Re-defining Digital Ad “Inventory”

Part I: How technology and data are forever changing our view of audience-based planning

As our clients’ navigators through the world of digital media, one of the most amazing sea changes we’ve seen begin to take shape over the last 24 months (and accelerating in many markets in 2011) is in the way we define the “inventory” we plan and buy. The world in which we only worked directly with media companies/publishers to negotiate for access to their audience has been forever changed.

Historically, we’ve planned digital media buys (for ‘display’ ads) along two main points of focus:

• Audience-based planning: Planning to reach as great a percentage of my defined target audience as possible based on our budgets and a desired frequency of exposure. This has largely been based on syndicated research supported statistics about a site’s reach and composition of a particular demographic.

• Context-based planning: By virtue of the surrounding content, my brand has relevance. For example, I want my ads for Cat Litter placed on as many cat-focused sites as possible. I need not investigate the demographic makeup of the audience of such sites as I believe that, by definition, the site’s audience is my target.

What we’re now seeing however is that both of these approaches to planning are being pushed to extremes, and in very different ways. In Part I of this piece, we’ll explore the changes in audience-based planning and a summary of the benefits as we see them.

Alphabet Soup and the promise of one-to-one, delivered

Apparently the digital ad industry is looking to rival large technology companies like Microsoft in our adoption of as many acronyms as possible. The most recent additions to our vocabulary however, like OBA (Online Behavioral Advertising), DSP (Demand Side Platform) and RTB (Real-Time Bidding) are terms that represent more than a change in the way we talk. They are representations of an entirely new market that is unfolding before our eyes. To some, it’s scary; but to us, it’s quite fascinating and represents a large opportunity for our clients’ brands to engage their audiences in new ways.

Fundamentally, this change is being driven by simple laws of supply and demand but it is fueled by the strategic use of technology and data. Unlike many other media where supply is fairly well-defined and the market cycles are more clearly identifiable, the digital channels are awash with inventory and a significant portion of it goes unsold. Enter Ad Exchanges and Demand Side Platforms. These systems are meant to automate the buying and selling of digital ad inventory. Publishers can place unsold inventory into the exchanges and buyers use DSPs to ‘bid’ for that inventory. The driving force in this market and what the buyers are bidding on is cookie data: a piece of text that gets stored on a user’s PC that can tell a story about their online behavior. Two very important things to note about cookies:

• First and foremost, they make navigating the web easier. Nearly every web site uses cookies to make your user experience better – from simple applications like remembering your user name when you return to your bank’s website to more advanced uses such as amazon.com using data to provide you with products you are more likely to be interested in based on past purchases.

• While there are bad apples out there, industry standard practices do not allow for the use of any personally identifiable information (PII), ever.

We are witnessing a rapid evolution from evaluating media properties individually, based on their reach or composition of our target demographic, to simply saying “this is who I want to reach”, and then buying impressions against that audience, independent of context. As the chart below illustrates, the growth of DSPs and exchanges (which will be used by nearly 50% of ad agencies in the US in 2011) is happening rapidly and at the expense of General ad networks and Premium publishers.

With some exploration, testing and refining of our definitions, we do Audience-Based Buying, leveraging aggregated information including demography, geography, interest areas and explicit behaviors engaged in online. We have the tools to deliver this with limited waste and independent of the context. Through different tagging platforms such as our GroupM-owned Zeus Advertising Platform (ZAP), we cannot only reach the individuals we want, but have an unduplicated view of those we do reach across different sites, even across multiple partners or ad networks.

While this is machines talking to machines, it can be a very strategic platform

In many cases, leveraging Audience Buying for a brand can deliver efficiency in the form of pricing or just in the form of eliminating waste from a media buy. Additionally, this approach to digital planning can eliminate many of the inefficiencies in the RFP-based planning process we’re so accustomed to. More interestingly though, this technology enables capabilities such as capping the number of times someone can see our ad (frequency capping); telling brand stories by delivering a sequence of messages to the same individual; or even deciding to deliver different versions of ads to different individuals based on different criteria. Of course this all plays beautifully into our Relationship Media planning approach in that it enables us to gain insights about the audience and truly leverage the technology to tell stories and engage users in meaningful conversations with our brands.

So it is that technology is affording a more targeted, more efficient and more valuable solution, and fueling an evolution in audience-based planning and buying online. In Part II of this piece in May, we’ll delve into the other side of the coin and look at how context-based planning is evolving.

Jon.Kaiser@maxusglobal.com