a whole new ecosystem has developed in the space of two year, the pace of change is staggering. The component areas of the value chain seem to be settling down a little now and both publishers and buyers are starting to do deals with and build infrastructure around DSP’s and SSP’s in order to service the opportunity. It’s not yet clear how the traditional intermediary, ad networks, will respond to these changes.

Do you think there is still not enough quality inventory available through automated channels?

MK: I think there is quality inventory available at scale but an issue that buyers will find in this environment is that it’s hard to find and the ways of doing this differ by platform. All supply sources take a different approach to defining quality as do all the DSP’s so it’s a minefield with no standardisation. We have chosen to tackle this issue head on and have invested a lot of time and effort in to devising our own manual vetting procedure for inventory sources. We are about to introduce our own transparent classification system for inventory that we vet ourselves so watch this space.

Has the arrival of the SSPs, the DoubleClick Ad Exchange and now the Orange Ad market improved the buying opportunities offered through automated channels?

MK: There is momentum growing on the supply side and these intermediaries are driving things forward. Ultimately this makes sense for everyone involved, with lower transaction costs associated to this channel and CPM’s increasing substantially in the last 6 months alone. Part of the education process for publishers is that the CPM’s that they receive for their inventory are higher than those they receive from a network as the buyer has much more opportunity to recognise value in the platform environment than they do in a bulk network buy. We, on average, currently pay double the average CPM in the Doubleclick Exchange quite simply because we can see the value that our activity is driving for the advertiser and bid accordingly

Do you think this volume on the sell-side will attract a lot more display spend into the exchange eco-system?

MK: I don’t think anyone on the demand side is under any illusion that this is the way that the market is going and needs persuading any more. The barrier is more around attaining the skills and technology to operate effectively and the speed with which this will happen.

Data plays a huge role in the automated buy. Do you think the absence of UK-specific data sets from the data exchanges and other platforms is hindering the development of the exchange eco-system?

MK: The data market has been slow to develop in the UK but there are now some companies entering the UK such as Quantcast and we welcome that development. I would also say that from an Infectious Media perspective this has meant we have had to focus our product development around data analysis and decisioning in the absence of ‘off the shelf’ target audiences.

We speak to many of the top UK publishers and they are keen to find ways to monetise their data so it will just be a matter of time before this market develops further and there is room for some big winners in the UK and European data market.

Is Infectious currently buying inventory through RTB? Would you say the buying process is different than a typical auction buy on the Rightmedia and Adx exchanges?

MK: Yes we are currently buying via RTB in the UK and across Europe. The buying process is no different in many respects, this is just the buying of display media after all. The difference is the amount and richness of data points that can be passed through to the buyers on each impression but I don’t yet think this is being fully exploited by the supply side especially. The more information a publisher passes about an impression, the more of a chance that we will see value in that impression and bid higher accordingly. What has been a real game changer for Infectious is impression level reporting which is a huge volume of data that we take in to our data warehouse to analyse but has meant we can scrutinise performance to a new level of granularity and optimise accordingly.

Infectious is an exchange trading specialist – far removed from a traditional media buying agency. What kind of skills does Infectious, which puts technology and data at the heart of its business, look for in new hires?

MK: There is some cross over with media buying agencies in what we do but we’re a very different type of company. Exchange trading is our only service and we offer this to both advertisers and agencies and because of this we have built a very specialist team and infrastructure. Our last three hires have been a statistician, a business information systems architect and an agency account manager. So some cross over with an agency in terms of personnel but in the main something completely different. Coming from large media agency backgrounds it’s been a breath of fresh air for Andy (co-founder) and myself to be able to build the team from scratch with new skills and a company structure that is fit for purpose. To date we have not employed anyone from a pure media buying background.

Now that the DSPs have finally arrived and RTB inventory has come onto the market, how do you see the space developing in the coming months?

MK: The pace of change is rapid at the moment and will not be slowing down any time soon. The coming months will see the completion of the infrastructure for the UK platform trading revolution, new UK data centres opening, trading desk offerings appearing, SSP’s hitting scale and we hope a more open debate around data and privacy that needs to happen if we are to successfully self regulate as an industry.

Oh, and loads more hype, as ever.

