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What does oil scarcity have to do with ad technology innovation?

What does oil scarcity have to do with ad technology innovation? iMedia Editors
Americans are despondent over our dependence on foreign sources of energy. While America has recoverable oil, there’snot nearly enough to fuel its 20 million barrel per day habit.  We've found ways to fill the gap between our demand and our domestic supply, including moving to abundant and cheaper natural gas, solar, and wind, but some of these new sources just aren’t as good as oil.

As the price of oil rises, it’s become economical to invest in new technologies thatrecover previously expensive sources of natural gas and oil. Two techniques - natural gas 'fracking' and shale oil extraction –have emerged as viable alternatives that.Both approaches require new technology, place a premium on available inventory and are disruptive to existing producers. These are not methods you use when oil is cheap and plentiful.

Oil isn’t cheap and plentiful like it used to be. 30 years ago China and India weren’t growing at 10% a year and the internet was nothing more than an academic and military communications tool.

The parallels between the energyeconomy to the current ad technology ecosystem are not obvious at first. But when you take a look at the ad ecosystem - and Terry Kawaja’sLumascape - the parallels are stunning. As demand for more has risen over the last two decades, more companies and more technologies have arrived to fill the gaps and create new sources of inventory to satisfy new demand.

When oil was first 'discovered', in western Pennsylvania in the middle of the 19th century, it was very close to the surface. This madeextraction simple, but messy and inefficient. John D Rockefeller's consolidation of the early oil industry into Standard Oil introduced efficiency. As worldwide exchange for trading oil and its derivatives developed, the US dollar was standardized as the Reserve Currency to stabilize the market. Since thattime all oil, even internationally, is bought and sold only in US dollars.

The development of this complex system for extracting, trading, transporting and refining oil took  nearly a century to develop. By comparison, the same process took the online ad industry less than 15 years.

Within the ad tech ecosystem, Doubleclick was Standard Oil. Overture would have been British Petroleum, but they ceded this mantle to Google.  24/7 Real Media became Dutch Shell. Various other ad networks became versions of Philips, Citgo, Getty, Chesapeake Energy and Lukoil.

A barrel of Oil? In today’s ad world, the standard measure is CPM.

Over time, vertical control of oil field operations left the control of the 'oil' companies and became separate businesses. The rise of the SSPs echo this development, as companies like AdMeld, The Rubicon Project and Pubmatic became the Halliburtons of the ad world and helped manage yield. Their plumbing provided the raw material for Google AdX and other exchanges to monetize. Media companies like Yahoo, seeing the value of their own fields, sought to buy technologies like Right Media to better monetize their own inventory and then applied this technology to other companies’ fields. DSPs like Turnand Invite developed ways for buyers to target the fields that best met their needs.

Still, during all this time, these companies were recovering most of the easy stuff: web display ads on the best publishers' pages. Using a standard set of recovery tools - iFrames, JavaScript, and Flash - these OPEC-like players competed for the ad inventoryby bidding for the highest quality impressions, or the best crude oil, that they could find. Like wildcatters of the old days, Publishers realized that more home page inventory meant more revenue and created new editorial products to be sold. As long as the users visited and occasionally engaged, all was good. Publishers even started to monetize impossibly tiny audiences on impossibly small screens via mobile apps and companies like AdMobwere created overnight to pursue and exploit this market.

However, throughout this flowering of ad technology innovation, one humongous source of potential inventory has stubbornly avoided profitable exploitation:  the real estate residing within email newsletters, alerts and notifications. Breaking news. Friend and game requests. Transactional messaging. Status Updates and reminders.

Email, the universal tool of communication - the number one way for publishers to remind you to visit their site, for social media services to notify you of a post, and for etailers to send you your confirm – has until recently relatively untouched by the ad tech revolution. Unmonetized except by retail email marketers. While retailers have long appreciated email as an effective marketing tool, the issue is that, in the hands of a publisher, email has long been underutilized and has remained a loss leader. Big time.

Why is that?

Cost. The hassle factor of buying and selling email inventory. It’s been too hard to sell, and too hard to buy. Everyone else has been selling impressions and clicks while email has been selling sends. And selling them asynchronously. The time has come for a change.

The amount of premium display inventory available in email dwarfs that of display. There are approximately three billion email addresses in existence today, four times the number of Facebook users. Much of that email volume, estimated at 170 million messages a minute, is being read using HTML readers, which, similar to display, are capable of serving images. As more users move to smartphones, the number of HTML5-enabled readers grows by the minute. All of this is for a solution to recover the valuable latent ad inventory locked within it.

The reason email inventory hasn’t been exploited is very simple: without flash, javascript and iFrames – the drilling tools of the ad tech ecosystem –advertisers and agencies couldn’t buy it the way they can buy display. And publishers couldn’t sell it like they could sell display.  So it just sat there. Until now.

LiveIntent has ‘fracked’ the latent inventory lying dormant within email newsletters, alerts and notifications and has made it available for buyers and sellers just like every other form of interactive inventory that’s been created.

With this revolutionary extraction method – no flash or javascript required - email advertising finally has developed the real-time technology to unlock the high-attention, opted-in ad inventory of the newsletter, which allows it to be bought and sold as efficiently as display. Publishers can now fully monetize inventory, something that had been nearly impossible and cost-prohibitive prior to this innovation. Advertisers can now target, bid and buy impressions within emails where users are routinely spending 20 or more seconds - impression quality that approaches billboards or television.

This is a really big deal. With the growth of the smartphone, people are spending increasing amounts of time reading email. Where before it was a desk-bound activity, now people – for good or bad – can read email anywhere they want, and on devices that render in HTML5, often a better platform than what they have on their desktop computer.

Advertisers can now buy email ad inventory that can truly be called local and mobile. Publishers can now make money sending email like their counterparts within the retail sector.

What’s most exciting? People click ads in email at a rate 10x in traditional display. People spend almost 30 seconds in an email when they open it.  Why? Because unlike in display, with it’s high bounce rate and short time on page, readers of opt-in newsletters have asked to receive the content, and there is high trust factor when requested content is paired with an ad.

So if you were deciding whether you were going to create another subsection on your website, another page four clicks down, think twice. There is another property that you own, another property that you can sell, and you push it to your best customers – it’s your email newsletters, alerts and notifications. Use this inventory and you’ve ‘fracked’ your way to some new revenue that technological innovation has created for you.

iMedia Communications, Inc. is a trade publisher and event producer serving interactive media and marketing industries. The company was founded in September of 2001 and is a subsidiary of Comexposium USA.  ...

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