review of the digital advertising ecosystem

by greg stuart www.gregstuart.com january 6th , 2010

Prepared by Greg Stuart

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purpose & agenda

Purpose: Provide background for a discussion on the ever changing Advertising Ecosystem. Topics as follows:
1. Marketers’ Metrics discussion 2. Digital Media Ecosystem review 3. Data & Targeting discussion 4. Three Screen discussion 5. Privacy principles Author’s Background: Greg Stuart Decade as NYC Ad Agency Media Strategist 6. Appendix Decade+ as Sr Exec in Digital Media 7.
o Terms & difinitions CMO, VP Biz Dev, Ad Sales, CEO Digital (iTV & Web) o Advertising Spending review ofMedia since 1993 Advertising Bureau CEO IAB – Interactive
Co-Author What Sticks Advisor to VC’s & 15+ Net/Mobile Businesses Consultant to Alcatel, AT&T, etc (see appendix)


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main themes
1. Change is everywhere & constant 2. Advertising has never been so complicated…and yet so ill prepared for the future (tech, data, automation) 3. Exchanges are likely to tremendously transformthe digital advertising & media world 4. Data is the talk of the digital town; but the value of data is still quite unclear 5. Marketer’s metrics were indeterminate before and will be murky for awhile 6. Privacy at a regulatory level is anyone’s call at this point (but can be managed)
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.not surprised Prepared by Greg Stuart Confidential 4 ..confused?.

com Web 2.0 5 Confidential . search LOTS of time surfing Email IM Photo sharing Early social networks Online banking Simple Travel guys Auto info   CDs/Books Complex travel eBay Motors Groceries Blogs Comments & posting Customer reviews Ratings Web 1.internet is a still evolving as a medium First activities ISP & ease Info.0 Prepared by Greg Stuart greg@gregstuart.0 Source: Nielsen/NetRatings Web 3.

all media under assault – from consumers How often do you surf the internet at the same time use your Tivo or DVR to skip Do you Skip as watching TV? television ads? Some sds 36% Seldom 16% Never 26% Sometimes 26% Always 17% Prepared by Greg Stuart greg@gregstuart.com W M Ne A 6 Confidential Skips All Ads 52% .

digital advertising more complex than ever and the options more diverse IM Outbound communication iPhone apps Streaming Podcasting Website Development Viral Online WOM Branded entertainment Video .com Widgets Confidential 7 .YouTube Display Email marketing SMS/MMS marketing Microsite development Influentials Online advertising INTERACTIVE AD CHANNEL Seeding Blogs Microblogging App Development CRM application Search engine mktg RSS SEO Prepared by Greg Stuart greg@gregstuart.

000.5 trillion) online ads served annually 4. ads .000.…and yet ads.500.everywhere  Estimated (4. ads.000 ads per person per month    Prepared by Greg Stuart Confidential 8 .000   = 2.

marketers’ metrics discussion Prepared by Greg Stuart Confidential 9 .

CPT. Marketers metrics are CPA. engagement. CPL. etc. Have seen 10x in cost per value versus TV. Confused yet? Should be!   Prepared by Greg Stuart Confidential 10 . Soon to mean nothing (or at least little) Only 8% of consumers click regularly (only 16% ever click) Publishers like CPM.  In part because TV is SO overspent Internet is not a single medium (it’s really a platform of mediums) Click has been everything. etc.metrics summary  Online is often more cost effective than other media. as it’s easy to measure. control. But it is the bain of the internet medium.

but click is such a small percent of activity Source: DoubleClick DART for Advertisers: 2008 Prepared by Greg Stuart greg@gregstuart.35% of marketers use clicks.com Confidential 11 .

1% Sources: DoubleClick.however. eMarketer. there is a MASSIVE decline in displayad click through rates In 2008. ABI Research estimates Prepared by Greg Stuart Confidential 12 . Eyeblaster. comScore measured click rates as less than 0.

custom analysis.and virtually no one clicks anymore Source: comScore. July 2007 and March 2009 data periods Prepared by Greg Stuart greg@gregstuart. persons. Inc.com Confidential 13 . Total US Online Population.

0% 6.0% 4.889.602 respondents.0% 6.0% 10.0% 1.7% (Δ 1.0% 0.9) (Δ 1.5% 3.com Online Advertising’s Effect on Brand Metrics in the US.1% 2.8% 49. April 27. “How Online Advertising 1st ad exposure 1-2 after 1st 1-3 after 1st 1-4 after 1st Works: Whither the Click.but there is no question online ads work Advertiser Site Visitation Among US Internet Users Exposed to Online Display Ads.6) (Δ 4.8% 5. Q4 2008* (% of Resp impacted) 70.0% 2. 2008 exposure exposure exposure Prepared by Greg Stuart greg@gregstuart.1% 30.0% 0.6% 65. **delta (Δ ) defined as point difference in exposed vs. *includes three years through Q4 2008.8% 4.9% 3. Source: comScore Brand Metrix.6) Confidential Note: n=2.0% Week following work and university locations Weeks Weeks Weeks Note: home.0% 20.3) 3. 2009 14 .0% 40.0% (Δ 2.0% 3. control groups Source: Dynamic Logic provided to eMarketer.0% 45.5% (Δ 2.4) 60.0% 50.380 campaigns and 3.” December 5.1% 4.0% Control Test Lift 53. 2008 7.0% 5.

4 1.90 CL Source: Dynamic Logic’s MarketNorms campaigns over last 3 years through Q1 2009 OPA N=1. MN = 2.5 2..6 1. Portals = 1.2 by Site Category Online Ad Message Awareness Association 5.com Confidential 15 .5 1.7 3.0 Brand Purchase Favorability Intent 2.540 campaigns.4 4. Ad Networks = 399 Prepared by Greg Stuart greg@gregstuart.7 4. there is no change) A/B/C/D indicate statistically significant difference between deltas at .2 MarketNorms Portals Ad Networks 2.2 1.e.1 0.255.3 0.8 2.224.publishers may have better effectiveness Ad Effectiveness Deltas Aided Brand Awareness OPA BCD 3.8 1.5 1.3 2.1 2.2 Notes: Ad effectiveness deltas in red are statistically insignificant (i.7 3.