There’s much confusion about what Vivaki does? Is it buying platform? Is it a crack exchange trading unit? Can you explain the Vivaki proposition in more detail?

MB: Vivaki is the strategic entity created by Publicis Groupe to leverage the combined scale of its media and digital operations, which represent nearly $60 billion dollars in global ad spend and influence. VivaKi aggregates the marketplace influence of five autonomous brands, including: two global media agencies, Starcom MediaVest Group and ZenithOptimedia; two leading digital marketing agencies, Digitas and Razorfish; and a premiere futures practice, Denuo.

On behalf of its agency brands and their clients, VivaKi faces the market to help identify and build technology, message distribution, audience aggregation and content solutions for the future. VivaKi also includes a “Talent & Transformation Practice”, which leverages the scale of the VivaKi brands to develop and deliver tools and approaches designed to attract, develop, train, motivate and reward the world’s best people.

Sitting at the core of VivaKi is the VivaKi Nerve Center, which serves as a think tank, R&D centre and testing ground to activate new pathways for clients to connect with consumers in an increasingly digital world.

The key objective of the VivaKi Nerve Center is to help deliver better solutions for our clients as the marketing landscape continues to evolve and accelerate at a fast pace, collaboration within the VivaKi family, and across the Groupe, is essential.

To succeed in our mission, the Nerve Center will focus on some key areas to empower our VivaKi agency teams and clients:

Global Platforms & Products: Developing global platforms and proprietary products that help our agencies differentiate and compete in the marketplace. Products will be supported by an advanced underlying technology and data infrastructure that delivers speed and scale.
Industry-Leading Partnerships: Creating strategic global partnerships that provide tangible value for our clients and partners, while differentiating against the competition.

Innovation & Thought Leadership: Investing in innovation and next generation emerging opportunities, like The Pool, which will validate our leadership position in the marketplace.

Our ad exchange solution is called Audience on Demand and is therefore a key strand in the global platforms and products category above and indeed innovation. It’s one of the most exciting areas to touch all agency groups in recent years and needs to have a defined and aggressive focus put upon it. Vivaki Nerve Center has worked very collaboratively with the brands in delivering the Audience on Demand platform to their clients. We are live with Audience on Demand and really excited by the performance of the solution.

Can you elaborate a little more on your role within Vivaki?

MB: My role in is Managing Director of The Vivaki Nerve Center in the EMEA. I report into the Global President of the VNC, Curt Hecht. The VNC has made significant progress in the US and my role is to work closely with the brand management and digital teams to establish how the VNC can help them in delivering the future-facing digital solutions that our clients are asking for everyday. Ad exchange trading through Audience on Demand is a significant area of work for me.

What’s your perspective on automated trading and audience buying through exchanges and other demand sources?

MB: I have been blown away by it. I may be biased and perhaps my background lends itself to making this exciting to me but when you see the potential of automated buying you can’t help but be impressed. It’s worth saying that automated buying is a little misleading. It requires clever optimisation strategies and insights that the agencies need to lead through talented people. I would not want people to think that you a press a button and it’s all done. Anyone who thought search bidding would be automated would testify that is not the case – it is search bidding times ten so definitely not just automated.

The trading platform allows you to target exactly the individuals you want at the price you want. You are buying one impression at a time which makes a CPM approach look outdated although it is not the death of the CPM buy just yet, not least because media auditors would not know what to judge us on! I believe it will ask questions of every agency trading model to some extent or another. It will also challenge auditors to stop judging agencies on an arbitrary discount off a pool metrics, and force everyone to consider more performance related contracts. I think for now it lends itself more easily towards the performance models but down the line I can see far more being traded through this method.

Do you think that large European holding companies like Publicis are now seeing ad exchanges as an efficient channel to buy ad inventory?

MB: I think the large network groups get a hard time for not changing enough and being slow to react. In some ways that may be true but agencies today are very different to those of 15 years ago. They have completely transformed: agencies realise change is inherent in what they must deliver year in year out.

Ad exchanges are just another media / trading / targeting opportunity that have come along, and agencies will embrace it and make the most out of it on behalf of their clients. My experience so far is that all the groups see the benefits of it but that will vary by group as some are more advanced than others. You will see who believes in it the most by how quickly they grow their ad exchange spend because once you start to see the results, clients and agencies alike will want to move their budgets into new the model.

