Beyond Search: Google Tunes Up Display Ad Machine

Image representing DoubleClick as depicted in ...

Image via CrunchBase

From my Forbes.com blog The New Persuaders:

Just a few months ago, Google sketched out a plan to bring together a wide array of its display ad buying technologies into a more coherent, easier-to-use offering. On Wednesday, it’s announcing that it has put some meat on the bones of what it now calls the DoubleClick Digital Marketing platform.

This is a little inside-ad-tech-baseball, so bear with me. But essentially, Google is gradually refining the pieces of what it hopes will be something of an operating system for online advertising, not just the search ads it dominates but the picture- and video-based ads that support most websites:

* It’s close to integrating key pieces of ad buying and creation systems that it built or acquired in recent years. For one, the ad buying system DoubleClick Bid Manager–the “demand-side platform” formerly known as Invite Media that Google acquired two years ago–will move out of beta test mode and become available to all customers next month. Google says improvements in the underlying technology infrastructure have reduced the time it takes to connect with various ad exchanges, allowing beta customers to access 16% more ad inventory on the thousands of websites that use DoubleClick. …

Read the complete post at The New Persuaders.

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Google Shuts Off TV Ads Business

From my Forbes.com blog The New Persuaders:

After five years of trying to sell ads on television using the automated buying system that works so well for its signature search ads, Google has finally given up. In a blog post this afternoon from Shishir Mehrotra, VP of YouTube and video, the ad giant said it will shunt the group’s staff to other projects:

Video is increasingly going digital and users are now watching across numerous devices. So we’ve made the hard decision to close our TV Ads product over the next few months and move the team to other areas at Google. We’ll be doubling down on video solutions for our clients (like YouTube, AdWords for Video, and ad serving tools for web video publishers). We also see opportunities to help users access web content on their TV screens, through products like Google TV.

The shutdown is clearly a disappointment for Google, yet another sign that its math-driven advertising systems don’t readily translate to traditional advertising. Back in 2009, the company shut down radio and print ad efforts for lack of interest.

Mehrotra’s not being entirely disingenuous when he says that Google’s efforts are better spent on online video advertising. After all, more and more TVs get connected to the Internet and more and more people watch TV shows on their laptops, smartphones, and tablets. With its Google TV project and its fast-growing YouTube video service, Google remains in a prime position to vacuum up ad revenues as big advertisers start to follow their audience onto the Web.

Indeed, YouTube especially has shown considerable traction in attracting new ad spending–$3.6 billion this year, by the reckoning of Citigroup analyst Mark Mahaney. As I wrote in a recent story, YouTube is where Google is placing its television-scale bets:

Now Mehrotra’s goal is to try to grab a big chunk of the $60 billion U.S. television business. But to do that, and fend off TV-content-oriented online rivals such as Hulu, YouTube has to become a bit more like conventional TV. To that end, it organized itself last year into TV-like channels, investing $100 million in cable-quality launches from Ashton Kutcher, Madonna, the Wall Street Journal, and dozens of others. More and more TV advertisers are being won over, says David Cohen, chief media officer at the media buying agency Universal McCann. “They’re getting marketers to think about YouTube as a viable outlet,” he says. 

Mehrotra, who last year became ­YouTube’s vice president of product, envisions millions of online channels disrupting TV, just as cable’s 400 channels disrupted the four broadcast networks. “We want to be the host of that next generation of channels,” he says.

In other words, Google’s strategy is to attack the TV ad business from where it’s strong instead of from where it’s not.

Why Do Programmers Hate Internet Advertising So Much?

Facebook ad question (Photo credit: renaissancechambara)

From my Forbes.com blog The New Persuaders:

Another week, another pontificating programmer slamming online advertising. What is it with these guys?

The latest example is a steaming heap of linkbait from software developer and entrepreneur Patrick Dobson entitled Facebook Should Fire Sheryl Sandberg. That would be the chief operating officer of Facebook, whose purported crime is that she steered Facebook toward being an ad-supported company.

In Dobson’s telling, while Facebook cofounder and CEO Mark Zuckerberg was off at an ashram in India, onetime Google ad exec Sandberg mandated that Facebook would henceforth be an advertising company. Proof of her folly? Facebook’s now worth half of what it was at its IPO three months ago as it “continues to flounder in advertising hell.”

This, despite the fact that Facebook will gross about $5 billion in ad revenues this year, despite the fact that its current market cap is still more than $40 billion less than eight years after the company’s founding in a Harvard dorm.

Thousands of Web developers would love to flounder this badly.