7 +10.1 +3.6 Control Exposed Impact 15% 7% 9% 34% 39% 13% 15% 11% 19% 17% 43% 19% 22% 10% 8% 16% 7% 9% 39% 45% 15% 15% 12% 21% 19% 50% 24% 25% 14% 11% +1.7 +4.But ad networks provide lots of brand lift also Ad Network Sites Unaided Message Recall: XXXX Message Association: XXXX Message Association: XXXX Online advertising recall Purchase Intent Recommendation Intent Actions Taken Consider purchase Download free trial Visit website Gather more info Publisher Sites Impact Control Exposed 0% 3% 4% 13% 8% 8% 31% 53% 21% 24% 20% 25% 22% 56% 29% 29% 18% 17% +12.8 +13.0 +1.4 21% 42% 8% 12% 10% 11% 15% 48% 26% 24% 16% 15% T2 Box: Overall Opinion of Brand Brand Opinions (Top Box) Is high quality Always up-to-date Is best in the category Has improved their product Prepared by Greg Stuart Confidential Sig @ 90% 16 .8 +2.9 +14.7 +5.2 +7.9 +2.1 +7.9 +3.6 +11.9 +3.7 +6.8 +1.9 +4.9 +4.3 +1.9 0.4 +9.4 +0.3 +0.0 +4.3 +0.2 +2.1 +9.9 +4.

00% 4.00% 6.00% 10.00% Percent Impacted 14.00% 8.00% 2.best campaigns for sure work on ad networks Best / Worst Perform ers on Ad Networks Market Norns Avg 16.00% 12.00% Top 20% Ad Networks Avg Ad Networks Prepared by Greg Stuart But networks cost 1/5th to 1/20th of publisher inventory!!! Confidential Aided Brand Awareness Online Ad Awareness Messsage Allocation Brand Favorability 0.00% Purchase Intent 17 Source: Dynamic Logic Market Norms database .

online is best able to measure but the hardest to measure  More than half of interactive marketers — 51% — interviewed by Forrester say that measuring ROI is their key challenge with display ads…   …with 38% saying developing good creative is a problem Prepared by Greg Stuart Confidential 18 .

leads and customers am I getting? o What is driving those visitors. leads and customers? o What are my best and worst sources of leads and sales?  Convert o Landing page optimization o Lead tracking o Lead management o o o    Analysis o Marketing Analytics o Lead Scoring How can I grow sales? How can I lower marketing costs? 19  Prepared by Greg Stuart Confidential .metrics simplified – there 3 elements  Promote + Found o o o o o Media Search (natural & paid) PR Social Media + Blogging  Questions a marketer should be able to answer: o How many visitors.

3 Prepared by Greg Stuart greg@gregstuart. Mixes brand spend. etc) capturing the immediate action.4 3.0 76. order.3 Local affiliate of a national chain advertiser Local “mom & pop” Retailers 30.different marketers have different needs Advertiser Orientation Brand Marketers Goal is to increase brand awareness.3 53. but with a order.2 1.3 8.9 9.2 1. etc mechanism to drive action too National Brand 64. 2007 $ billions CAGR.com Confidential 20 . 2003-07 percent Customer base 1. imagery. and purchase intent Call to Action Marketers Direct Response Marketers Spending to accomplish a near-term Advertisers primarily focused on action (traffic.1 Revenue.

2009 Prepared by Greg Stuart greg@gregstuart.com Confidential 21 . “2009 Ad Effectiveness Survey.” June 1.metrics for measuring success $1 million + All resp. (n=49) (n=112) Conversions or sales Registrations/Subscriptions via organization’s Website Click-throughs Unique views to Website or page where ad or content was placed Boost in search rank Downloads of data or information Change in target audience awareness/perception of brand Customer feedback on Website Number of target audience members reached Streams of video or audio content Other 82% 55% 51% 51% 39% 33% 31% 16% 14% 8% 6% 70% 52% 49% 37% 34% 37% 25% 26% 13% 6% 3% Note: 8respondents were primarily based in the US Source: Forbes.

advertising metrics .relationships Prepared by Greg Stuart Confidential 22 .

Response Frequency vs. 30 or more. Confidential 23 Impressions Clicks Conversions Revenue Unique Impressions Unique Clicks Unique Conversions Click through rate Click to conversion rate Impression to conversion rate Ad Exposure Time View Through Ad Interaction Rate Interaction Time Ad Component Interactions Video Play Rate Average Video View Time Video Completions Replay Rate Reach Frequency Frequency vs. Conversion Time Lag to Conversion Ad Delivery Rate Attrition Rate Lead Generation Revenue per Sale Revenue per User Revenue per Impression Revenue per Click Revenue per Visit Repeat Purchase Rate Lifetime Revenue . Prepared by Greg Stuart expanded list of possible metrics There are a number of possible metrics or points of measurement for marketers in digital media.

might have played a role (delivered value) to the final click. It recognizes that other advertising.alt: msn’s engagement measurement msn has popularized and development tech to support “engagement measurement”.  Prepared by Greg Stuart Confidential 24 .

and in combination.alt: cross media analysis Like MSN’s engagement mapping. Research behind What Stick’s found that Internet was most Cost Effective Medium in 75% of campaigns Optimized media plans delivered +30% lift in media   Prepared by Greg Stuart Confidential 25 . some work has been done to isolate a medium’s value.

technology. speed. ease o Display=branding (attitude change) o Graphical. context. action. pervasive o Technology and scale o Commensurate advertiser base (really important) o Prepared by Greg Stuart Confidential 26 . etc) o Relevance. their objectives can be blurred: o Search been proven to provide brand value o Display can provide performance  But they are different: o Ease of text – alteration.is there a blurring of search & display?  Traditionally: o Search=performance (clicks. rich media  However.

more)  o Mobile is just not ready.    Prepared by Greg Stuart Confidential 27 .final thoughts on metrics Clicks have ruled (counterproductively so) Alternatives: Analytics systems permit reaching deeper  o View thru (30 days post the activity) o Brand or performance later in process Better tools coming: Factor TG. digital media wins (ROI. o iTV is likely a long ways off. optimization. Market Share Partners But as a result of it’s inherent advantages. immediacy. but is heading in the right direction. integration.

digital media ecosystem review peeling the layers of an increasingly complicated ad ecosystem in the increasingly digital-networked advertising industry Prepared by Greg Stuart Confidential 28 .

