Google versus China. Round 2 – “A new approach”

The latest news of Google’s outage in China is a big PR issue, but does little to their situation in China. Google’s brand is so strong that even if there was an outage in North America, they’d be back to business as normal within 48hrs. People that do power searching are as loyal and forgiving of Google as Apple users were through the iPhone 4 issues. It actually overshadowed the much bigger news of Google potentially powering all the search for Yahoo Japan. That would essentially accelerate Google’s growth three-fold in a very short time. It’s clear that Google is not walking away from Asia and will attempt to dominate every market in Asia with or without further adoption from China.

The Evolution of Display Advertising, Ad Networks and Ad Exchanges

In a previous post, I talked about the difference between ad networks and ad exchanges being only technology. With the emergence of demand side platforms ad exchanges are positioned to lead the way in redefining how “none premium” display inventory is bought. It is simplifing the process of buying remnant inventory for advertisers, reducing the intenal processes for agencies and allowing publishers to monetize their website traffic. Below is chart I’ve seen that explains the changes we see demand side platforms driving.

Old School		New School
Buying Pages	1	Buying Audience
Forward Markets	2	Spot Markets
Sellside Optimizes For Both Advertiser Performance And Publisher Yields	3	Sellside Optimizes For Publisher Yield While Buyside Optimizes For Advertiser Performance
Sellside Aggregates Audience	4	Everyone (Sellside, Buyside, Intermediaries) Aggregates Audience
Technology Is Strategic For The Sellside And Tactical For The Buyside	5	Technology Is Strategic For Everyone
Agencies Work To Foster Internal Collaboration Between Digital And Non-Digital Buyers	6	Agencies Work To Foster Internal Collaboration Between Buyers Of Display And Buyers Of Site Integrations And HPTO’s
Buy Instructions And Optimization Instructions Submitted Via Email Phone & Fax	7	Buy Instructions And Optimization Instructions Submitted Via API
Testing Cycles Of 4-12 Weeks For Brand Metrics And Media Performance	8	Testing Cycles Of 4-12 Days For Brand Metrics And Media Performance
Agencies Allocate Dollars Manually Based On Publisher’s Reach, Brand Equity And Perceived Value	9	Agencies Allocate Dollars Through Automation, Based On Modeling Of Projected Returns On Ad Spend
Agencies Rely On A/B Testing For Learning	10	Agencies Use Exploratory Data Analysis For Learning, As Well As A/B

The ability to add data intelligence in a near real time basis has display advertising behaving like direct marketing. As the scale of inventory available through ad exchanges increases a new standard will be created for measuring the effectiveness of display advertising. I wonder what this would do to social media website’s?

*chart courtesy of Greg Hills

2010 Predictions MidYear Report

OVERALL SCORE: B-
1. The success of Apple and Google phones will force Microsoft to buy a mobile ad network. I know, not shocking. GRADE = C, not correct, but no quite wrong yet.
2. CPM prices will rise again. The recession pushed premium inventory prices down, but it pushed traditional ad dollars down more. Online surpassed TV for the first time in Europe in 2009 and this year, we’ll see digital make a comeback in volume and pricing GRADE = B, This was as obvious
3. Social media hype will cool down. Yes, I know it’s popular and the amount of hours spent on Facebook are absurd, but no one has been able to truly measure how impactful advertising on social sites really are. All media buyers should turn social media spending over to the PR team. They are more closely aligned with how to measure the success of social. GRADE = INCOMPLETE, Not enough information. Facebook continues to make their own rules and we all have to play.
4. The end of the search battle. In case it wasn’t clear by now, Google has won the search battle. With roughly 80% of the global search queries and growing and a decreasing battled Yahoo and Microsoft, it’s safe to end the standing 8 count. Baidu however, will be the world’s number 2 search engine by 2012. GRADE = B+, Baidu is not a secret, but the move of Google out of China changed the game. It is important to note that Baidu has tried to launch in other Asian countries with little success.
5. Twitter reaches the crossroads. They will either get acquired, see a new competitor or just go away. The jury is still out on how valuable twitter really is, click here, but the honeymoon phase is over. GRADE = D, It’s clear twitter isn’t going away, but still not clear if they will or should get acquired. The success of their new advertising model will be the beginning or end for them.
6. The tradeoff on free content will hit a pivot point this year. Advertising supported website will be impacted by online privacy changes. And challenge all publisher’s ability to monetize content without charging. GRADE = INCOMPLETE. Viacom’s losing in court to Google only leaves us where we started this year.
7. Large advertising agencies will acquire technology companies versus other agencies. The increase in online advertising will force ad agencies to think about growing more efficient versus just topline growth. GRADE = C, Not correct, but not wrong. This process may take more time that I anticipated.
8. 3D advertising will become a norm on the Internet. After all the hype of TV moving to 3D channel following the success of the Avatar movie, digital ads will be the first to the new format a standard. GRADE = D, It appears TV will be taking a huge leap into this space. I still have my bets on online, its just faster and easier to adopt.
9. Online video will make its way to television. It’s the next step of reality tv, user generated TV.  I know Apple TV does this now with YouTube, but I think Time Warner, Comcast and DirectTV are all looking for one leg up in innovation. GRADE = B, Does YouTube being available by cable neworks count? I hope so, these grades are only getting worst.
10. 2010 will go down as the year of data. Who has it, who owns it, what they can do with it. GRADE = A, The government will be a big player in this space this year. From the EU’s revised data collection policies to Germany’s probe of Google’s data collection, it’s going to get interesting this year.

