iMedia's managing editor sits down with the ad server's CEO to discuss the ad serving space, ad networks and international markets.

Mario Sgambelluri: Let's start with domestic ad serving, and then branch our way out from there. What's new on the domestic front? Any big surprises in the domestic ad serving space this year?

Brian Handly: Streaming media is becoming increasingly more popular this year when we speak to prospects. Social networks do extremely large volumes and there is also a definite explosion in the blogging space this year.

Sgambelluri: What's the latest on emerging strategies and tactics in the ad serving space? For example, consumer generated content and geotargeting?

Handly: An effective service platform for emerging media must be built with a stable ad serving platform. The ability to readily serve new media types is more powerful than actually serving a new media type.

Consumer-generated content is difficult to monetize given that any specific page can vary in content type from one entry to the next (for example, a teenager will jump from topic to topic and the topics will include entertainment, college, dating, weekend, new music...all on a single page). Contextually sensing the content is certainly a valid option -- but yields questionable returns -- and may in fact prioritize on the least relevant concept. Looking ahead, perhaps certain consumer generated content sites should do something "old school" like requiring users to categorize their content/space as part of the registration/new account creation process. This will allow for more accurate forecasting, upfront sales, cross promotion and a more efficient model overall-- by having key content provider metrics.

Each of the below mediums -- as they mature -- can benefit from the robust features of an enterprise class ad serving solution including dynamic ad insertion, real time reporting, complex targeting, frequency capping, surround sessions, and optimization. As the emerging technologies mature, serving an ad to each new device or platform will be a baseline model of monetization -- with the maximum value realized when the right ad is delivered to the right user -- as is already possible with "traditional" online technologies. Specific features that a medium may require in addition to the above core features are listed below:

• Bid-for-text: Publisher specific templates, contextual or content level placements, enhanced text + graphic ads. Overall, let the ads better reflect the publisher content and audience not the network.
• Mobile: Targeting by carrier, equipment, geo and user profile.
• Video: Behavioral targeting.
• Podcasting: Dynamic insertion of ads at the time of file download. Target the ad to the user not static to the content.in-game: Dynamic ad insertion based on user profile, skill level, interaction point, game-play history. Create ad standards that can be inserted into games at time of play as opposed to the units placed onto an accompanying game window or coded during game development.

Sgambelluri: Okay, let's move on to the international space. Accipiter has a footprint in Europe, the Middle East and Asia. Thinking about ad serving, what are some of the comparative strengths and challenges in these markets? 

Handly: Each of these markets has the strength of excellent growth in online ad spend as well as growth in ad spend across emerging media (Podcasting, video, mobile…)

According to recent studies from Jupiter Research and the Interactive Advertising Bureau Europe, spend in online advertising across Europe has grown faster than any other advertising medium in history. Online advertising spend in Italy alone reached more than 137 million euros in 2005. That represents an 18 percent increase over 2004, which had already experienced a 16 percent increase over 2003.

There, many of the similarities stop. Growth in the emerging space varies significantly with each different geographic region. There are other differences as well. For example in Australia, the top five publishers account for an overwhelming percentage of the overall page views online. There are also challenges across the geographic regions in terms of language support and handling multiple currencies as well as widely varying preferences in the sales process from country to country. This last point is one of the main reasons why Accipiter has evaluated each market and in many cases has chosen to partner with local resellers in specific markets rather than employing a direct sales force. 

Sgambelluri: What companies are using ad networks overseas? Is it mostly in-market clients (for example, European companies in Europe) or is there a lot of cross-over? What percentage of international ad serving is represented by U.S. clients?

Handly: Who uses them:

• Small sites (who can't afford their own sales staff)
• Low quality content/inventory
• Remnant inventory from larger sites

Typically, properties that have pan-european inventory but do not have pan-european sales presence would employ a pan-european network.

This was a popular approach in 2000-2003-- when many sites struggled. This became cost effective to have someone else selling for you even if you only received back 40 to 50 percent of the revenue share. Good quality sites that have remnant (unsold) inventory do not want to dilute their brand by just putting it into a direct response network (they still want someone representing their brand).

Sgambelluri: Is the network approach on the slide?

Handly: No, not necessarily for the above reasons, however, there will be some good quality sites that move away from networks. The market is healthier now. Good inventory is driving high CPMs for the publisher. Now it makes sense to have your own sales and not give away 50 percent to a network.

Sgambelluri: Is it mainly in-market?

Handly: Yes-- in local market (country) and inter-europe. Although where there is a shortage of inventory to reach campaign goals, it can be cross country/market.

Sgambelluri: What percentage of international ad serving is represented by U.S. clients?

Handly: I would say a fairly small percentage.

Direct response networks tend to handle all the low value inventory or remnant inventory from larger sites. We are seeing today that most ad networks with a premium network business have or are building a direct response network.

Sgambelluri: What advice would you suggest for advertisers interested in negotiating the international waters with an ad server? Best practices, words of caution, questions to ask of the ad server?  

Handly: Local language support, support offered in local time zone, ability to support multiple currencies, ad delivery speed metrics. An important factor for international content providers to consider is whether their current ad management technology can deliver any media to any medium. Managing multiple advertising technology vendors spread out across all forms of digital media is not an acceptable scenario for providers or advertisers in the near term. The increasingly sophisticated online market is driving demand for technology convergence and streamlined applications. A comprehensive technology platform should support any ad in any format with a single application. Therefore, consider a vendor that allows a single ad management application to deliver any form of digital media you currently support and/or have plans to offer in the future: RSS feeds, podcasts, mobile, in-game, streaming audio/video, et cetera.