. agencies. local. media..summary ad ecosystem More disruption than ever & at nearly every level & category . Exchanges potentially change everything Critical to Exchanges is application of data What could happen:  o Shift away from networks to exchanges o Exchanges follow Direct Mail & Search going direct to Advertiser o Agency media department becomes less important Prepared by Greg Stuart Confidential 29 .publishers.

they are a-changin’ bob dylan Traditional definitions range from the broad to the specific…  “Intermediaries that enable advertisers to reach audiences across the web. Revenue Science) serve both publishers and advertisers without brokering any inventory Confidential 30 ..” Piper Jaffray Investment Research “Brokers of online inventory.g.g.” CIBC analyst report “Aggregates advertising inventory from a number of websites and sells this inventory to advertisers or agencies.the times. Glam) Specialist providers of sophisticated valueadd services such as targeting and adserving (e. functioning more as an outsourced sales force than a reseller (e. pocketing the spread” CIBC analyst report “Appliers of sophisticated targeting analytics to serve advertising for third parties” CIBC analyst report Prepared by Greg Stuart …But the landscape is evolving as new types of players emerge Ad Exchanges eliminate the typical “broker” role by linking publishers directly with advertisers via a managed transaction platform (e. then resell to an advertiser. Ad networks will buy inventory from a publisher.g. Right Media) Rep firms market inventory from select publishers to advertisers... and allow publishers to better monetize inventory.

com Confidential 31 .the digital value chain Advertisers Agencies (creative/strategy) Inventory Influencers Programmer/ publishers Distribution platforms Measurement Prepared by Greg Stuart greg@gregstuart.

/ Support Publishers Prepared by Greg Stuart greg@gregstuart.expansion of the value chain Advertisers Agencies (creative/strategy) Inventory Influencers Programmer/ publishers Distribution platforms Measurement Agencies Advertisers Agency Support/ Buyers Data Clearinghouses Exchanges Networks Pub. Prog.com Confidential 32 .

players in expanded value chain
AdAgencies vertisers Agency Support/ Buyers Data Clearinghouses Exchanges Networks Pub. Prog./ Support Publishers

SEM Digital media buying agency

Technology platforms that enable the buying and selling across multiple ad networks and publishers real time Yield optimization companies that enable publishers to maximize the value of their inventory acro

source bid-management tool ted system that manages and optimizes bidwords for advertisers based on conversion rates m-based platforms that maximize ROI on ad network and exchange inventory buys on behalf of brands

e on AdWords in Yellow Pages vertiser focused on specific demographic

Search engine aggregators  multiple websites, either blin Centralized ad selling entity that sells typically remnant ad inventory acrossSearch engine Website owner and operator g, but either facilitate the transfer of data between parties in the value chain, or aggregate data from severalparties and make it available
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greg@gregstuart.com

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representative players in value chain
Search Intent Driven Media
Advertiser Agency Agency Support / Buyer Ad Networks Publisher/ Content

Advertisers

Agencies (creative/strategy)

Inventory Aggregators

Programmer/ publishers

Distribution platforms

Measurement

Broad Scale Media

Prepared by Greg Stuart greg@gregstuart.com Advertiser Agency

Data Agency Support / Clearinghouses Buyer

Confidential Exchanges

Ad Networks

Publisher Support

Publisher/ Content

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all the details – source gridley & co.

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exchanges-likely biggest change ever

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exchanges - new kids on the block
Question What do Exchanges permit? Answer Publishers provide a slice of their inventory to exchanges so that advertisers can select just the inventory they want, sometimes calculating value from upwards of 50 data elements Real Time Bidding technologies that can both cherry pick inventory and provide immediate feedback In addition to RTB, the integration of data and access to data on that user or individual impression No straightforward answer to this question, because exchange inventory falls into buckets. That said, most inventory is acquired for $0.10 – $2.00 CPM

What makes them so interesting to the industry What make exchanges work?

What are typical exchange CPMs? What are typical exchange margins?

Exchanges typically receive (only) 5% to 10% of revenue on impressions they serve. (Networks, the current middle man, are 25% to 50%). Too early to tell but likely will scale; it takes very little to run How much exchange inventory is an exchange Hard to quantify, but generally reported to be tens of billions available?

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Data are used to select and optimize exchange impression attributes and bring high value than just context or time of day There appear to be two current data pricing models:  o o  Cost per Cookie by BlueKai with is a simple auction model: Cookies with series of data about users are auctioned for around $2-3 per thousand and buying can buy that cookie for as long as cookie lives.how exchanges use data Advertisers are able to sort through dozens of impression attributes (and cherry-pick billions of impressions) to choose impressions to buy. Percent of Spend by eXcelate / % of value model: The data provider receives a percentage of the media value (currently 20%) Next Action (SKU level data) Acerno (eCommerce data owned by Akamai) Revenue Science (BT) Media6º (Social Media – Birds of a Feather) Lotame (Social Media) Other Internet data players: o o o o o Prepared by Greg Stuart Confidential 38 .

Optimization. Likely. Possible positionings: Brand. etc  Prepared by Greg Stuart Confidential 39 . Category/sector. Ad Sales (Relationships). or economically unable. Some are generating ~$100 million in revenue. to do Key elements: Tech. Supposedly 300+ networks. Positioning is really necessary for a network to survive. Metric. They do the work that agencies are too lazy. Publishers (Content) Exchanges make the publisher segment unnecessary.will there be a network shakeout? Yes. Tech is critical. Marketing/Positionings.

00 CPM Prepared by Greg Stuart 5¢12¢ * Short term arbitrage gain 5¢-50*¢ 5¢-10¢ 25¢-50¢ Confidential 7¢15¢ $0. Atlas) $1-5 CPM 2.01 40 .50 $0.economics' of the ecosystem $1.00 $0.10 CPM Ad Serving (DART. Atlas) $1.5M-$3M per Sales Person Ad Serving (DART.

