Operative Blog

“It’s with great excitement that we introduce the 2010 OnMedia 100. This fresh batch of the hottest emerging companies in digital advertising joins illustrious alumni and gives us a great deal of insight into the coming trends in monetization… The 2010 OnMedia 100 winners have survived the upheaval of 2009 and are positioned to advance on the opportunities represented by the return to growth in the digital advertising sector. Congratulations—it looks like we made it.” 

Take a look at Operative and the list of OnMedia 100 Top Private Companies of 2010 under the “Advertising Service Providers” category!

Also, please join Operative CEO, Mike Leo at OnMedia NYC on February 2 at 1pm as he moderates the panel, “Will Exchanges Grab Market Share From Networks or Cater To Different Segments?  How Are Distribution and Bidding Evolving?”   Friends from IMO Entertainment, AppNexus, Google, PubMatic, and Peer39 will join in the debate.  We hope to see you there!

The end of a decade.  A time for prediction, review and a double dose of ‘best of’ lists.   So, let’s think… just what does the future hold?

Well, Spain will win the World Cup.  In the UK, Conservatives will win the General Election.  And, according to this Government commissioned report, we’re set for fewer butchers but more prosthetic limbs.

As for the Online Advertising world, it seems as if just about everyone has thrown their hat into the ring.  There was one announcement which caught my eye in Q4 I which feel might impact in 2010.  Google announced a new tool for advertisers called ‘Insights’.  This analytics suite is similar to Atlas’ own ‘Engagement Mapping’ tool and helps measure the effectiveness of display campaigns by examining the entire conversion funnel. This technology hasn’t quite hit its stride, so if you’ve not encountered this as yet: It’s time for a quick primer.  A ‘review’ if you will.

Since the online equivalent of the big-bang, the capacity for advertising on the internet has expanded into some boundless ether.  This constant state of change means that the cost of online ad space has also had to evolve.

Now there are a vast number of variables that determine the price of this inventory.  But despite what an Ad Sales Executive might tell you, this price is ultimately driven by the bar graphs on the advertiser’s report.  As the old adage goes – “It’s only worth what someone is willing to pay”.

The early adoption of buying a number of ad impressions (CPM) proved to be self-defeating in some respects.  As more web pages appeared online, advertisers witnessed diminishing returns and demanded more proof that campaigns were performing.  Establishing a cost model based on the numbers of user clicks (CPC) helps to validate an ROI.  But whilst this kept the acronym fanboys happy, it also raises as many questions as it answers.  Essentially this amounted to a glut of resellers tripping over themselves to get to the front of the queue to register your click and take your order online.  Cue the rise and rise of Search Engine Marketing (read: Google).

Post-click tracking has helped advertisers validate these clicks by identifying (anonymously of course) which users actually ‘converted’ e.g. went on to buy a book, sign up for the newsletter etc.  Here we can see a real correlation between the ad and the sale.  As a result online inventory is now commonly sold on a CPA basis (cost per action) i.e. a website will display your banners ‘for free’ but will take a payment based on resulting sales performance.  CPA deals represent a guaranteed return for your advertising budget.  Everyone’s happy right? <shakes head>.

This pricing scenario has thrown up its own unique conundrum.  When an online ad campaign appears across several websites, it’s possible that a user may see, or click the ad more than once.  Now should the user ‘convert’ (i.e. make the jump from clicking an ad to purchasing a product) which website should take payment for a successful sale?

Currently the general consensus is as follows: A successful sale will be acknowledged to the last / most recent click as this is assumed to be the most valid.

This ‘last click’ methodology is flawed as it ignores user engagement.  A user could see a banner displaying a ‘half price sale’ promotion on 5 different occasions – each in premium positions across several publisher sites.  It’s possible the promotional message has successfully registered with the user via highly interactive rich media ads.  If / when they decide it’s time to make a purchase, what do they do?  What would you do?  Well it’s pretty common to ‘google’ the advertiser’s website and purchase.  Payment for the conversion is therefore collected by Google/the reseller and not the websites who originally displayed the ads.

These new tools help calculate the value of all media exposure, allowing marketers to uncover deeper insights into each touch point.  Thus potentially giving credit (and by that I mean payment, not just a smile and nod) to the publishers displaying the ads.  Given that the analysis of user engagement is a complicated one, there will be no simple replacement for the ‘last click’ methodology.  I don’t expect Publishers/Advertisers/IAB to unanimously agree a ‘one-size fits all’ solution – but it does arm advertisers and agencies with more information to make purchasing decisions, and ultimately this will reflect in the price of the ad space.

So that’s it, a prediction, a review… I don’t have a ‘best of’ list.  There are too many of them anyway (but if I did Mamma Mia wouldn’t be anywhere near it!).

——-

Blogged by Jonathan Hall

Operative provides outsourced Ad Operations not only for publishers, but for a number of major Agencies across the globe. Jonathan Hall is one of Operative’s senior technical experts for all things Agency, providing advice to agency clients on a variety of subject matters including campaign planning and execution to report generation and troubleshooting.

