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Inefficiencies created by new buying platforms

Inefficiencies created by new buying platforms Kamal Kaur
Ad networks have succeeded in the past by being the fulcrum that maintains the delicate equilibrium between advertisers and publishers. Successful ad networks must meet a given advertiser's return on investment (ROI) metrics while also protecting the financial goals of its partner sites. Striking this balance hasn't been easy. Ad networks have had to constantly create new products and optimization techniques in order to preserve order.

Some of these new products have included innovations like audience extension, data segmentation, user profiling, behavioral targeting, remarketing, selective media buying, and now, real-time bidding (RTB).

Current platforms and technologies have disrupted this equilibrium. With the advent of demand-side platforms (DSPs), supply-side platforms (SSPs), data vendors, data platforms, and creative optimization solutions, many publishers fear that their data is becoming commoditized. Meanwhile, even savvy media buyers have found that today's landscape is cluttered and difficult to navigate. The growth of extra handoffs hasn't made the process or product any easier; rather, it has added cost, not to mention increased discrepancies.

The social revolution
Fortunately, ad networks can once again restore equilibrium by taking advantage of the greatest tool that online advertising has ever known -- the extraordinary growth of social media. Today, consumers are sharing unprecedented amounts of information about themselves on social media sites and, more importantly, across the open internet.

According to TNS Global Market Research, "Internet users worldwide spend more hours per week with social media than any other online activity." Research firm Nielsen Online adds, "Social media networks and blogs consume nearly 25 percent of people's time online. The world spends 110 billion minutes on social media networks and blog sites." It is clear that people are far more open to sharing and interacting on the open internet now than in the past. To DSPs, this data is a commodity.

For many of us, Facebook is believed to be the platform for social data. However, it's actually only a fraction of the total amount of social data on the open internet. Just about every website (almost every page) seeks to draw users into a conversation with other visitors to the site. The reams of social data in forums and comments are staggering. In fact, Facebook comprises only about a quarter of all the social interactions that are happening across the internet. And, the rate of social interaction outside Facebook is growing rapidly as media properties and others seek to keep conversations on their own properties.

Data goldmine
The technological advancement of harboring this data in ways that are not personally identifiable has enabled a few companies to capitalize on this goldmine. While you must have the core technology and a keen sense of what data to mine to create an intent graph, one must also have a solid understanding of how to use that data on specific supply sources. The simple fact is that data can't be separated from media. If this is not simple enough, here's a more tangible example:

Every savvy foodie's dream is to dine at Napa Valley's famed French Laundry as often as possible. The ingredients used by the famous restaurant aren't brought from a distant land. They are grown by local grocers and available for anyone to buy. However, just because the restaurant's chef, Thomas Keller, can whip up any palette's ultimate desire, it doesn't mean you or I can go home each night and replicate the French Laundry dining experience on our own dinner plates.

The same is true with media and data. In my opinion, these are inseparable. Only a network knows all of the variables of a cookie pool, such as the performance of users on specific sites, how often cookies are segmented, and the frequency and recency of their use. While DSPs may believe that they can create value out of consolidating fragmented supply sources, the data that they offer lacks context -- making that data almost instantly stale.

Getting the best value
Platforms brought efficiency for advertisers to buy the inventory cheap. But, the eCPMs for the publishers are poor at best. Furthermore, buying through a platform has only layered on additional costs in the form of data sources, verification companies for brand safety, creative optimization technologies, additional optimization algorithms, data warehouse costs, in-house optimization, and billion other variables. In the end, there isn't much of a cost savings at all -- rather, a blatant attempt to create a French Laundry dish with a week of old leftover ingredients.

Through maintaining their own living supply of anonymous, non-personally identifiable data, ad networks that own their own data can match the right impression with the right brand and deliver significant value for publishers and advertisers. While DSPs, SSPs, data vendors, data platforms, and creative optimization solutions have roles to play, they are merely tools -- not turnkey solutions. Used independently of ad networks, they produce short-term gains -- not long-term savings.

Kamal Kaur is the vice president of RadiumOne Display Network.

On Twitter? Follow iMedia at @iMediaTweet.

At RadiumOne, Kamal manages all aspect of mobile and display business units. Prior to joining RadiumOne, Kamal managed the media team at Yahoo! Ad Network. There, she provided leadership and direction in all aspects of the Yahoo Ad Network and also...

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