Do you think that trading on ad exchanges makes it easier to leverage agency and client data to deliver better campaign performance?

MB: Trading on ad exchanges will allow data to become more important but actually it’s not the exchanges where the benefit lies but with the use of DSPs like Audience on Demand. It is this technology that allows us to best use data to enhance the performance of campaigns and target only those users that are most likely to deliver a beneficial response for our clients.

The combination of our clients being able to retarget their visitors but on a much larger scale with the introduction of third party data means we can turbo-charge our schedules to deliver at the right cost and at the right level of volume. Those third party vendors need to move quickly over here. We already have demand and they are a little slow to get going. I was pleased to see Phil moving from Yahoo to Quantcast, perhaps a sign of things to come.

Does Publicis have an exchange strategy for Europe, and if so will this be headed up by Vivaki? Are there plans to devote more resource to developing this area of the business?

MB: This is not a UK or US only market place. It will become important across all major markets so of course we will grow our business in those countries. Many of our major European markets are already testing different models and gaining from the insights. Vivaki Nerve Center will take the route that drives the consistency and ability to learn as a group and not at a country/agency level. We are in the very formative stages of this area so it’s important we all learn from each other.

Resources will evolve over time. Some people will re-skill into this area, some will be recruited. But we have time yet to get into that. Rest assured though that the number of people working in this area will grow substantially!

What do you think are the key difficulties in moving an agency toward automated media buying? Is it the lack of technology and data skills that exist within the agencies? Or is it a lack of technology?

MB: It’s not a technology issue. We have the technology and it works. I am sure all of our competitors have their technology too. Some will work better than others perhaps, but generally I don’t see that as an issue. Technology should not be the differentiator for agencies, it’s the people behind it and what it delivers that counts. Clients do not want pitches where we all get our technology out and wave it about; they want to see insights and results.

In Vivaki there are pools of people who understand this new area and those that know less about it but is that not always the way? Over time we will train people and recruit people so that we have the right level of understanding and evangelism in the business. Look how agencies changed around search. We had the same discussions back then and we now have these amazing skill sets around search in the agencies, so I don’t really see too many issues. If you think the opportunity is a good one, you can make things happen.

Do you think the arrival of DSPs into the European market will help agencies bridge this technology and skills gap?

MB: DSPs will allow agencies to build campaigns across multiple ad exchanges, create data pools, and control frequency etc across the whole playing field rather than at a site or network level. They will also provide us with the largest search area when we are trying to find the elusive consumers who have visited our client sites previously. DSPs are enablers so of course it’s a great innovation in the marketplace globally.

I would say that I believe a true DSP is one that’s only interest is in providing technology to do all the above. It should not to try to resell inventory or have morphed from an ad network. There are many blaggers out there and it’s important that people choose carefully in who they work with as you may discover that the systems they provide are not as future-facing as you thought. The market place is very grey around the edges!

What’s your view on real-time bidding? Is it a game changer for the display market? Or are there still fundamental problems that need to be worked through (such as the computational costs) before we see the benefits?

MB: It works. Our campaigns are delivering great results on the RTB strands of the campaigns. I think RTB will be affected by many different elements not least volume of competition, which will only increase. But this is where the clever use of data helps you in RTB: only you know what is deemed a valuable cookie. Hence you will be bidding on it, not the rest of the world. This is different to search where everyone knows that if you bid on home insurance you will sell insurance. This is a huge benefit for ad trading – the agency knows who is valuable not the publisher telling us what is valuable.

Overall I believe that RTB will be a game changer. Suddenly impressions are valuable again in the volume game. Interestingly though, they are valuable from a data perspective and not so much from a context /channel perspective. The rules have changed. What’s premium now?

How do you see the European exchange space developing over the next twelve months?

MB: I think you will see many of the major players in the US getting people on the ground here to push into big European markets. The ecosystem is developing rapidly in Europe, and it will not be any different than the US. There are already companies up and running in Europe, providing ad serving and other services, and they will try to steal a march in these markets. The DSP pure players will soon be driving a more objective approach across Europe. I also think we will see the likes of Google really ramping up in the markets here, which in itself will drive liquidity.

