There is a developing battle going on at the moment between the ad net and agency DSP for ad spend. Slowly but surely ad net margins are getting squeezed by the emerging DSP market. Agencies, who remember have the client direct relationship, are implementing fairly robust exchange strategies now. They are looking to put a lot more of their spend through these automated channels (either through 3rd party vendors or their own platforms). Who will suffer most from this shift of budget to the DSP? The ad network of course. Price and inventory transparency remain the key drivers. But transparency remains a tricky subject especially in the European DR market. A lot of ad nets are selling blind because premium publishers don’t want to them repping their non-premium inventory – for fear of sales channel conflict. The agencies are demanding more transparency and less of the black box sales patter.

This is a difficult place to be for the ad networks. The industry Cassandras who called the death of the ad network 12-24 months might not have got it quite right, but you feel there is a big shake-up about to come. There are a couple of reasons for this? The biggest reason, which have already touched on is the rise of the agency buying platform, with ad agencies taking a more pro-active role in buying and optimising media on behalf of the client instead of outsourcing the process. Another big factor for the shake-out is the rise of the so called data economy. For years, data was given away without a thought. Its economic value was never fully appreciated by publishers. The data leaks will soon be plugged up by revenue hungry publishers and ad nets will have to pony-up for its use. And questionable tactics like burying scripts in ad tags will never capture enough data.

Ad nets do have of course access to large volumes of actionable data, but thrity-day cookie decay and regualr cache clear-outs will ultimately force their hand. Publishers will be looking to be compensated for data use. I’m not saying ad nets are in danger of disappearing. But there are too many ad nets in the UK – and with automation becoming the trend there will eventually be no business need for 80 middle-men. The bigger technology-driven and well financed operations will survive and prosper. And they won’t be satisfied with being on a media plan. Some will, but others will be looking at this from a different perspective. I envisage a future where agencies and ad nets are going head-to-head for advertiser budget.

Imagine for a minute you are top-performing DR ad network with solid tech, data and expertise. Are you going to let a third-party or agency DSP suck all your business away and leave you as an ad-hoc outsourcing solution? Of course not. The ad nets will go straight to the brands and advertisers, and try to distinguish themselves from their agency competitiors. How will they do this? They could build out a DSP proposition similar to Lucid Media or licence tech to compete with agencies trading in the exchange marketplace. The data “blind spot” could be covered by establishing attractive rev share deals with publishers. Basically the uber ad net will need to play heavily on the tech and data angle. People in the industry say ad nets and DSPs can co-exist in one harmonious space. I’m saying it’s possible but there will be less ad nets in the market and their business model is going to look a lot different than today. Arbitraging inventory will no longer cut it especially if agencies continue to put more and more budget through ad trading platforms.

With European criminals viewing the automated channels as an easy opportunity to infect web users, it would appear that partnerships like this are no longer an add-on but absolutely essential. There has been a lot of industry talk in the past couple of months about the extent of the malware problem – but there has been little or no debate in the pages of the mainstream trade press. Perhaps the subject of malicious scripting is not as engaging as an Old Spice social media campaign. It should be given the size of the European display market. With the increasing move towards automation in the online ad market, I can see a lot of resource being invested in combating the threat posed by malware producers. Publishers will require this service more and more, as more European ad inventory is put through exchanges and supply side platforms. Details of the full release can be read below:

NEW YORK – July 27, 2010 – The Media Trust (www.themediatrust.com) today announced a partnership with AdMeld (www.admeld.com), the technology platform that helps premium publishers sell ad inventory smarter and safer. The integration puts The Media Trust’s powerful malware detection engine to work across billions of AdMeld-optimized impressions each month. The Media Trust uses proprietary technology to proactively identify malware threats and alert AdMeld to the source — before the tags can be launched and damage done.