Cookie deletion by users is rampant. or the tracking of users from one session to the next and one site to another. Upwards of nearly 50% of users delete cookies a month.underpinning data & targeting are cookies Cookies. Current industry thinking is that cookies are at great risk due to regulatory   Prepared by Greg Stuart Confidential 41 . is critical to using data & targeting. Private study conducted amongst trusted sites showed a real variation in deletion rates.

36% users delete cookies monthly Rejecters 16% 20% “Multi-user computer” Selective Users “Periodic” “Bipolar” Acceptors 64% This data is proprietary & confidential – do not forward.overall. Prepared by Greg Stuart Confidential 42 .

…and some sites saw nearly 50% cookie deletion C ross Site User Breakdown 100% 90% 80% 70% 18% 19% 20% 14% 17% 26% 13% 17% 20% 29% 13% 13% 14% 18% Percentage of Users 60% 50% 40% 30% 20% 10% 0% Prepared by Greg Stuart 63% 66% 57% 69% 51% 74% 68% S ite A (8 -2 7 -05S ite B (1 1 -1 7 -S ite C (9 -1-0 5S ite D (2 -1 4 -06 ite E (2 -2 2 -0 6 ite F (2 -0 1 -0 6 ite G (2 -01 -0 S S S Confidential thru 4 -2 0 -0 6 ) 0 5 thru 4 -19 -0 6 )thru 1 -3 1 -0 6 ) thru 4 -2 0 -0 6 ) thru 4 -0 1 -06 ) thru 4 -2 0 -0 6 ) thru43-2 0 -0 6 ) 4 Rejec tors Inc onsistent Ac c eptors .

2.) Large population of web users who regularly log into a registration oriented site.) A tracking pixel associates the user’s persistent ID with the 3rd party cookie each time they login 3.) If users return with different 3rd party cookies. we know they must have deleted their cookie.measuring cookie deletion – how it was done 1. Publisher ID ABC ABC ABC ABC DEF DEF DEF 3rd Party Cookie Date 123 5/1/2005 123 5/2/2005 123 5/9/2005 123 6/5/2005 456 5/8/2005 456 5/16/2005 789 5/20/2005 Person who did not delete their cookies Person who deleted their cookies sometime between 5/16 and 5/20 Prepared by Greg Stuart Confidential 44 .

compiles s bill to buyer nciles the bill and pays & reservations (sales tools)workflow Campaign mgmnt Reporting Billing 6 7 8 4 7 2 Agency Side Media planning & buyingMgmnt & trafficking workflow Billing & recon-ciliation Campaign workflow Reporting & analytics e Buy Media Research Tools 6 3 Associate Media Buyer Agency Ad Operations Associate Media Buyer Billing Coordinator 1 Prepared by Greg Stuart 8 Media Buyer Confidential 45 .today 1 2 3 Publisher Side 3 Sales Executive Sales Planner 5 Pub Ad Operations Account Manager es what web sites to buy Seller negotiate deal internal teams for workflow 4 ps sends ads to publisher Inventory avails ps inputs ads ws 5 results. compares reports.the buy/sell process .

Loads of inventory (10’s of Billions) 2. Players and technologies are just being established Networks that are not differentiated or have some unique attribute likely to be squashed.What’s moving where / when  Exchanges are the most significant change to advertising since Google. RTB (technology) drives the efficiency for system 3. DSP=Demand Side Platforms are taking the planning out of the media plan=affect on agencies Data here is critical and yet value is still unclear   Prepared by Greg Stuart Confidential 46 . 1.

data & targeting discussion Prepared by Greg Stuart Confidential 47 .

summary . ecommerce. or at least analytics   Prepared by Greg Stuart Confidential 48 . Intent. Categories of data: Context. etc. social. Identity  o Content.Google $95 eCPM o Key is a intent-driven targeting system with 100k’s of advertisers & self service Net. o Unclear as to where uniqueness might still be Some question the real value (but not sure yet) Requires new understanding of metrics. targeting (and the data to support) are very alluring to advertisers and publishers.why data has an allure  Value of targeting & tech . non-web.

. .000 viewers for a given media property Current TV (example) $10/1. . . .000 viewers tal Addressable (example) Prepared by Greg Stuart 49 . . $12/1. 1.000 viewers $6 500 500 $6 Sell to Sell to Adv A Adv B Confidential For Adv B For Adv A $12 .theory behind targeting – good for all Cost per thousand (CPM) Number of viewers Advertiser’s out of pocket spend Media provider’s revenue 1. higher total revenue to media provider Increase CPM . lower out of pocket per advertiser .000 viewers 500 500 $10 $10 Advertiser A really only wants to reach half of them but they can’t be broken out . . .

2% 4.3% 2.2% 0. Google Search jet WebMD.7% 3. CNET.1% Index to Exchanges 15000 12000 4700 3300 2000 400 200 100 Branded News (NYT) $15 Portals Networks Exchanges $2.50 Prepared by Greg Stuart Confidential 50 . private websites) Cars.0% 12.how does ‘intent’ affect pricing CPM High Transactional Value (e.g.0% 0.10-1.80 $1-2 $0.4% 0.com Forbes ~$100 $95* $30-40 $25 Implied CTR 15.

ad spending trends-behaviorally-targeted In millions Source: eMarketer Prepared by Greg Stuart greg@gregstuart.com Confidential 51 .

shipping & handling.com Confidential 52 . Claritas. Acxiom) Individual & household level TV Viewing Marketing Stimuli Link to digital set top TV data using name and address A DAT Online ads Referral links Offline purchasing Online Transactions Linked using name and address Client CRM databases Retailer loyalty card data IRI Scanner panel data All secure session activity Purchases and subscriptions Price paid.g.sources of data Web Visiting & Viewing Demographics All web site/page click stream Content viewed Search engine queries Keyword used Self-reported and validated Appended segments (e. promotions Applications/configurations Prepared by Greg Stuart greg@gregstuart.