A very quick breakdown of how it might work:

- Quantcast profiles the brand’s or the agency’s desired audience.
- Quantcast then searches for “lookalikes” – these “loookalike” segments are built using its own proprietary modelling technology and of course data from publisher partners. It then allows advertiser’s to target ads against the “lookalike” segments.

Do note that the UK is a different market from the US given the delicate privacy laws and the make-up of the market, and Qunatcast’s strategy here for Europe might differ entirely from the US. The exchange space does look forward to learning more about the possibilities of “lookalike” data.

Here is the press release in full on the expansion into the UK:

Quantcast announced today the appointment of Philip Macauley to UK Managing Director, where he will be responsible for leading the company’s operations and expansion into the UK market.

Mr Macauley joins Quantcast after ten years at Yahoo!, where he most recently held the post of Director of Business Development and Commercial Relations. He brings Quantcast and its clients his broad expertise in media planning, display advertising and go-to-market strategy within the digital domain. Mr Macauley joined Yahoo! as Head of Planning and Strategy for the UK and Pan-European market. In his tenure with the company, he has held various senior roles including driving media agency relationships as Agency Sales Director and leading the company’s publisher efforts as Head of Publisher Partnerships. Prior to Yahoo!, Mr Macauley was with WPP’s MindShare.

With this expansion, Quantcast brings to the European advertising and media marketplace a simplified and vastly improved way for advertisers to understand and reach their audiences online and for publishers to deliver real-time audiences that satisfy each advertiser’s unique audience requirements.

– Quantcast Measurement is the world’s favourite audience
measurement solution enabling publishers to better represent their
unique audiences and providing web site owners with accurate, directly
measured traffic, demographic, lifestyle, business and geographic
audience data. Best of all, Quantcast Measurement is completely free.

– Quantcast Audience gives advertisers the ability to
understand the distinctive characteristics of their best customers and
deploy these proprietary models to connect with millions, or tens of
millions, who look just like them across the web. Quantcast calls these
“lookalikes,” and by working with a wide range of leading publishers,
only Quantcast makes lookalikes truly portable, enabling advertisers to
take their audience model to any quality content and media partner of
their choice.

Quantcast’s services are used extensively by the advertising industry including most of the world’s major media agencies, hundreds of major marketers and millions of websites worldwide, including such leaders as MTV Networks, Bloomberg, The Economist, Reuters, IAC, BBC, Time Inc., NBC Universal, Discovery Communications, TypePad, WordPress, Dailymotion, Demand Media and LinkedIn.

“Since the launch of our global audience service in March, we’ve seen strong worldwide growth, particularly in Europe,” said Konrad Feldman, co-founder and CEO Quantcast. “Phil has exceptional knowledge of the UK marketplace, the needs of buyers and sellers, and a deep understanding of the emergence of real-time media solutions and the value these technologies deliver to publishers, marketers and consumers. We’re delighted to have him spearheading our UK expansion and excited for the opportunity it presents.”

About Quantcast

Quantcast measures and organizes the world’s audiences in real-time so advertisers can buy, sell and connect with the people who matter most to them. Ranked Fast Company’s # 3 Most Innovative Company on the Web for 2010, the company is used by the world’s leading media agencies, hundreds of major marketers and millions of global websites including thousands of the world’s best known destinations. Quantcast connects the planning, buying, and media fulfilment processes, delivering the marketplace’s most consistent and accountable audiences. Launched in 2006, Quantcast is headquartered in San Francisco and backed by Founders Fund, Polaris Venture Partners, Revolution Ventures and Cisco Systems. Come Get Quantified(TM) at http://www.quantcast.com.

A further 52 percent of publishers also said that third party vendors should be able to use audience data for retargeting, provided there was full transparency on its use. That is an interesting number, as it makes me think that either 48% disagree with the practice or they simply don’t have a data strategy. The reality is that publishers will have to use external parties to understand their data and use it effectively. How many publishers really know how to segment? Do they have the technology? Do they have the in-house resource to do it? Publishers need to get smart about their data and their audience. How can you effectively sell inventory if you don’t know your users?