Dobson’s preferred alternative is that Facebook should gradually phase out advertising in favor of–and I have to get technical here, because the bigger picture he provides is fuzzy–selling access to its application programming interface. That way, developers can build businesses like Zynga did on top of the social network in the way personal computer software developers built applications atop Microsoft’s Windows. From his post:

… There is massive value in the social graph and the ability to build applications on top of it. I believe the value is greater than all of the advertising revenue generated on the web to date. … What is the best way to monetize the social graph? To sell access to the social graph! … Developers can then figure out if advertising, or micro transactions, or payed access is the best way to monetize the social graph.

I’m not really sure what “selling access to the social graph” would be, though it sounds like the result could make Facebook’s many privacy gaffes to date look tame.

But the bigger problem is the persistent implication by tech folks like Dobson that advertising is beneath them, and beneath any intelligent human being. Now, I’m no huge fan of most advertising, and all too often it is indeed lame. But there’s no doubt it can be useful at the right place and time, and even when it misses the mark, advertising is a small, remarkably frictionless price to pay for a whole lot of free Web services.

The notion that advertising is evil, to use a favorite term of Google critics, or at least useless is a longstanding meme in Silicon Valley. It goes at least as far back as Google’s founding, before it became–right–the biggest online ad company on the planet. Cofounders Larry Page and Sergey Brin famously wrote in their Stanford doctoral thesis describing Google that advertising could pollute search results.

Why this antipathy to advertising? A lot of tech folks seem to believe they’re immune to the influence of advertising. More than that, they assume that no one else is much influenced by it either (despite ample evidence over many decades that ads do influence people’s attitudes and behavior). Therefore, the reasoning goes, ads are nothing more than an annoyance, an inefficient allocation of capital. Dobson accuses Sandberg of a “rampant lack of business creativity” that has “no place in centers of innovation,” later saying she should start an ad agency in Miami. …

Read the complete post at The New Persuaders.

Twitter Launches Ads Targeted To Interests–Starting At A Penny

From my Forbes.com blog The New Persuaders:

Until now, advertisers could hit Twitter users with ads only if they followed the company or users Twitter deemed to be similar to those followers. That limited the potential reach especially for large brands looking to advertise to many millions of people.

Today, the company announced that marketers can now target the service’s 140 million users with ads, called Promoted Tweets and Promoted Accounts, based on their interests, inferred from their retweets and whom they follow, and other undisclosed qualities it uses to create its “real-time interest graph.” From the announcement, here’s how it works:

There are two flavors of interest targeting. For broader reach, you can target more than 350 interest categories, ranging from Education to Home and Garden to Investing to Soccer, as shown in the screenshot below. As an example, if you were promoting a new animated film about dogs, you could select Animation (under Movies and Television), Cartoons (under Hobbies and Interests), and Dogs (under Pets).

The two-level interest hierarchy is composed of more than 350 categories.

If you want to target more precise sets of users, you can create custom segments by specifying certain @​usernames that are relevant to the product, event or initiative you are looking to promote. Custom segments let you reach users with similar interests to that @​username’s followers; they do not let you specifically target the followers of that @​username. If you’re promoting your indie band’s next tour, you can create a custom audience by adding @​usernames of related bands, thus targeting users with the same taste in music. This new feature will help you reach beyond your followers and users with similar interests, and target the most relevant audience for your campaign.

So, how well does this work? Twitter says it’s seeing not only greater reach, no surprise, but also higher engagement thanks to messages reaching people more likely to be interested. It provides no specifics on these early tests, however.

Twitter also dropped the minimum bid for its auction-based ad system from 50 cents to a penny. That doesn’t mean a flood of cheap ads for getting rid of belly fat are coming. Indeed, it could open up its ads to a broader set of ad buyers, potentially creating more competition and higher prices.

As AllThingsD’s Peter Kafka notes, Twitter isn’t allow advertisers to target ads based on your tweets themselves, which probably makes them less effective in terms of purchase intent than Google’s search ads. Still, the ability to target people by their interests could be a big step forward for the company as it tries to turn its audience into dollars.

Facebook’s Faster New iPhone App: It’s For Advertisers Too

From my Forbes.com blog The New Persuaders:

After fielding a mobile app that was widely panned for being achingly slow to use, Facebook has launched brand-new apps for iPhones and iPads that are much speedier.

Speed is something users can never get enough of, but in this case, Facebook surely isn’t aiming just at its users. Speed matters just as much to advertisers. And advertising, especially on mobile devices, matter a lot to Facebook these days, since it’s seen by investors as struggling to make money from its users as they increasingly access the social network from smartphones and tablets. Some 543 million users, or half its base, access Facebook from a mobile device.