The difference between an Ad Network and an Ad Exchange and why you shouldn’t care just yet.

Over the years, display advertising has taken a hit and made plenty come back attempts. The latest is realtime bidding, which I won’t cover today, but will be an important player in how we buy media in 2010. In the early days, media buyers would call up portals and website owners and negotiate a price for placement and volume of impression on their site. The main winners at that time were large portals (Yahoo and MSN), national new publishers (NY Times and CNN) and local news providers. With just that mix of publishers, buying display media can be a laborious process. As the number of internet surfers grew, so did the places the consumed content. Creating a challenge for advertisers to get in front of potential customers and for publishers maintain previous traffic levels to their site.

Then came the concept of Ad Networks. An ad network is simply a buyer and seller of display media. They buy advertising space and sell them to various advertisers for a profit, so basically arbitrage. This obviously comes at a cost to publishers, because now they are paying a fee to sell their traffic. As more ad networks where created competition for inventory got more competitive and inventory from ad networks decreased in quality.

Ad Exchanges brought technology to the industry to bring more transparency and simplify the process of buying premium advertising space.Though this became an easier way to “pimp” page views, it too continues to fall the way of ad networks. Publishers, concerned about devaluing their inventory started pulling space out of networks and selling direct. So the struggle between marketers reaching the right audience and publishers selling at the best price contuniues to be a struggle. Enters Realtime Bidding (i.e. RTB). RTB allows advertisers to bid on the impression versus just a page view that provides little information excep that a user visited that page. I’ll discuss RTB in a later post. With Google buying InviteMedia I am sure the airways are buzzing for the rest of the technology companies.

Searching for China

With Google giving up the fight in China, my earlier prediction about Baidu probably means they will be second to Google in search queries by the end of 2011 not 2012. Although this may feel like a great opportunity for Yahoo/Microsoft, it’s not. For the last few years, I spent a lot of time understanding the Asia digital advertising market and doing business there has proven a very different challenge of US companies. Currently Baidu doesn’t seem interested in launching in any other market so partnering with a second tier search engine seems unlikely. Google’s power has already changed the advertising field in most markets which has essentially left no competition in search. This may however push other countries to rethink how much free reign they want to give Google. This will be an interesting year for Google with the fastest growing market now out of their plans.