“Over the past six months, malvertisers have grown increasingly sophisticated in their methods,” said Chris Olson, CEO, The Media Trust. “Instead of mounting network-specific attacks they have begun to target multiple demand sources simultaneously, employing the same tactics that agencies and demand side platforms use to achieve their own reach and targeting goals. This shift requires a fresh approach to the problem, and The Media Trust’s global infrastructure, combined with AdMeld’s broad view of demand-side flow and supply-side inventory provides a unique capability to combat this growing threat.”

“Today we’re announcing a new standard in malware protection for our customers and the industry as a whole,” said Michael Barrett, CEO, AdMeld. “With hundreds of publishers and demand sources transacting on our platform, maintaining a safe environment requires the technology to seek out a few, increasingly sophisticated needles in a large, ever-changing haystack. This is what The Media Trust does best, and we’re proud to partner with them on this.”

About The Media Trust Company

The Media Trust is the leading provider of online ad creative malware scanning, ad verification, and data transparency services worldwide. Media Trust’s proprietary content monitoring technology protects yield managers, publishers, ad networks, and exchanges from malicious or otherwise unwanted creative running through their platforms or on their web sites. Media Trust verifies targeting and creative execution for thousands of media buys daily across 45 countries. Media Trust maintains the largest global infrastructure for geographic and behaviorial targeting verification to ensure campaigns are running correctly, reducing discrepancies and make-goods and providing solutions to identify and correct campaign errors in the process. Media Trust automates the support of traditional and mobile Internet advertising creative including display, rich-media, video, text and search and is integrated with leading ad serving and OMS solutions. Media Trust clients include AdMob, Advertising.com, Comcast, Hearst Newspapers, PointRoll, Yahoo, YouTube and over 300 additional agencies, publishers, ad networks and exchanges.

About Admeld

AdMeld helps the world’s top publishers maximize ad revenues, and sell their inventory smarter, safer and more efficiently. The company’s dynamic yield optimization technology connects with hundreds of sources of demand such as ad networks, exchanges and DSPs, and provides tools and analytics for publishers to better understand and monetize their audiences. Current AdMeld customers include Answers.com, AccuWeather, Discovery Communications, FOX News, Hearst Television, IAC, New York Post and more than 260 others worldwide. The company is headquartered in New York City with offices in San Francisco and London. Visit www.admeld.com

» Google released its Adplanner June data for the top 1000 global sites this week. Big risers in the 1000 site index included Marca.com, ESPN.com and goal.com – mainly due to the World Cup and the Tour De France. I’m sure most European ad networks and publishers have factored these cyclical events into their sales pitch when touring the agencies. Here’s a summary of the big movers for the month:

- June was a banner month for Spain as it led up to this month’s big World Cup win and Spaniard Albert Contador winning the Tour de France. Marca.com was a winner too with a 79% increase in unique users from the month before.
- The World Cup didn’t go unnoticed either in the United States as espn.go.com saw a 48% rise in June. And won’t it will be interesting to see where ESPN falls in the July Ad Planner 1000 thanks to some stateside craze of our own named Lebron James?
- In May goal.com jumped 21% in the Ad Planner 1000 rankings and the momentum didn’t stop in June when the site enjoyed a 40% rise in unique users.

The full analysis for the month can be read here.

» Microsoft’s quarter earnings might have beat the Street’s guidance, but it continues to burn through stacks of cash in its online operation. The Microsoft earnings reveal that it’s losing $696 million in its online division. The chart below (courtesy of BussinessInsider) shows that the division hasn’t turned a profit since the final quarter of 2005. Microsoft clearly have very deep pockets.

» Is mobile now the best use of your DR budget? According to a new report by MediaMind on the global performance of automotive ads, it would appear that marketers are missing a big opportunity. The report suggests that mobile banner ads have nearly twice the CTR of standard online ads. Will marketers from the automotive industry put more budget into the mobile channel? Possibly. But there is still a big issue around transparency in mobile. A lot of the current ad nets are blind media buys. Brand safety is a major concern for agencies around mobile – and most of the time they are unsure what sites their ads are appearing on. And there’s also the issue of tracking performance. In most cases agencies have to depend on the word of mobile ad networks when reporting campaign performance to clients. Not acceptable. Google’s launch of DFA for mobile should see all this change – with the result being a shift in budget to mobile. Big media buying agencies will not have to roll specialist units to buy mobile inventory. It can all be done from their trusty DFA ad server. I think that’s when you will see ad budget flow into the mobile channel. [eMarketer]

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.