Internet on the road Bought an iPhone early. etc Uses phone in the car. Mobile & TV. Brand buyer. not price Sends ~xx texts/day indicates age/engagement Uses coupons for consumer package goods Goes to shopping. mall. Used Cars.com Considered TV from Amazon. etc Identity Interests .com Frequent News viewer.159.com Confidential 53 .Intent Context Prepared by Greg Stuart greg@gregstuart.37 Net & TV. Recent Auto Shopper Clicked on mortgage ad Sought: “”Plumber in Portland: Searched: for “TV reviews”. etc Mazda review Lunch Breakfast or weekend shopping 11932 Calls to order lunch from deli daily Family of five.com searches Other searches # of unique people called Device owned Psychographic segment Registration (address. etc Frequent callers are influencers Android owner “Urban Dweller” Name.456. etc. frequency) Family plans Usage patterns (when & where) Type of handset or upgrade # of e-mails/texts sent/received Coupon activity Location patterns Apps/downloads Purchases Shopping cart Content viewing history Ads seen/clicked on YP. or restaurant Downloaded “mint’ app Bought TV from Best Buy.different data is available on platforms Mobile Consumer Info GPS Location IP address Concurrent media use Content Daypart Zip code Calls placed (to who. address.) Internet TV Data Example Store or street location (Main & 1st street) 127.

com Confidential 54 .the ability to drive incremental value from data and targeting depends on 4 key elements Prepared by Greg Stuart greg@gregstuart.

g. in the market for a house) Allows identification of demographic & psychographic segments Specific data types •Contextual (what content Context are they viewing) Day Part (when) • •Geographic (where are they) •System (with what device) Interests-Intent Behavior •Actions (purchases. intensions) • •Demographic (who) •Psychographic (market segment) Personal Identity • Prepared by Greg Stuart Confidential 55 ..g.data helps advertisers better meet specific goals Category of Data Why is it valuable? Provides insight on the setting in which a consumer views an ad (e. click/buy history. while reading a laptop review).. Allows marketers to direct ads to consumers based on actual behavior (e. interests. Some think context really matters. views) •Preferences (affinities.

“Project Canoe” has been formed to bolster MSO advertising revenue through set top box targeting Prepared by Greg Stuart Confidential 56 .

 Future:  Ultimately. Prepared by Greg Stuart Confidential 57 . If that data is unique and not acquirable elsewhere.  Publishers ultimately should get the value. Perceptually they do. Data turned in insights likely matters most.who get’s the value from Data  Currently:  Marketers should get the value. those that hold and process the data probably get the most value. But they don’t cause they can’t sell that small inventory  Networks/Exchanges probably get most of the value. Word on the street. They have the scale and need the differentiation. in reality they are not right now.

three screen discussion Prepared by Greg Stuart Confidential 58 .

o There is not enough expertise or spend in 2 of the 3 channels and there are few/no tools to manage/optimize or insure value in 3 screen approach. not medium planning  Three screen holds allure because: o Access to a consumer cross-media at their different access points via different messaging value is intriguing o Some companies (cable & Telco's) have multiple media/distribution platforms and want to use them to get more share from advertisers  Facts o Each consumer has different media habits o Cross media optimization can improve performance o Collection of data/insights is better in some channels than others and communication value is better in some channels than others (and priced differently) o There is a large internet ad spend.it’s supposed to be media planning. Prepared by Greg Stuart Confidential 59 . but not much spend or expertise in mobile and/or addressable TV  Reality o Unlikely that three screen will become a big deal anytime soon.

such as TiVo.significant time is spent on the various screens  Big growth in channels that consumers have more control over. Net and Mobile and where addressability resides Prepared by Greg Stuart Confidential 60 .

oData richness of data collection oContextual advertising oRichness of targeting available oMultiple forms o o Prepared by Greg Stuart oRichness of video oLong form of TV Commercials oProduction values of TV o oPersonal nature of phone Confidential oIndividualism oProximity to retail/location 61 . TV for communications impact and mobile for personal & proximity.3 screen ad approach  The value may be in the value exchanged. Internet for data.

or measuring to commit large sums o They aren’t good at cross media now o They will likely apply test o Comcast and NBC budgets cause they like deal to be viewed as Only Nielsen is focused on addressing 3 screen with their A2/M2 “first” o (Anywhere Anytime Media Measurement) Initiative o Confidential  62 Prepared by Greg Stuart . or optimizing.who wants things to change & why  Television Industry o TV’s “virtue” is to sell lots of inventory at bulk ($10s of millions) o $70B category that’s been doing “just fine” o Controlled by networks that are not digitally oriented o The ‘pipes’ might want to solve given the unique value this brings them  Advertisers/Agencies   o A/A are not oriented to small buys either. or to know the value of targeted media o They don’t have the tools in managing.

what would need to happen to get TV to change?  Cable and TV would have to be willing to work together  Lack of standards & consistency is a big issue  Lack of geographic coverage is an issue  Ability to get cooperation or to go around them (force coop)  Potentially advertisers can drive the change  Exchange business commitment of $50 million by Chrysler  Super strong business case or desperation  Probably still not enough to create change  Upfront spending falls by significant amount. forcing change  Prepared by Greg Stuart Confidential 63 .

privacy principles Prepared by Greg Stuart Confidential 64 .

soon Prepared by Greg Stuart Confidential 65 . trust & control  Various approaches being developed. o Unclear if self regulation is enough  Government might intervene .privacy summary Consumer control is everything in privacy But that is not a proven science yet  o Focus needs to be on value.

Anonymity Identity kept anonymous or confidential and assurances and proof of such Control Opt-out (partially or wholly) at will must be employed Prepared by Greg Stuart Confidential 66 .effective privacy policy must satisfy 4 elements Value Trust Consumer permits implicit or explicitly data use in exchange for a personal benefit – more relevance or convenience – and some clear value Consumer trusts the Brand to use permitted data only within agreed-upon limits.

