DIGITAL MARKETING HUB v2.0 - AdExchanger

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Digital Marketing Hub <strong>v2.0</strong> BMO Capital Markets The Web 2.0 Era Marketing Analytics The term analytics is frequently used a broad category of business models, like agency or ad network. In fact, analytics is an even broader term as it’s a theme that frequently runs across the enterprise. From a marketing perspective, analytics live on both the buy-side and the sell-side of the ecosystem. For example, publishers that sell online ads frequently use web analytics, like Adobe/Omniture’s SiteCatalyst, to track website usage; on the other hand, an advertiser can use the same tools and data from their own website to optimize their own marketing campaigns. The term analytics is also being increasingly used to describe the tools offered by “market research” companies like Nielsen and WPP’s Kantar as well. And is growing to be a theme of this section, analytics services crossover with so many of the accompanying business models; put simply, any company operating an ad technology module is generating data about its usage that can be re-packaged into a usable format for marketing decision-makers and be called “analytics.” While it’s a broad term, below we describe a few of the more recognizable business models: Web Analytics Web analytics vendors provide the tools to calibrate and analyze a web property’s traffic. Using these tools, publishers can bolster customer profiles and test the effectiveness of one ad versus another (i.e., A/B or multivariate testing). Moreover web analytics vendors have long since incorporated and synthesize other internal sources, such as point-of-purchase and call center data. And as the technology evolves it will be able to incorporate essentially any customer data sources that are derived digitally. Moreover, vendors also often act as a platform for “plug-and-play” integrations for third-party marketing applications, forming a basis of a broader “digital marketing hub.” Social and Mobile Analytics As the social and mobile ecosystems have developed so too have analytics services based around the channels and properties. These can come in the form of first-party services offered by major properties; for example, Facebook offers advertisers analytics tools derived from its social media property, while iTunes offers developers feedback (aka “analytics” on usage of the apps they’ve developed and sold). But the term is more commonly used for third parties; this can include broader third-party analytics companies mentioned above, as well as start-ups focused on social or mobile specialties. For example, salesforce.com acquired Radian6, a social analytics provider to offer to its broader customer base built around sales CRM. Third-Party Analytics and Measurement What was once called market research and/or media measurement is increasingly being categorized as “customer insights” or third-party analytics. Information collection techniques traditionally included panels and focus groups, whose data was then overlaid with human analysis to create, for example, broadcast TV ratings. Today, third-party analytics increasingly involves the harvest of digital data – both from cookies and APIs -- and digestion into usable formats for advertisers and publishers, like online advertising performance benchmarks. This is the evolution currently going on at companies like Nielsen, WPP’s Kantar, GFK, and Ipsos. A member of BMO Financial Group 60 June 7, 2012
Digital Marketing Hub <strong>v2.0</strong> BMO Capital Markets Ad Verification Ad verification vendors rose to help address the always persistent question around discrepancies in ad impressions and budgets fulfilled between the buy-side and the sell-side, and the various layers of the display ad ecosystem. These third-party services help act as an independent check, however, they are not seen as final authority or cure-all for discrepancies between different vendors either. Ad Exchange The onset of ad exchanges in the middle part of the last decade became a key driver of the rise of programmatic display ad buying and real-time bidding. In the early days, ad exchanges were the marketplaces around which the tools of search marketing (e.g., preset rules and budgets, targeting parameters and other elements of programmatic buying) could be used to buy display advertising like banner ads. Agencies, ad networks, and individual advertisers can take part in the marketplace individually or in support of each other. Each player uses its own special mix of data and targeting algorithms to buy and/or sell ads. Right Media (acquired by Yahoo!) is normally viewed as the original ad exchange and today Google’s DoubleClick Ad Exchange has become the leader, while Microsoft has also been a player in a variety of forms for many years. Exhibit 47. Indexed Comparison of CPMs on DoubleClick Ad Exchange by Vertical 300 250 257 200 221 200 199 150 170 170 153 147 143 137 107 105 105 104 100 96 100 50 89 82 81 74 73 73 69 67 46 0 Health Business & industrial Jobs & education Travel Reference Pets & animals Beauty & fitness Food & drink News Shopping Real estate Hobbies & leisure Science Home & garden Internet & telecom People & society Games Finance Sports Computers & electronics Arts & entertainment Online communities Books & literature Autos & vehicles Law & government Source: Google "What's Trending in Display for Publishers?" May 30th 2012 Ad exchanges have come to stand along ad networks as the primary “second channel” distribution model. Both business models have long-promised advertisers more efficient marketing campaigns by using data to target ads, both based on web content and context, as well as audience-based characteristics. And because of the exponential growth of digital ad inventory, publishers have often viewed their services as “raise to the bottom” pricing mecha- A member of BMO Financial Group 61 June 7, 2012
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