Privacy is a pretty hot topic right now, especially with the furore about Facebook’s privacy policy and their seemingly endless intentions to try to make personal data available to whomever will pay for it. But you can see their point. Much of the value of Facebook as a business entity will lie in not just the demographic data that Facebook holds, but also in the habits and interests of their members. Commercialising this data will clearly be priority number 1 right now.

People feel uncomfortable about this, but when talking to them, most are not really sure why. Some just don’t like the idea of big companies prying into their lives (even though credit card, traditional direct marketing and telecoms companies have been doing this for years). Some feel the data is private, even though they have decided to plaster it all over the internet. But most simply do not realise the impact of their actions. As a result, the press and privacy campaigners have highlighted the dangers of giving up certain personal details and preferences. But far from giving licence to identity thieves and fraudsters to steal every inch of your persona, as long as people follow some careful rules, read privacy policies and ensure they investigate the sites they sign up to, they can feel reasonably safe being a member of Facebook, Twitter, or any other social networking / similar site.

But that’s the point. How many of us feel they have the time to investigate and read the privacy policies of the sites we join up to? Most of us will simply join them from curious interest or peer pressure and assume they are safe since they are generally large and all your other friends are members. This is dangerous as it leads to mass trust of a site or system based simply on the beliefs of a few random individuals who may not have checked the basic facts before signing up themselves. It does not help that sites such as Facebook keep changing their privacy policies either, but regardless, it all points to one thing: privacy needs to be simpler.

Most of the problem relates to the fact that collecting and storing data comes at a cost and sharing data is so littered with legal issues that it incites each and every one of these sites to build their own system to perform these tasks. This leads us to the current issues of today where each and every one of us will have personal and non-personal details individually stored across hundreds of different sites, ranging from simple registrations on competition websites to full on social networking behemoths like Facebook. Adding to the melange are all the cookie based data recording systems from adserver, adnetwork and behavioural companies which all use their own cookies and thus duplicate data again. The net result is huge confusion over data ownership and the value of data which then leads to all the scary headlines and companies trying to be somewhat underhand to recoup the investment in all their data collection machinery.

So let us propose a different solution, a data utopia if you will. Let us ditch all these disparate data sources and centralise everything into one secure distributed data cloud. Companies that want access could subscribe for the simple cost of storing the data and maintaining the infrastructure to provide that data. If companies want access to personally identifiable data, they have to be registered with the data commissioner and all the other legal stuff that goes with that. The data is no longer owned by any company, it remains in the sole ownership of the individual and to give them the management and control so lacking in today’s environment, we give them a login to this uber system. This login shows exactly what data exists and which companies are using it, as well as giving the user the ability to selectively delete data and / or restrict data from one or more companies.

Companies still get to decide whether or not they tell the user what they use the data for, but given that a user has complete control over what is stored and what the company sees, it is in the interests of the company to prove it is trustworthy as well as provide measurable value to the customer for giving up some of their data. In Facebook’s case this is the ability to stay in contact with friends around the world for free. For behavioural companies, it is allowing access to ad supported content sites free of charge.

Once people understand the value of their data and regain control of it, privacy will become simple. In return, all companies using data will benefit from more accurate, more regularly updated data that can be more easily used to provide tailored services or advertising. Those that believe people will simply block all advertising companies should note the experiment from the arstechnica.com guys (http://arstechnica.com/business/news/2010/03/why-ad-blocking-is-devastating-to-the-sites-you-love.ars) where people with adblockers actually happily turned them off / added an exception for the arstechnica.com site once they realised the financial harm they were doing to the site. Similarly, some sites could just prevent access unless you subscribe (also handled through the uber data system) or make available some personal data, again, bringing home to the end user the value of their data.