All-in when subscribing to service. Part of Service/Account Activation process. Recorded on phone. Agree to TOS.com In TOS.com OPT . no explicit notification Buried in TOS agreement Low feasibility High feasibility No opt-out option No opt-out option = Height of bar assesses feasibility that this can be done NEW SUBS Moderate feasibility 67 . All-in when subscribing to service. Notice within bill 2.EXISTING SUBS OPT . (Deselect checkbox) Confidential Pop-up TOS change and opt-out button Low feasibility High feasibility Moderate feasibility Mailer Options : 1. (unchecked checkbox) Download software/toolbar. Checkbox on service form.IN NEW SUBS Written or mailed consent sent to ATT ritten or mailedconsent.OUT EXISTING SUBS Prepared by Greg Stuart Ad-campaign about opt-in Ad-campaign about opt-out Opt-out when subscribing. Permission granted on website.com website (un-checked box) Permission on service order. sent to ATT Sign-up on xxxx. Sent to website 3. Separate insert w/ bill Agree to TOS – highlighted in application documents NAI notification Explicit opt-out on xxxx. Pop-up box to opt-in and TOS agreement change Ad-campaign about opt-out Email notice for optout (with checked box) Mailer with TOS change privacy is not an exact science – range of options ail notice of change in TOS explicit (with unchecked box) NAI notification Explicit opt-out on xxxx. Download software/toolbar. Agree to TOS.

novel approach-Blue Kai registry  Blue Kai gives the consumer access to what they know about them and the opportunity to opt out or modify that profile Prepared by Greg Stuart Confidential 68 .

Trevor Hughes (VT) o IAPP-International Association of Privacy Professionals   Prepared by Greg Stuart Confidential 69 .privacy experts  Jules Polonetsky (WA DC) o Future of Privacy Forum  Alan Chapell (NYC) o Chapell & Associates  J.

final thoughts Prepared by Greg Stuart Confidential 70 .

banners) and direct marketing campaigns (spam email) Limited search capabilities (site • lists. limited clutter. limited campaign results for advertisers •Limited targeting •Highly focused based on •Clutter Prepared by Greg Stuart customer browsing / search behavior •Simplicity. integrated into browser toolbar •Increased focus on contextual ads. poor search engines) •Better algorithm – gateway to the web •CPM-based advertising Advertisers •Pay-per-click pricing •Best-in-class measurement for advertisers •Unclear ROI. relevant to end-users •Intrusive ad formats (pop-up ads. 1999 •Complex user experience. 2003+ •Elegant user interface.6 case study context: Google revolutionized on-line advertising by solving the two-sided value proposition equation Online ad landscape. often Consumers cluttered user interface Online search. site guidelines Confidential 71 .

Thank You   More questions? Greg Stuart greg@gregstuart.com +1 631 702 0682  Prepared by Greg Stuart Confidential 72 .

appendix Author’s (Greg Stuart) Bio Terms & Definitions Advertising Spend review Prepared by Greg Stuart Confidential 73 .

Greg has a BA in Economics from the University of Washington and completed Wharton’s intensive Advanced Management Program in 2008. He currently serves on the Board of Zimbio.Istanbul. in SF. Sydney. In the last two years he has served as Advisor. He is the former CEO of the Interactive Advertising Bureau (IAB). his operating expertise is in leading cross-functional teams in product development. CNET. NY with his wife Pamela. He is a member of the National Speakers Association and speaks around the world on the failings. Jakarta. He’s also worked with AT&T. & Social Media backed by Intel. Inc. Union Square. Israel. He had served on the Board of Rapt (Accel backed). USVP. Oak VC. Barcelona. go-to-market strategy. Yahoo! & 400 others. Sony Online Ventures. Google. and Board of Allyes (Oak backed) in China. sold to Microsoft. He grew the IAB’s revenues with a CAGR of 37% (overall +500%) while leading the industry from $6 billion to $17 billion in ad spending. Zurich. Aside from his industry leading status in advertising and digital media. Cars. DFJ.linkedin. the trade group for the interactive advertising & marketing industry. Flycast Ad Network and venture-backed DeltaClick. Germany. Shanghai. each at least at a 10x multiple. The IAB customers included AOL. First Round Capital and others. Ad Age identified his book. Monaco. He lives happily outside of New York City in Bridgehampton.greg stuart bio Greg Stuart is a recognized leader in digital media & advertising and was selected by Ad Age as one of “10 Who Made Their Mark” in 2006. twin daughters and son. Conway. Sierra. Greg has also served on the Advisory Boards of a dozen venture-backed companies in Search. sold to Focus Media.com/in/gregstuart  Prepared by Greg Stuart Confidential 74 . Disney. Greg has more than two decades of hands-on operating experience as a proven business builder in the Digital Media and Technology arenas since 1993. a next generation webzine with nearly 20 million uniques and backed by Menlo Ventures and August Capital. and scalable revenue generation with a record of success in both rapid growth businesses and turnarounds. of advertising . Research. business development/deal making. Tokyo and others. http://www. Video. Greylock. “What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds. Canaan.com. Sao Paulo. Switzerland. Alcatel Lucent & Meredith in redefining their digital media opportunities for the future. company positioning. marketing. Intel. Director and angel investor to venture-backed companies with a resulting $750 million in exits. NBD. He has extensive experience as CEO/Director/senior executive roles with Y&R. Mobile. and thus opportunities. Spark.” as the “Number one of 10 books you should have read”. Mexico City. TimeWarner.

Majority of sales occur between 3 and 9 months prior to airtime. the how many times ad is played inventory is figured by the month). Mobile: each individual ad unit viewed on a mobile publisher's deck (web site). Annual sale of network ad inventory. Cost-Per-Action what an advertiser pays for each visitor that takes some specifically defined action in response to an ad (CPA) Cost-Per-Click (CPC) the cost or cost-equivalent paid to a publisher per click-through. TV: total number of impressions that a Web site has available for sale over a given period of time (usually.Glossary Term CPM RPM Impression Inventory Upfront Scatter Remnant Ad Currency Unique Visitor Description "cost per thousand" ad impressions. Prepared by Greg Stuart Confidential 75 . the revenue that is generated for 1000 ad impressions Web: a measure of how many times an advertisement is displayed. and on similar terms to upfront Day-to-day market for ad inventory not sold in upfront or scatter markets. and guaranteeing placement in specific show time and position in pod Day-to-day market for network ad inventory. typically at a slight discount to scatter prices. The amount paid by the advertiser each time a user clicks on his/her ad. Typically discounted 30-70% on scatter market rates on a preemptible basis and without specific airing time Nielsen Rating Points Someone with a unique address who is entering a Web site for the first time that day (or some other specified period). the price that is charged to advertisers by “publishers” for 1000 ad impressions “Revenue per thousand" ad impressions.