Definition: Extrapolate- http://www.merriam-webster.com/dictionary/extrapolate 

Still in the year 2010, Publishers lose sleep over inventory and how best to manage it to optimize revenue.  As we discuss this vexing conundrum with the publisher audience, the most common themes continue to be:

1. We have SICK excel formulas and tables that help us extrapolate our available/sell-able inventory.

2. We have clients that want us to dive deeper into our audience…in addition, the advertiser wants to geo-target. So, extrapolating the data and conveying the inventory is a PAIN.

3. Using charts and images to extrapolate the inventory data is pretty sweet.  But, again, creating this in excel is sub-optimal.

How do you extrapolate your web site inventory? What solutions have you come up with that other digital publishers could learn from?  Post a note and let us know.

In this afternoon session, Product Manager Andrew Sullivan explores the concept of multi-dimensional inventory for digital publishers.  Decrementing inventory, segmenting audiences, packaging products…..these challenges affect the entire organization and most specifically, the ability to optimize revenue.

What business goals are impacted by your ability/inability to perform multidimensional inventory?

- Selling out of one area of inventory impacts other areas of inventory: this is a tough message to convey to Sales

- Illustrating to sales the full spectrum of inventory they are selling; and reasoning behind why certain pieces of inventory have a higher rate than others

- Ability for sales to communicate the value of their audience to the advertiser/agency

- Packaging strategies…looking at what you can encourage sales to lead with while making good use of the inventory

What systems are you using today to capture and aggregate the inventory?

- Ad server logs

- Excel Sheets

- Rapt

Who interacts with inventory in your organization? What are some of the typical roles?

- Ad Ops Team

- Finance Team

- Analytics Department

- The Exec Team

- The “Ad Product Team”- they focus on product analysis and performance

- Delivery Managers

- Sales reps and Sales planners

- Analytics Teams

What is CRITICAL to your business when solving for MD inventory?

- Compatible with MULTIPLE ad servers

- One data set to have transparency into all the inventory sources

- Quick and easy way to pull the data, aggregate it, and help the product, sales, marketing and ops team make sense of it

- Ability to generate accurate inventory reports

- Flexible rates, packaging

- Not using Excel anymore! It’s too manual and publishers need to move faster!

In breaking for lunch, many clients were anxious to discuss trends and themes that are top of mind as they tackle 2010.  Some of the common themes included:

1. Campaign reconciliation and billing- this is NOT just a Finance responsibility anymore. Many Ad Operations managers are charged with preparing billing and invoicing for revenue recognition- therefore as an industry, we need to do a better job of making billing/invoicing easier for non-Finance-focused individuals.

2. Targeting data- many Publishers are using 5+ targeting tools to help them better segment their inventory to meet advertiser/agency requests. These targeting tools can be cumbersome to manipulate because none of them talk to each other.  How can we simplify data collection from these systems?  How can we then apply the data from the targeting system in a meaningful and easily consumable way for Sales?

Do these topics keep you up at night? Leave us comments on how you have overcome these hurdles and/or best practices you’ve adopted.

Also- want to see who’s here? Or what we’re doing?  Take a look at some pics!  CLICK HERE!

What IS Operative.One?

Operative.One is the NEW brand for our solutions philosophy- the concept that media companies need to utilize multiple pieces of the value system in order to sell, execute and bill digital advertising (CRM, Ad Servers, Finance/Billing, Audience Targeting, Pricing/Rate Card, etc), and that all of these fragmented solutions need to feel as “one”.  It is Operative’s job to make it feel like one…To help our clients become easier to do business with.  Therefore, the “Operative.One” brand will be the umbrella for all future business solutions.

We are at the Winter Client Summit 2010 at the Norwood Club in New York City.  Clients from Wall Street Journal Digital Network, NBCU, Reuters, MySpace, Cars.com, Top 10 Reviews, SmartMoney, Geeknet Inc, and National Public Media to name a few, are here today to provide input into the Operative road map, share experiences about their digital advertising businesses in 2009 and how they plan to grow in 2010. 

Keep following us for updates on themes, discussions, and debates from the Client Summit.

And- check out out tweets @OperativeInc

In the Operative-sponsored Industry Participant Breakfast on Monday morning at the iMedia Agency Summitin Scottsdale, Arizona, three Senior Sales Executives sat on a panel to discuss ways to drive digital advertising revenue in 2010.  Participants included:

Moderator:     Mike Leo, CEO and President, Operative

Panel:

• Cheryl Lucanegro, SVP Advertising Sales, Pandora
• Tom O’Regan, SVP Advertising Sales, The Street.com
• Andrew Snyder, Chief Revenue Officer, Associated Content

How do you make it easier for an agency to buy from you?

According to Tom O’Regan from The Street.com, highlighting the value of sponsorships versus impressions will help them better interact with buyers.  Once an agency puts your brand in the ‘direct response’ bucket, the potential for revenue opportunity becomes obsolete. Pricing must be a combination of efficiency AND value.  The cost of doing business in digital advertising comes down to the Ad Operations team, and a focused, well-oiled Ad Ops team  is a true asset. 