In particular, the new apps update the Facebook news feed in real time, so users don’t have to manually reload the page to see them. That’s key for Facebook’s mobile advertising hopes, since Facebook earlier this year began allowing advertisers to run so-called Sponsored Stories, or posts from one’s friends that marketers pay to highlight, right in people’s mobile news feeds. Now, those ads, like other posts, will be able to appear faster.

Why is that so important? Because real-time ad placement, already a staple in more “traditional” online advertising, could be a big key to success for Facebook’s mobile advertising, especially as it expands its ad exchange announced in June. “Mobile devices have put people in charge of their experiences,” Cindy Murphy, VP of brand activation at social advertising firm RadiumOnesaid at MediaPost’s Social Media Insider Summit today. “It’s more of a real-time experience.”

In particular, advertisers are keen to reach people at precisely the moment they’re ready to eat lunch at a restaurant or grab a coffee at a local cafe. To do that, they need to know where people are at a particular point in time and, more importantly, they need to know an ad for a discount or coupon will get to them instantly.

Speed in ad delivery is key for another reason, too. It’s becoming clear that standard Web ads simply shrunk down to smartphone screen size won’t cut it, but not simply because of the screen size. A bigger factor may be that people view their mobile devices as much more personal than personal computers ever were, so they loathe being interrupted while they’re doing things on it.

A better opportunity for marketers, then, may be the moments in between activities, when people are already switching gears anyway. “There are natural breaks in television,” says Chris Cunningham, CEO of appssavvy, which helps create ads for social and mobile companies. “You can find natural breaks in mobile too–such as between levels of a game. They can be in the form of a large, beautiful ad.” But those moments are, well, momentary, so that’s why speed matters there as well.

So as much as you may enjoy a Facebook app that’s speedy, advertisers–and Facebook itself–may like it even more.

Can Social Networks Ever Make Money On Mobile Ads?

From my Forbes.com blog The New Persuaders:

If there’s one thing that dogs Facebook among investors, it’s whether it can make the leap to mobile devices–and bring its advertising along with it. Although Facebook claims some success with its mobile ads so far, they’re still a relatively small portion of its revenues, and it’s not apparent that it or other social networks can translate their ad formats to small screens where people are way more sensitive about interruptions to their activities.

What Facebook and other social networks from Twitter to Tumblr need to do, according to a panel of marketing folks at MediaPost’s Social Media Insider Summit in Lake Tahoe today, is to realize that they can’t simply slap smaller versions of their display ads onto iPhones and iPads. Instead, they must try to catch people in the moments in between activities on their phones when they’re most receptive to relevant marketing messages.

On the panel were moderator Erik Sass, a reporter at MediaPost; Kate Bare, product manager for innovation at Expedia Media Solutions; Gabriel Cheng, group head of media solutions at Ansible; Chris Cunningham, cofounder and CEO of appssavvy; Cindy Murphy, VP of brand activation at RadiumOne; and Nathaniel Perez, global head of social experience at SapientNitro. Here’s what they think will work (and not work):

Q: What doesn’t work with social advertising on mobile?

Cunningham: Using the same old, same old techniques and trying to apply them to a new medium. We know people ignore ads. This next generation is about people and users.

Murphy: Mobile devices have put people in charge of their experiences. Consumers are not going to engage with the usual (ad) content. It’s also more of a real-time experience.

Perez: Beyond just social and mobile, the rate of change has outpaced marketers’ ability to adapt. Content that’s relevant and delivered in the right way remains key. We have still failed to shift from interruption (marketing) to experiences.

Q: So we need to avoid interrupting the users’ experience. Does that mean mobile display is dead?

Perez: I don’t think you can write it off. It’s about delivering relevance in the moment. The real problem isn’t about screen size and layout.

Cunningham: Display today and how the ad networks are selling it (is the wrong way). We have to go back to big, beautiful ads. People are scared to interact with ads because they might be taken away. There are natural breaks in television, and you know it’s going to come. You can find natural breaks in mobile too–such as between levels of a game. They can be in the form of a large, beautiful ad. …

Read the complete post at The New Persuaders.

What Startup Buyout Frenzy Says About Social Media’s Future

From my Forbes.com blog The New Persuaders:

Despite the resounding thud of Facebook’s disappointing initial public offering of stock, social media still looks like a huge opportunity for marketers–and for the rapidly expanding ecosystem of companies looking to help them understand how to operate in the new medium. So social media enablers from Buddy Media to Vitrue to Wildfire Interactive have been snapped up for big money recently by seemingly unrelated companies such as Salesforce.com, Oracle, and Google.