entering a competition. CPA metrics allow marketers to measure success based on customers acquired through a campaign. only counting those email subscribers who remain subscribers for three months — helps marketers assess success on a more valuable scale than simply volume. thereby generating a similar metric across differing campaigns. Some marketers now impose stricter rules on what counts as a “visit” (which is sometimes still called a “click”). Introducing some type of “quality” measurement within the definition of acquisition — so. for example. However. using your own ad serving tool for measuring clicks (and visitors) can help establish a standard measure. as “engagement” means something different for every marketer. CPC is a very popular metric for marketers trying to drive direct action from an advert. “Engagement” can be defined in a number of ways. For brand marketers. CPE is a newer ad model whereby advertising is offered free. it can also lead to advertisers paying for many clicks that are not from the target audience. More than 65% of database marketers in a recent Forrester survey say they use response rates as a key metric. with CPA management tools included in its AdWords product and within the affiliate network (previously known as DoubleClick Performics Affiliate). These metrics are most useful for advertisers aiming at driving further interaction from consumers. that are less directly related to costs. such as “visitors spend at least 3 seconds on the landing page. those who sign up for an email newsletter. It is also a way of measuring interaction with newer types of creative — such as video ads or ads with product comparison tools within them — that may drive significant interaction but not actually click-throughs. CPV (cost per visitor) gives insight to Web site owners. rather than trying to compare metrics from a variety of tools for each campaign. such as completing a survey within the ad. Online video ad provider VideoEgg pioneered this payment system in 2008. for example. and of course take no account of what the visitors do when they get to the Web site. CPE (cost per engagement) is emerging as a metric. CPV is where advertisers pay publishers based on how many viewers of display ads then actually visit the advertiser’s Web site. leave immediately once they arrive on the landing page. CPA (cost per acquisition/conversion) gives a metric comparable across channels. which looks at consumer activity post exposure).9 For example. limiting their value.cost per X detailed definitions CPM (cost per thousand impressions) has been popular since the start of online advertising. and even expose them to click fraud. with advertisers paying only when viewers actually engage with the ad itself (thus differing from CPA. rather than general brand awareness or attitude. or those who take some other type of direct response activity via the ad landing page like asking for more information on debt management. “acquired” may have different meanings for different marketers: For a retailer it may simply mean a site visitor or someone who puts goods in the shop’s online basket or perhaps only those who actually buy. As a marketer. CPM remains one of the most popular cost metrics used.11 This method is seen to push back more responsibility for ad performance onto the ad creative than other methods such as CPC. or watching a certain amount of video.10 However.000.   Prepared by Greg Stuart Confidential 76 . they could. even if marketers pay for a campaign on a cost-per-click basis. they can get reporting on total impressions and simply divide their total spend by impressions and multiply by 1. such metrics are not comparable across campaigns even for the same marketer. It allows simple comparisons between campaigns and future opportunities (many publishers use this on their public rate cards). it may be measuring those who click through to a certain area on a Web site. such as time spent interacting with an ad. such as clicks by mistake or invalid clicks from Web crawlers. Google has heavily promoted this as a metric. which were thought to place the bulk of the burden of performance onto the publisher.” to get over some of these problems. for example. Nonmarketers such as CEOs or CTOs can often more easily relate to this type of measure than to online-specific metrics. Of course. though these days it’s rarely the only metric employed for a campaign.

despite their lack of real insight. is the relative ease of benchmarking across your own campaigns and with the industry as a whole. Cost-Based Metrics Generate More Insight Evaluating display ad campaigns on a cost basis allows marketers to track the efficiency of the channel and begin some simple comparisons. and 60% of marketers say that they struggle to build the case for interactive marketing in their organizations. and with almost two-thirds of marketers using these as a metric. DoubleClick. as they mirror the basic offline measures for brand exposure of readership in print or viewers on TV. such as number of impressions or unique viewers. supplies some ad click-through rates. Even the smallest of advertisers can track this with free analytics packages such as Google Analytics.”    Prepared by Greg Stuart Confidential 77 . though are unlikely to be very insightful for marketers with a branding goal or to indicate real ROI. However. Performance-based metrics aim to expose true interactions. such as comparing banner ads and search on their “cost per click” (CPC) or even television and banners on “cost per unique viewer. One of the reasons for the prevalence of both of these types of basic metrics. generally appeal more to advertisers with a branding goal. it’s hardly surprising that half of interactive marketers say extracting ROI is their biggest challenge with display advertising. These measures. these metrics reveal very little about the impact of advertising on consumers. for example. Metrics such as number of click-throughs or video views give an indication of how many consumers actually took some action upon seeing an ad and appeal to advertisers looking to drive direct action.verbiage on digital ad metrics View-based metrics simply look to track exposure.

ad spending review Prepared by Greg Stuart Confidential 78 .

Performance & ROI rules 4. Online video is up & growing (+115% in ‘09) 2. Net. mobile is <$1B  Online display/brand is only 1/4 Growth opportunities online:  1. Digital is growth medium  Others declining. & will continue to fall  Prepared by Greg Stuart Media Channels Television: o Broadcast TV o Cable TV o Spot TV o Interactive TV Internet: o Search o Display o Digital Video o Games Magazines Business Press Newspaper Radio Out of Home Digital OOH Direct Mail Yellow Pages Mobile   Confidential 79 . Behavior/Audience targeting still growing 3.)  60/40 national / local  50/50 brand / direct marketing Online is ~$25 billion. eventually 5.S.ad spending by channel summary ~$300 billion dollar industry (U. Local online will grow.

IAB RAB & Barclays Capital . NAA.ad spending trends – the details Newspapers Magazines Prepared by Greg Stuart 48 12 80 Confidential Source: Universal McCann.

