Fixing Advertising Los Angeles | July 2010

Fixing Advertising Los Angeles | July 2010

CaptureRarely does a panel discussion achieve an optimal mix of education, entertainment and controversy the way the Fixing Advertising session did on Monday night in Los Angeles. The education series, sponsored by Dapper, has now made its way to every major U.S. media market in an effort to not only make sense of the fragmented display advertising landscape, but to actually do something about it. Bravo!

Credit for the effective cadence and tone of the session goes to Pete Kim, General Manager of Yahoo! SmartAds, who clearly being qualified to serve on the panel himself had the audience on the edge of their seats just by knowing just when to dial up and down the intensity. He began by asking the audience what level of discussion they wanted to hear, which was promptly met with shouts of “deep dive” and “hard core!” And the panel did not disappoint. 

So what is being done to “fix” advertising? Kim began the conversation by asking the panel to articulate what’s broken — and everyone had an opinion about given the theme of the evening. 

According to Zack Coelius of Triggit, advertising is broken because it’s fragmented. It’s broken when it costs 20 to 30 percent of the media budget just to plan, buy and manage the process, especially when you don’t know where your ads are going and when you don’t have control over the buy.

Frank Adante of Rubicon echoed his sentiment from the publisher perspective, explaining how the sell side is fragmented too. Finding the money is difficult, he says, when an estimated two million advertisers are buying from one thousand sources and at least 500 sales teams worldwide. Not to mention the difficulties presented by multiple billing, collections, reporting systems. The solution, he suggests, is a central platform for selling and the  need for automation.

According to Jon Aizen of Dapper, people enjoy the web and get great value, but they don’t like display ads, which cover 10-20% of the visual real estate. After all, banners haven’t changed much since 1994. Advertisers actually have sometthing people want, but the advertising isn’t reflective of their offering, which Dapper hopes to change by matching visitors to relevant content.

Amy Lehman of United Online made a compelling case for how expensive it is to manage campaign reporting, metrics and attribution and how insane it is that we have not dealt with this as an industry already. Furthermore, she said, the industry is “beyond commodotized” and we make enable fragmentation which only makes it harder on ourselves. Ultimately, according to Lehman, most facets of the fragmented ecosystem (analytics, rich media, creative optimization, ad verification, etc.) belong resident in the ad server. 

As automation of these processes takes hold, will jobs actually be eliminated? Probably not, since machines can’t do creative or strategy, but more junior level roles centered around manually running reports and  managing pivot tables may evaborate, or at least their jobs will change, as the industry continues its rapid trend toward automation. According to Adante, automation is partly the cause of the fragmentation, referencing how a huge SEM/SEO services industry was built upon the backs of the major search engines.

Jon Aizen spoke about page saturation, consumer immunity (banner blindness). Unlike how a half page ad in print is half the cost of a full page, more ads on the page online are sold at the same rate, thus creating banner blindness. In Aizen’s view, sometimes it is more prudent to know when not to serve an ad. He also claims display units are too small and not intrusive enough. After all, when was the last time a banner ad made you laugh or cry?

The days of arbitrage models where middlemen add no value are over. If Terrence Kawaja’s now infamous GCA Savvian fragmentation slide is an indicator of some future consolidation, the Kim asks “by whom?” According to Coelius, “it’s going to be a going out of business process, not a buying process.” For those vendors who help to add insight and extract real value for advertisers, however, the outcome may certainly be acquisition by those larger media players and agencies who must continue acquiring such technology to compete long term.

Partly justifying the need for so much data and analytics is how much more multi-dimensional and dynamic display is compared to search. The mere fact that campaigns are distributed among thousands of sites in and of itself is complex. Then add in the critical creative component, which according to Michael Baker, a recent DataXu study found was the single most important factor in driving conversions, followed by consumer and context.

Being hosted at The Rubicon Project, Adante diligently represented the voice of publishers, whose role in all of this cannot be overlooked. According to some, a publisher backlash related to how networks use their data is looming, but there shouldn’t be any at all if publishers are simply paid for each impression based on what it is worth to the advertiser, which is what DSPs and sophisticated ad networks are set up to do.

Best quotes of the evening:

“We’re trying to kill online advertising and replace it with content.” – Jon Aizen

“Arbitrage just needs to die.” –  Zach Coelius

 “These little buy and sell side technologies are like plaque in the teeth of Google.” – Michael Baker

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From left to right: Amy Lehman, SVP Advertising, United Online; Zach Coelius, Founder & CEO, Triggit; Frank Addante, Founder & CEO, The Rubicon Project; Jon Aizen, COO & Co-Founder, Dapper; Peter Kim, General Manager of Yahoo! SmartAds; Michael Baker, CEO, DataXu, James Beriker, CEO, Dapper.