What’s up with that? Essentially, it’s a recognition that social media can’t be successful in marketing unless it’s connected to a brand’s other marketing efforts, from traditional and online advertising to public relations. Much of the infamous dissatisfaction of brands such as General Motors with Facebook advertising stems from their relegating social media to a little experiment rather than figuring out how it’s unique and how it best meshes with other marketing channels.

That was the message from a panel this morning at MediaPost’s Social Media Insider Summit at Lake Tahoe, which is streaming live online. The panel included moderator Jackie Cohen, director of social media and communications for marketing consultant TicularMax Kalehoff, VP of product marketing for social media marketing firm Syncapse, which recently bought Clickable, where Kalehoff was VP of marketing; Mike La Rotonda, cofounder and CEO of social marketing platform Votigo; and Jeff Ragovin, cofounder and chief strategy officer at Buddy Media, recently acquired by Salesforce.com. Here are highlights of their repartee.

Q: How is social media evolving?

Ragovin: If you’re not doing social media today, it’s almost a fireable offense. …

Read the complete post on The New Persuaders.

Facebook Social Ads: What’s Working, What’s Not

From my Forbes.com blog The New Persuaders:

One of the biggest uncertainties about Facebook is how well its social ads work. The social network and its partners have trotted out study after study showing that people more often click on Sponsored Stories and related ads that contain a friend’s name, but advertisers and especially investors are not yet universally convinced.

Today at TechCrunch’s Crunchup conference in Silicon Valley, we got the skinny from two people who know as much about Facebook advertising as anyone: Greg Badros, Facebook’s vice president of engineering and products and the guy in charge of advertising engineering; and longtime adman Tom Bedecarre, chairman of digital agency AKQA, now a unit of ad giant WPP. Here’s what they had to say in conversation with TechCrunch’s Josh Constine.

The bottom line: Both men indicated that Facebook is just at the start of the opportunity. But the guy with the checkbook really wants more kinds of ads than Facebook currently provides–and implied that the size of those checks in the future depends on getting them. …

Read the rest of the post at The New Persuaders.

Marketers Send Facebook Message In Q2: Show Us

Facebook CEO Mark Zuckerberg (Getty Images North America via @daylife)

From my Forbes.com blog The New Persuaders:

Facebook may have disappointed investors with its first earnings report as a public company, but the results also reflect disappointment among an even more important group of constituents: marketers and agencies.

It’s not that Facebook did badly on the sales front. It exceeded admittedly dampened expectations, not to mention hitting the Street’s profit target. Nor do the folks who write the checks to run ads on Facebook spend much time watching FB on the stock ticker. “Whether the stock is up or down is not a big concern,” says David Berkowitz, VP of emerging media at Japanese ad giant Dentsu’s digital agency 360i.

What is? Results. While Facebook today trotted out plenty of stats and examples of success stories for the Sponsored Stories that it clearly views as the most effective ad it offers, the company hasn’t yet managed to close the deal for many marketers and agencies. “Facebook has to do a better job of articulating the value of its advertising to the brands,” says Heather Pidgeon, VP of services for iProspect, a digital agency owned by Aegis Group. “They have yet to say, ‘This type of advertisement works for this type of advertiser.'” …

Read the full post at The New Persuaders.

LIVE: Facebook Shares Plunge On Disappointing Q2 Earnings

English: Mark Zuckerberg, Founder & CEO of Fac...

Facebook CEO Mark Zuckerberg (Photo credit: Wikipedia)

From my Forbes.com blog The New Persuaders:

Facebook managed to hit the second-quarter earnings numbers investors had expected, but that wasn’t nearly good enough as shares plunged in after-hours trading.

The social network earned a non-GAAP 12-cent profit, on target with expectations, on revenues of $1.18 billion, the latter up 32% and a tad above estimates.

Ad revenue was up 28%, to $992 million, well above analysts’ forecasts, though still below the first quarter’s growth rate. Facebook suffered a net loss of $157 million, or 8 cents a share, largely because of accounting for employee stock plans post-IPO.

Shares rose as much as 6% in extended trading initially, but then quickly fell back almost 11%. That’s probably at least partly because Facebook didn’t offer a forecast, at least ahead of the conference call. They fell more than 8% at the market close today. They now sit at an all-time low of just under $25. That’s 37% below the $38 IPO price.

A quick take from Global Equities Research analyst Trip Chowdhry: “Overhyped and underdelivered.”

Here’s what CEO Mark Zuckerberg and other executives had to say about the quarter in the company’s first earnings conference call: …

Read the complete post at The New Persuaders.

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