8 2008 -4.8 47.0 35.7 Prepared by Greg Stuart Confidential 41. team analyses 09/08/2010 13.9 14.$ Billions Does not include Direct Mail.3 Total Print (Consumer Mag + Newspaper) Magazine Newspaper 41.4 44.3 19.4 20.6 48. Business Press or Miscellaneous 09/08 09/08 09/ /2010 /2010 09/08 08/ 09/ 6. 9 14.2 -5. 2003-09 .9 81 .1 13.2 59.5 20 10 08/ 20 Online 10 14.0 online and cable have experienced the most growth in ad spend while newspapers’ revenues have plummeted U.5 45.4 18.8 55.2 46. Morgan Stanley.1 4.4 13.4 26. Deutsche Bank.S.2 10 -0.2 -0.2 19.9 23. MAJOR media spend by type. Wachovia.2 46.76.810 09/08 09/ /2010 08/ 20 21.5 7 0 16. 27.8 56.1 31.9 27.9 09/08/2010 09/08/2010 09/08/2010 09/08/2010 09/08/2010 Source: Universal McCann.3 11. Veronis Suhler. SNL Kagan.0 24.3 20 /2010 09/ 08/ 09/08 09/ 10 08/ 20 /2010 09/ 08/ Outdoor 12.9 44.2 20 10 14.0 Yellow Pages 10 Radio Cable TV Broadcast TV 2003-09 CAGR Percent 09/08 09/ /2010 08/ 20 16.7 12.2 09/08 09/ /2010 08/ 20 23.4 44.9 60.8 10 19.9 -2. 9 43.8 17.3 0.9 21.6 13.2 46.3 46.5 25.7 12.4 13.9 19.5 41.2 23.9 13.2 12.9 58.

2003-07 56 45 26 19 14 21 7 * Includes newspapers and consumer magazines ** Definitions of local and national vary slightly by media *** Compound annual growth rate for total ad spend Source: Universal McCann. local (online is lowest local but most growth overall) Media type Local and national advertising spend** $ Billions. Veronis Suhler. much from small & medium businesses’ (SMB) advertisers •But local online ad spend is only 15% of total online spend 82 Prepared by Greg Stuart greg@gregstuart. 2007 CAGR*** Percent. SNL Kagan. Wachovia. Morgan Stanley. Deutsche Bank.7 national vs.com Confidential . team analyses •$90 billion in localoriented ad spend (~50% of total excluding mail).

2007.48 addressable media vehicles continue to capture value Mass-reach o Newspap er o Televisio n o Radio Highly targeted o Direct mail o Cable o Internet o Advanced TV 09/08/2010 Source: 09/08/2010 09/08/2010 09/08/2010 09/08/2010 83 Veronis Suhler. PWC (2008) Prepared by Greg Stuart Confidential .

There is NO question .com 60 120 Confidential 180 240 84 .online is a mass medium 100% 80% 60% 40% 20% Daily Reach and Duration for Various Media Outlets Radio Web 2005 Newspaper Magazine Web 1995 ? 0% 0 Daily Duration: Average Minutes per User Source: Ball State University Center for Media Design – A Day in the Life: An Ethnographic Study of Media Consumption Prepared by Greg Stuart greg@gregstuart.to be clear…web is mass medium  ….

Marketer Goal different channels play different roles against marketers’ goals Brand Building Driving Action Yellow pages Media capabilities Digital OOH Print – Magazines & Newspapers Addressable Online Video Online display Interactive television Mobile display Prepared by Greg Stuart Confidential n e r a w A s s e Lessaddressable Broadcast & Cable Television y r e g a m I e d i s n o C n o i t a r s a h c r u P e Direct mail Online search Mobile search 85 .

6% ) $23.6 .0(9.5% ) $25.6(5.6% ) $22.0 (9. 08-201 (billionsand %chang 4 e) 2008 2009 2010e 2011e 2012e 2013e 2014e Prepared by Greg Stuart greg@gregstuart.5 % 2 0 1 0 2 0 1 1 0 . December 2009 2 2014 86 .com $23.8% ) $28.3(12.3% ) U S T o ta l M e d ia A d v e rt is S p e n d in g 2 0 0 8 -2 0 1 4 (% c h .4(10.2(6.4 (-4.6 % 2009 -0 .7% ) Confidential 2 2 0 1 3 0 .5% ) $34.3 2012 $31. overall ad spending projections USOnlineAdvertis S ing pending 20 .online ad spending projections vs.4 % 2 0 0 8 -1 4 .6 Source: eMarketer.

411 $1.details .370 2010e $11. 2008-2014 (millions) 2008 Search Display Classifieds Lead Gen Rich media Video Sponsorship E-mail Total: $10.046 $3.422 $4.online spending by format US Online Advertising Spending.782 $4.688 $1.800 $2. by Format.683 $1.com Confidential 87 .628 $1.844 $372 $353 $31.200 2012e $13.765 $2.476 $1.858 $351 $323 $28.984 $2.090 $1.981 $1.029 $313 $268 $22.600 2011e $12.966 $328 $302 $25.202 $388 $374 $34.642 $734 $387 $405 $23.448 2009e $10.030 $1.077 $1.546 $4.172 $5.868 $2.215 $1.108 $2.868 $1.915 $1.877 $3.694 $5.440 $316 $283 $23. December 2009 Prepared by Greg Stuart greg@gregstuart.641 $5.000 Note: numbers may not add up to total due to rounding Source: eMarketer.300 2013e $14.174 $1.810 $5.176 $2.000 2014e $15.923 $2.142 $5.558 $1.630 $2.739 $1.521 $1.

online is not yet a major brand channel 2008 U. Measured Media Spend: $186 Billion Branding $146 B (~50%) Online Spend as 2008 U.S. ThinkEquity Partners Prepared by Greg Stuart greg@gregstuart. Measured Media Spend Percent of Total $24 Billion Direct Response 4% 11% $6 B (~25%) $18 B (~75%) $159 B (~50%) Source: JP Morgan estimates.S.com Confidential 88 .

ww online share Allocation to online ad spending varies greatly by country Top countries:  o o o o o o U. Nordic EU Countries UK Czeck & Poland Aus.S. & Japan So Korea Prepared by Greg Stuart Confidential 89 .

some are better than others: o Best is probably is eMarketer o Compilation of all others’ data & projections o Universal McCann data ok for most media o Zenith Media is good too o Jack Myers is good but paid for  Suggested caution: o TNS for Online (poor methodology & not the whole interactive ad channel – used for per brand generally) o Nielsen NetRatings data not representative either (same as TNS) o Some of the Wall Street data   Additionally. there is NO good CPM data Prepared by Greg Stuart Confidential 90 .sources of ad spending data  Various methodologies.

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