Online Advertising Predictions for 2010

1. The success of Apple and Google phones will force Microsoft to buy a mobile ad network. I know, not shocking.
2. CPM prices will rise again. The recession pushed premium inventory prices down, but it pushed traditional ad dollars down more. Online surpassed TV for the first time in Europe in 2009 and this year, we’ll see digital make a comeback in volume and pricing
3. Social media hype will cool down. Yes, I know it’s popular and the amount of hours spent on Facebook are absurd, but no one has been able to truly measure how impactful advertising on social sites really are. All media buyers should turn social media spending over to the PR team. They are more closely aligned with how to measure the success of social.
4. The end of the search battle. In case it wasn’t clear by now, Google has won the search battle. With roughly 80% of the global search queries and growing and a decreasing battled Yahoo and Microsoft, it’s safe to end the standing 8 count. Baidu however, will be the world’s number 2 search engine by 2012.
5. Twitter reaches the crossroads. They will either get acquired, see a new competitor or just go away. The jury is still out on how valuable twitter really is, click here, but the honeymoon phase is over.
6. The tradeoff on free content will hit a pivot point this year. Advertising supported website will be impacted by online privacy changes. And challenge all publisher’s ability to monetize content without charging.
7. Large advertising agencies will acquire technology companies versus other agencies. The increase in online advertising will force ad agencies to think about growing more efficient versus just topline growth.
8. 3D advertising will become a norm on the Internet. After all the hype of TV moving to 3D channel following the success of the Avatar movie, digital ads will be the first to the new format a standard.
9. Online video will make its way to television. It’s the next step of reality tv, user generated TV.  I know Apple TV does this now with YouTube, but I think Time Warner, Comcast and DirectTV are all looking for one leg up in innovation.
10. 2010 will go down as the year of data. Who has it, who owns it, what they can do with it.

AdMob, Android, Google and You

The AdMob acquisition along with the soon to be release new Android are clear signs that mobile is starting to get some momentum or atleast in the eyes of Google. To date, mobile has been a huge challenge, particularly in the US where multiple phone networks, various phone manuafactors, various software prevent any type of standardization. Between Palm, Windows Mobile, Blackberry, iPhone and Android, how do you provide the best user experience and how do you even execute across the various systems. What Apple did with the iPhone was eliminate two main barriers. They created the software and the platform (i.e. iPhone). In addition they created a marketplace that allow users and application developers (or advertisers). This ecosystem worked with the iPod and has proven successful with the iPhone. Google, with the acquistion of AdMob has gone in a different direction in terms of how the “marketplace” will potentially provide content and advertising.

Putting lipstick on Yahoo!

Now that the buzz around the Yahoo and Microsoft deal has calmed down. I wanted to take a deeper look at what this really means for the search landscape. According to ComScore Google searchers remain loyal to the brand and Google is actually growing market share globally despite the release of Bing.  There has been some traction in the US market for Bing, but the US market is not only the most mature, it only represents 17% of the global search space. The MicroHoo deal instantly made Baidu the world’s third largest search engine. And with China having the worlds largest internet community is number and growth, Baidu could eventually become the worlds number two search engine. In addition to the growth of competitors globally, the landscape for “portal searches” has changed. More people are using their mobile phones and twitter to search, which offer faster and more relevant information making the 1 year courting of Yahoo! search seem pointless.

Not all the news is bad though. The MicroHoo deal could be the beginning of a powerful partnership and a competitor to Google’s real growth opportunity, display advertising. Yahoo and Microsoft combined have a powerful display network filled with a quality audience and global reach. Between the two companies there are 4 ad network systems, which doesn’t create confidence that a display partnership is close (in execution not on paper).

In the end, Microsoft had to do this deal. It was necessary and the right thing to do. This partnership is not only needed for Microsoft, but for the advertising community. I just get the feeling that Microsoft may end up feeling buyer’s remorse once the “new” feeling is gone.

Display + Search is only the beginning

Increasingly more companies are pushing for display and search integration to be more efficient with ad dollars. Although this concept has been romanticized by many agencies and publishers, it only represents the beginning of the real shift understanding advertising effectiveness. It has been well documented that multiple exposures to a brand influences consumer choices, yet media continues to be measured in silos. The success of banner ads, emails, search, TV and radio should be measured by market exposure versus click thru or open rate. And once you add in viral and word of mouth, the success of a program becomes increasing difficult to dissect using our current available metrics.

Should there be a new metric to measure advertising effectiveness? Or is the current structure of advertising agencies and media buying the barrier to truly having a holistic view how customers interact with brands? More ideas around how to execute on this concept coming soon.

“Vision without execution is hallucination” – Thomas Edison

Where I’ve been….

Thanks for all the followers who have reached out to ask why I have stopped writing. It really means a lot. I am currently working on a few projects that have unfortunately taken away from my blogging time. I’ll be blogging again in the next month with a lot to say about mobile advertising, marketing dashboards, Facebook and why you should never invest in Twitter. Stay tuned.