There was an interesting piece this week from The Drift on how digital sales organisations need to look at their business as having three distinct areas: namely the page layer, the integration layer and the audience layer. Of the three the one that interested me most was the audience layer. In the post Doug Weaver suggested that “segregating and centralizing the audience selling activity inside your organisation” was a good strategic decision. The main reason for this is the move towards audience buying by demand-side traders. As data becomes more valuable than inventory it is almost a necessity now for publishers to either hire specialists to understand and trade their data or outsource these functions to third part vendors. To be honest monetising data is still a relatively new concept for publishers. But remember ad nets have been collecting data and using it to optimise inventory profitably for years. And how did they build these cookie pools? Yep, you guessed it: by collecting data from the publishers.

So now is probably a great time to start looking at all the options available. Those publishers that are sitting on a ton of data they can’t use, should be thinking about ways to trade with data hungry DSPs, agencies, ad networks and even publishers. Granted there is still no market to sell (suc as Blukai and Exelate), and there is still some confusion about the EU directive. But pubs must be more pro-active in getting together a comprehensive data strategy or they risk losing valuable revenue in the long run.

Here are some of the key points in the report, along with some of my ownj observations:

- The challenges for Right Media moving up the ad exchange food chain to become a premium exchange: publishers remain sceptical about putting remnant through the exchanges (although many are doing it anonymously, especially here in Europe) for fear of sales cannibalisation. D+P believe Yahoo will test different exchange models going forward, including a futures exchange or a reverse auction model where publishers bid on a buyer’s business. I still think publishers aren’t quite ready for a futures market; they’re still trying to come to terms with exchange trading.

- The growing influence of Google in the display market. Google want to own the non-premium exchange marketplace. With its huge reach in the marketplace through DFP and DFA, D+P believes Google could dominate the market. But it does stress that running a neutral ad exchange in this market might be impractical – and more importantly less profitable. The report feels Google might build out a DSP itself, as it looks to capitalise on the growing appetite on the demand side for more audience-focused buys. This is making holding agencies very nervous, as Google might be able to offer this service directly to advertisers directly and possibly disintermediate holding agencies from the media buying process. This is a very plausible scenario. Potential DSP acquisitions might include Appnexus, Invite and MediaMath (you could probably another five or six companies in there as well) – but it’s hard to know if it will go for a pure technology play. If it does decide to go down that and engage in some M&A action, my money would be on Appnexus.

- The report also focuses on the role being played by SSPs (the new acronym for Yield Optimization experts). The SSPs are effectively morphing into premium exchanges, as they help premium publishers sell their unsold inventory to the market. The SSPs are playing heavily on publishers’ fears about pricing and protection of proprietary audience data. The new SSP breed, such as Rubicon, Admeld and Improve Digital, will become an important buying point for ad networks and DSPs simply because these platforms will be managing some of the best inventory in the market.

- Advertisers love data. They need it to allow them to make “smarter, more targeted and timely online ad-buying decisions”. D+P talk about the rise of the data exchange as a means of accessing greater amounts of relevant data. From a publisher’s perspective it could well become an important channel for data monetisation. There are some serious hurdles to jump though. First of these is that premium publishers are interested in managing their own data and might not want to put their data on to an open exchange; and secondly, here in Europe legislators would have an absolute fit if they thought that cookie was being traded openly. It could explain Exelate and BlueKai absence from the market.

- And finally the report tackled the “big issue of our time”, the DSP. The report goes through the usual DSP focused companies, highlighting the evolution that has happened since the arrival of the of the first buy-side platform. There is particular love for Appnexus in this report, which makes me think that they the writers didn’t take time to talk to the rest of the people in the space. My own view is that Google will buy Appnexus or DataXu and that some of the big holding companies will acquire the rest based on the technology and expertise. Invite and MediaMath look like the best candidates for a holding company buy. I think the most interesting point made in the analysis of the DSP market is on the area possible new entrants. The report looks at Accenture as possible new player in the space. It points to Accenture’s investments in audience data provider, Adchemy, and its digital marketing consultancy gigs with the likes of Proctor & Gamble as possible indicators of entry. It also has an interest in a search bid management platform, MakeMeTop. Audience insight and biddable platform: sounds like a typical DSP to me. I wonder how many other companies are looking at entering the space. We know that Ebay are working directly with Appnexus. Are big advertisers thinking about building their own buying tools? Probably not, given the complexity of building out a buying platform. Expect a lot of consolidation in this space over the coming twelve months though.

