ChasNote

From my latest post on the ad:tech blog:

“I’m headed to ad:tech hoping to get a better sense of the value ad networks might bring to publishers and brands. After listening to pitches from around 50 of them over the past 5 years, I have to admit I’ve become a bit cynical.

“Publishers are disappointed with ad-network CPMs. Especially when they focus on how much the ad nets, exchanges and servers are skimming off every transaction — $4 of every $5, according to Jordan Edmiston analyst Tolman Geff.”

At ad:tech this year, I’ll be on the lookout for new approaches that go beyond ad-servers that merely target browsers with cookies they haven’t seen in a while.

From PaidContent:

“The talks are no where near the formal stage and the idea for a cross-publisher ad net doesn’t seem to be serious at this point. There has been one round of preliminary discussions about the ad net idea and there’s the possibility of another, but nothing has been set yet. So take this with a large grain of salt.

“According to one unidentified Ad Age source, the ad net push is more a wish and expression of frustration than an actual framework. ‘We’re getting killed by ad networks’ Ad Age’s source said. ‘A lot of companies feel like, as consumer companies with a flood of online content, if we could just create some scale on our own and sell across it, we can get a lot better ad rates.’”

I hope it’s not serious, because I like magazines and magazine companies, and I hope they quickly develop ideas to save themselves. This is not one of those ideas. Some of my best friends are ad networks and all, but they won’t save publishing. Ad networks do not drive rates up, and, while ad networks are a nice supplement to other revenue streams, by themselves they cannot support the kind of high-quality, expense-intensive content that differentiates traditional publishers from commodity news.

There’s something magical and irrationally valuable about the content in Time or Vogue or Sports Illustrated. There are other sources of world news, models in fashionable clothes and in-depth sports coverage (respectively), but most of us are convinced these publications do it better. Maybe it’s the quality of the writing and photography, maybe it’s the access they have to their subjects, and maybe it’s just the fact that we’ve grown up associating those names with leadership in those content areas. Whatever the contributing factors, these magazines have built brands with readers around the world. It’s hard to explain the connection readers have to those magazines and the content within them. It’s subtle work. What’s made the business of publishing work is the ability of those magazines — their publishers and sales reps — to explain that magic to marketers, who are then willing to pay premium advertising rates to insert themselves in a premium conversation.

When you bundle up a few hundred magazine brands into a bundled-sell ad network, the “premium conversation” discussion — as well as the premium rates — goes out with the bath water.

TechCrunch points out that my two most recent posts — Steve Jobs’s medical leave and deceptive ads served by Yahoo’s Right Media — have a connection. At least within the flawed logic of the ad-targeting machines used by ad networks and context targeting engines. The screenshot below, from TechCrunch, shows a Kaplan University ad (”Jobs Become Obsolete. Talent Doesn’t.”) alongside a WashingtonPost.com story on the Steve Jobs situation. An added wrinkle: The Washington Post owns Kaplan.

Om talks to Yahoo about the dearth of premium online CPMs: The web needs more quality content and something that makes the content unique. For example, the GigaOM sites!

I couldn’t agree more, Om.

Except when you say GigaOM competes with the ad networks. The GigaOM sites — sold individually to brands that want to associate with the premium, exclusive content in the rarefied context that is reading a site like GigaOM or New Tee Vee — live at the top of the media-pricing pyramid. That’s not to say that unsold inventory on those sites can’t be sold as part of a blind ad network like AdSense or Blue Lithium. Publishers such as GigaOM, FM, or ESPN offer one kind of value (building brand value through association with quality), and ad networks offer another kind of value (low-cost clicks that answer a direct-response need). The two can use inventory from the same sites symbiotically, if both entities understand the value they bring to the marketplace.

(Disclosure: The GigaOM sites are part of the FM family so I’m biased when I say you should buy ads on them.)