The technology for this system exists right now. What is lacking is the political and commercial will to make it happen. Microsoft, Google, Yahoo and Facebook are all vying to be the commercial entity that cracks this issue (look at MS Passport, Google Single Sign On and Facebook Connect), but if one of them does, this puts all the power with that one company. If legislation could be devised to favour a more open source model, we could prevent ownership and control by a single entity and in this way create a “data internet” in a similar fashion to how the “content internet” has grown up from community and commercial contributions.

It would take a confident government to be able to propose and implement such a solution as this, let alone across international borders, but in the meantime, it is refreshing to see more and more companies providing “cookie content pages” from their privacy policies where you can see exactly what data the company has captured from you and edit / remove as required. This is clearly a good start and is something you can expect to see from Infectious Media in the coming months.

I’m not suggesting that pubs should go down the ad network route. I think publishers exploring this option should buy one hundred per cent of display media through the automated channels (ad exchanges, SSPs, etc) forgoing the messy relationship building with pubs in their niche. How might a publisher buy this inventory and target ad using their proprietary data? They could use Invite or AppNexus. But they could build their own. Granted there would be some resource required in building out the technology and hiring people who have experience of buying inventory across exchanges. But the opportunity is there. Not everyone can do it of course – because all publishers have good data. I’d be looking at one of the niche publishers to take the plunge – particularly those in verticals that pay fat CPMs or can generate the most ad revenue. The FT would be the best candidate. It has ridiculously good data which it can use to augment its reach.

How might the FT look to put something like this together?

- Hire a bunch of developers to build out a proprietary DSP solution that will leverage data but prevent leakage
- Bring in some exchange-buying expertise to trade across the automated platforms
- Use a vendor like Netezza to help crunch the data
- Use a dynamic creative provider
- Hire some ad net sales staff to get you on those all important media plans

It sounds all too easy. And it is to begin with. There will be teething problems. Some campaigns won’t work – and some will. But the thing to remember here is that the ad net market is worth £250 million in the UK alone, and some pubs are missing out on taking a slice of it. What you also need to remember is that the European exchange ecosystem is slowly being knitted together. Invite can plug into many of the exchanges in Europe, and because of this you will see a lot more centralised media buying in digital. A lot of it will be done from London. Shouldn’t the FT be looking at this development as a big opportunity for revenue generation.

But what about sales cannibalisation? Audience-buying will affect my tier one inventory, and I won’t be able to demand my fat £70 CPMs from the market. Well, there’s something called sales conflict management. Seeing as the FT is running its own DSP it can instruct its sales staff to stay away from certain brands, agencies and advertisers.

Paidcontent reported yesterday that the FT was in the process of launching a niche site on the FT network, as it looks to increase ad revenue opportunities. Why limit yourself to a few hundred thousand in advertising when you could be accessing a market worth hundreds of millions Europe wide? The FT could own a chunk of the media buying market in finance if it wanted. But is owning and running a DSP a bridge too far for any publisher?

I’m not aware if figures are available for Europe – but it would seem a race to the bottom is happening in the display market as even greater amounts of cheap social media ad space are made available. Here’s the thing though, social media ad inventory continues to perform poorly (albeit for a couple of DR successes). And the brand safety element – something which Europeans are rightly obsessed with – is still a primary concern. This is some consolation for publishers for the moment. The other big issue facing pubs is that Facebook’s famed “social graph” continue to offer unbelievable targeting. If it starts to deliver better performance for advertisers, budget will inevitably flow to Facebook. The supply issue will continue to knock the stuffing out of CPM pricing – but context and brnad safe environments should stem the tide of bottom feeding social nets.

The graph below illustrates the disparity beween socila media and content sites (note the x-axis data is CPM pricing and this in US dollars):