Privacy is important and essential. But surely having appropriate ads targeted to you is a small price to pay for all the free content European publishers produce. Shouldn’t the industry be lobbying the EU a little harder about the positive aspects of targeted advertising? Has there been enough coverage around this topic?

The recent recommendations by the EDP Supervisor do not bode well for the online advertising industry, as it seems almost as mad as the mandatory opt-in for cookie access. The office suggests in an opinion paper that all new browsers should have mandatory privacy by default setting:

Need for further action, notably providing for mandatory privacy by default settings

As described above, web browsers commonly allow a level of control over certain kinds of cookies. Currently, the default settings of most web browsers are accepting all cookies. In other words, by default, the browsers are set to accept all cookies, independently of the purpose of the cookie. Only if the user changes the settings of his/her browser application to deny cookies, which as described above, very few users do, he/she will not receive cookies. Furthermore, there is no privacy wizard on the first install or update of browser applications.

A way to mitigate the above problem would be if browsers would be provided with by default privacy settings. In other words, if they would be provided with the setting of ‘not acceptance of third party cookies’. To complement this and to make it more effective, the browsers should require users to go through a privacy wizard when they first install or update the browser. There is a need for more granularity and clear information on the types of cookies and the usefulness of some of them. Users willing to be monitored for the purposes of receiving advertisement will be duly informed and they would need to change the browser settings. This would give them an enhanced control over their personal data and privacy. This would be, in the EDPS’ view, an effective way to respect and preserve users’ consent.

I know this has been said to the point of boredom but the information that cookies collect is anonymous: the data that a display ad is targeted against is based on a text file sitting on a user’s machine. Granted EU citizens should be protected against certain kinds of erroneous data collection, but there has to be some consideration for online publishers who require retargeting to increase revenue from advertising. There is a cost in producing content. Would the EU prefer to see pay walls pop up around all online information, shutting out its population? Would it like to strangle the digital media industry in Europe before it hits its stride? We are talking about billions of euros, and a sector that could create millions of jobs. There has to be some trade-off for free content – and all cookies are not evil. Maybe the EU should start talking to some publishers in the market and get their feedback? Maybe legislators should be asking: will this law affect your business and will this affect the future growth of the digital industry? Is self-regulation a better route than forced legislation?

Another reason why this is such a short-sighted piece of legislation is the impact it will have on online advertising innovation. Now I know I’m being biased here, but killing the cookie will severely hamper agencies and advertisers ability to buy audiences, will put a halt to the idea of trading data (can you see now why Exealte and Bluekai have stayed out of the market?), and will limit the ability to target online advertising effectively.

By passing this law, the EU risks losing competitive advantage to companies in other markets. We have about one more year of innovation and then its lights out unless the EU can be persuaded to row back on some of the detail in the new legislation. With so many trade organisations in our industry you’d think they’d coordinate efforts to win over the hearts and minds of European law makers. Clearly we need to work a little harder on our message and PR. The cookie is not evil – it’s just misunderstood. [EPDS]

» It seems behavioural targeting actually works. According to a study carried by the NAI (National Advertising Initiative) the conversion rates were more than twice as high as typical contextual ads. The research was carried out in association with twelve US ad networks (a total impartial view then). Good news for publishers too, as average CPM rates for behavioural ads increased by 108%. Performance ads only represented about 18% of the total $3.3 billion dollar revenue earned by the twelve survey ad nets. The research is being viewed as an attempt to sway the opinions of US regulators who are due to introduce online privacy laws. It would be good if the IAB attempted something similar here in Europe before our industry gets killed off by the cookie-hating bureaucrats in the EU. [Forbes]

» Downlaod the Natioanl Advertising Initiative report on behavioural targeting here.

2009 was a difficult year for the display advertising market? Has there been an improvement in the past couple of months? And will this year see a return to growth?