Another one for the contextual mis-targeting file, courtesy of ValleyWag:

From ValleyWag:

“We’ve got a call into Walmart, but our guess is that through ad network LinkShare’s affiliate marking program, hundreds if not thousands of Web site publishers put Walmart banner ads on their sites in hopes of referring shoppers and earning a slice of revenue from whatever they buy on Walmart.com. It would be very difficult to thoroughly vet each publisher. But if there’s ever been a need for a clear example as to why Madison Avenue interactive agencies do not trust their clients to ad networks that claim extensive reach above all else, there is no more.”

Last year AOL paid $275 million to buy Tacoda. Now, according to Venture Beat, AOL is dropping the brand and rolling the technology into Platform A’s Ad.com unit.

“iThis is a shocking move for some, because Ad.com doesn’t target much at all, and offers ads of $1 or less per a thousand views — and is generally considered a ‘bottom-feeder’ by some in the industry.”

Times are tough at ValueClick, too

No news here for folks who have participated in the television or print publishing businesses anytime in the past 50 years, but it may be revolutionary news in certain online marketing circles, especially circles in, say, Mountain View. From Ad Age:

“Now, new findings from the Online Publishers Association suggest that content is king: Ads on branded-content websites are more effective than non-branded sites and outpace industry norms in nearly every category.

“[The study] determined that ads on content sites have greater impact on the overall purchase process, including customer awareness, brand awareness, brand consideration, brand preference and purchase intent, especially among the consumer package goods, financial services, technology, telecommunications and travel sectors, giving credence to the idea that audiences are attracted to websites.”

Media Kitchen’s Darren Herman scared me with his headline Goodbye Media Sales Execs. That’s it, I said, no more inviting Darren join me on stage at the Conversational Marketing Summit!

Then I read his post, and found myself in deep agreement with his take on the future of media sales:

“While ad exchanges currently supply Madison Avenue with inventory such as 300X250, 728X90, and other IAB standard impression units, you cannot purchase integrated/custom campaigns. While what you can do in a banner/button unit can be extremely creative and unique, you are not able to purchase page takeovers, custom content, or any other unique placements.

“I believe Media Sales Exec’s lives are going to become much more efficient. Let agencies and marketers buy standard ad-units through exchanges layering on different targeting data (not just technologies), but when the phone rings to publishers, it’ll be for the custom/highly integrated media opportunities: where the sexy dollars are.”

More on the topic from my colleague Pete Spande.

Here too is an earlier post at ChasNote.

As reported by Silicon Alley Insider, data from PubMatic’s June AdPrice Index says:

“Online publishers earned a $0.36 CPM, or cost per 1,000 ad impressions, for inventory sold through ad networks in June, a one-cent drop from May.”

The biggest drop in prices occurred at small sites, those with fewer than one million pageviews a month, where average CPMs delivered by ad networks was $0.81, down from $1.13 in May. That’s still better than $0.46 CPMs for mid-sized sites (1MM to 100MM monthly pageviews) and the $0.23 CPMs for large ones. Not pretty for independent publishers trying to make a living.

Paris-based Quividi has created software that enables video cameras in billboards to determine a rough demographic profile of the person looking at the ad:

“they are not storing actual images of the passers-by, so privacy should not be a concern. The cameras, they say, use software to determine that a person is standing in front of a billboard, then analyze facial features (like cheekbone height and the distance between the nose and the chin) to judge the person’s gender and age. So far the companies are not using race as a parameter, but they say that they can and will soon. The goal, these companies say, is to tailor a digital display to the person standing in front of it — to show one advertisement to a middle-aged white woman, for example, and a different one to a teenage Asian boy.”

What happens if I’m walking by a billboard on a day I happen to be wearing a dress?!

In addition to solving the relevance problem (serving the right ads based on demographic-recognition algorithms), consumer acceptance may be an issue:

“Although surveillance cameras have become commonplace in banks, stores and office buildings, their presence takes on a different meaning when they are meant to sell products rather than fight crime. So while the billboard technology may solve a problem for advertisers, it may also stumble over issues of public acceptance…. ‘I think a big part of why it’s accepted is that people don’t know about it,’ said Lee Tien, senior staff attorney for the Electronic Frontier Foundation, a civil liberties group.”