Andrew Snyder of Associated Content said, “We’ve never heard an agency say ‘I want to work with you because you are cheaper than your competitors’. In reality, the agency is looking for performance measurement of some sort. You need to create the perception that your property drives results.” 

Cheryl Lucanegro of Pandora emphasized that being ‘easy to do business with’ runs from sales to ad ops and even to finance. The integration and alignment of these functions are critical to a publishers ability to develop long term relationships with buyers.

Mike Leo then asked the room of 80+ publishers, “How many people think that NOT being easy to work with negatively affects revenue?”  Most of the room said yes. 

A few years ago, hiring more salespeople was easy. Measuring their results has been very difficult in the past.  What are you doing today to gain more knowledge?

Cheryl said that Pandora uses Salesforce to track most of the revenue. She has 3 different sales teams selling 3 different products.

Tom’s focused on creating more dashboards to be able to see his work in a different and more descriptive manner. 

Andrewis going through the data flow right now, and trying to figure out how to gain transparency and present the information more effectively. Sales Reps could use a lot more insight as far history, close rates, etc.  Visibility into these metrics can only HELP drive positive results and behavior.

For more coverage on the iMedia Agency Summit, who attended, what trends to look out for in 2010, check out the event website. 

For the last session of the day, Operative CEO and President, Mike Leo, lead a discussion with Rob Deichert, Senior Vice President, Global Sales Development and Operations, AOL Advertising and Mark Ellis, Executive Vice President, Sales, AOL Advertising.  The panel explored how Sales and Ad Operations  work together to drive revenue, increase customer satisfaction, and continually optimize the consumer’s experience. 

We are in an industry of mass customization.  Everyone and every web site needs something unique and specific and customizeable - but are we there yet?  How do we deliver a custom product but on a mass standpoint?

Question: How does Sales work with Ad Ops? 

Answer: First and foremost, the work starts when the sale happens.  Ad Ops is a major partner, not an obstacle to winning and closing deals.  It’s common that the Sales person always wants to push the envelope with an agency buyer.  This is where Ad Ops has problems- a new custom environment for every agency client. 

Question: Is there one part of customization that would dramatically help? 

Answer: Optimization and billing would have a major impact on making the sales cycle better. 

Question: Does Sales appreciate Ad Ops? 

Answer: Yes (smile).  “All custom = no profit.  And all mass = no innovation.”   The key for any publisher is to find the happy medium because that is how a publisher can advance to the next level. 

Question:  Lets look at an example- AOL’s largest spending customers get the best and brightest opportunities because they have real dollars to spend.  Can we spill less blood than we did 2 years ago, if so, how do you do it? 

Answer:  The major change is that there are definitions for all products (Project Management), like an Operations role.  But in 2009, Ad Operations emerged as a major part of all implementations once a sale happened.  The majority of time though, even today, Ad Ops and Sales are not on the same calls.

Question: How do you manage inventory? 

Answer: The forecasting is more accurate when you add in multiple areas.  There is a balance between very specific sections and the ability to sell the entire site.  Managing inventory is entirely based on the market conditions.  The order of magnitude of creative in online versus TV is so different.  Online averages one piece of creative to 70k users versus a broadcast campaign which over 1 million.

Question: If the agency knew it was easier to do business with a publisher and that made business a lot easier, would the agency move more of the budget to them?  

Answer: Yes, the ability to provide fully baked programs at a strong value creates a much better relationship. 

Question: Is it part of your sales pitch, that “We are better at Ad Ops”? 

Answer: Yes, but it is subtle.  When you don’t have the best product, cheapest price, or largest site, customer service drives a large part of sales. 

Question: What improvements in the sales process have helped the most?  

Answer: One sales person, one person to talk to, one insertion order = huge win.  The online offline combination has a long way to go.  Video and TV will be the first to converge.  Others will follow.

Question: What will be the Big Wins in the next 3 years?  

Answer: The system between agency and publisher with regards to creative and discrepancies. 

“Looks like its cocktail time…”  Mike Leo

Does this sound familiar?

Lack of data integration

Too much manual data entry

Mistakes and discrepancies are constant

Invoices do not match

Every RFP is different 

IAB is trying to create a standard RFP –> Proposal –>IO –>Invoice process.  In conjunction with the IAB, Operative is participating in the beta project .  Geoff Petkus,  Senior Director of Product for Operative, takes the stand to showcase the ’standard’ communication process between Agencies and Publishers.

Step one, RFP receipt.  We will validate the incoming RFP for any errors and codes. The next step includes client-specific rules for what to do next. Each publisher will have the ability to define rules for any agency or account. 

Next we go to RFP management.  When an RFP comes in from an Agency, it will be assigned from a queue so that everyone is working on the most recent business.  After that, it will be organized into a RFP detail page. 

The last step is sending the proposal. 

Question of the day-  How does the new Ebusiness RFP platform play in a world that could be eliminating a major part of the RFP process?  

The whole process is meant to return RFP’s faster because they are in an agreed upon template to start with.  Operative can play a big role in the workflow- ask us how…email Sales@operative.com to hear about our work with Donovan Data Systems iDesk and innovations in streamlining agency/publisher communications.