RF: 2009 was one of the most difficult years in living memory for the broader economy and the ad market. In Future’s most recent trading update in February, we said tPublishershat we expected market conditions to remain tough during 2010. Remember too that as a special-interest portfolio business (with over 100 mini profit centres), we tend to see ups and downs in different parts of the portfolio.

There has been a lot of debate over the past twelve months about how best to monetise unsold ad impressions. Does Future Publishing use ad exchanges and ad networks to monetise non-premium inventory?

RF: Mid last year, Future took the decision to significantly reduce the number of ad networks it worked with in the UK. The goal was to push for quality over quantity. We also signed up with AdMeld in Jan 2010 and so are in the early stages of that relationship. Initial signs are encouraging. Future’s US arm is engaged with ad exchanges and we’re assessing how these might work for the UK business. We think there’s opportunity to work with exchanges on both the buy and sell side.

Do you think using yield management platforms like AdMeld, Rubicon Project and Improve Digital, can help European publishers monetise unsold inventory?

RF: We’re certainly anticipating the increasing automation of the display ad model and believe that such technologies will have a part to play in how Future monetises its audiences in the future. We work with yield optimisers now and will continuously assess what platforms/services are most appropriate for Future going forward. We’ve already identified the need to build the internal skills/expertise to define and manage audience management solutions, whether these are contextual, behavioural or data-driven, and we have a team already assessing opportunities in this area.

What’s your view on ad exchanges? Do you think ad exchanges offer publishers a strong sales channel for unsold inventory? What do you think European ad exchanges need to do to attract more quality inventory form top-tier publishers?

RF: Liquidity is an essential component of an effective market system, to arrive at a fair value. Poor liquidity is currently a key challenge for the Exchanges operating in the European arena. At the moment, too many media owners are using Exchanges simply as an outlet for their unsold inventory – rather than understanding how they can be used to increase value.

We’re at the ‘learn’ stage of understanding how we achieve better returns from the inventory we put into Exchanges. And, Future also sees an opportunity to use Exchanges to add reach to its highly targeted and engaged audiences.

Would Future ever consider trading its premium inventory on the exchange platforms?

RF: In principle, yes. But realistically, I think the industry isn’t ready yet to pursue that opportunity. The immediate goal for Future is to build understanding of the value of our audiences in the market….and to evangelise that not all audiences are equal…ours are better!

What’s your view on the new German publisher exchange, AdAudience? Do you think a similar initiative could work in the UK and elsewhere?

RF: Personally, I’m fascinated by what AdAudience and its j.v. partners are seeking to do. I think this is an opportunity that UK Publishers should be actively considering.

Campaign performance has become even more business critical to advertisers and agencies. Do you think the “audience buy” has become more important than context and branding?

RF: The KPI’s for any campaign need to be clearly defined before the campaign buy happens. This then determines what the most appropriate buying strategy should be. I can’t say that audience targeting is more important than contextual targeting or branding because there are many different reasons/needs for running a campaign.

Data is fast becoming a valuable strategic asset for publishers. Can publishers leverage their own user data (audience segmentation and user profiling for instance) to improve the value of ad inventory?

RF: Absolutely. If Publishers don’t do this then someone else will do it to them. By standing still, we run the risk of becoming disintermediated from our audiences. That’s why Future is building the in-house skills and expertise to manage audience solutions and is assessing which technology vendors we should work with.

Last year saw the emergence of data exchanges, like Exelate and BlueKai. Can you see this type of trading as a future revenue stream for European publishers?

RF: This is a more difficult area because of the legal challenges in place about data usage. The boundaries have yet to be clearly set for this. But logically, data exchanges are a natural extension to the behavioural targeting marketplace which has become a standard part of display media. The challenge for publishers will then be to understand the value of our audience segments.

How do you think the display market will develop in the coming year?

RF: I’d anticipate the whole industry – advertisers, agencies and publishers – looking to engage with the new technologies coming onto the market and that this in turn will drive more liquidity and therefore more value in the Exchanges. Future is building its knowledge and expertise in anticipation of this. As a special-interest media company, there is additional value attached to many of our audiences: they’re the passionate, loyal, committed opinion formers that so many advertisers want to reach; so we’ll look to continue to leverage this value in the contextual and behavioural ad programs that we run.