The “Macrotization” of Ad Serving, Ad Exchanges, and Demand Side Platforms

The online advertising industry at large is sprinting towards maximizing efficiency. Overall, the working theory is that smart aggregation and assembly of various technology providers will create a unique solution for display advertising, and one that combines audience targeting, procurement, arbitrage and media trade. However, if, as Randall Rothenberg, CEO of IAB, states: “technology succeeds in driving the cost of reaching the perfect audience down to zero” in his latest post titled “Is Marketing a Strategic Resource or a Procured Commodity?” then the industry might be fumbling towards false ecstasy, with “the same low costs, the same perfect efficiency, for doing the same exact thing.”

Allow me to explain. With all of the aggregation and consolidation of publishers, networks, and exchanges, in many instances, an overlap occurs with publisher inventory. Think about a typical web publisher in today’s ecosystem. Think about how many ad networks that publisher works with. Now think about how many ad exchanges those ad networks work with. Then think about how many Demand Side Platforms those ad exchanges work with. The result? The tail wags the dog: when you bid on an impression, in all likely hood, you are bidding on yourself, for the same piece of inventory. This overlap and inconsistency in many cases results in decreased efficiency.

Here at Lotame we call this concept “Macrotization” wherein you try and optimize results at the macro level but have built algorithms and processes that can’t ultimately be supported by the disparate supporting systems and components. Many of the components in these new advertising platforms don’t necessarily complement each other, even though it may seem as if they do, and complementary buzzwords often connect ephemeral dots that don’t belong. In time, the foundation for macrotization will settle, but for now, tremors still abound.

The truth is, there are few companies out there that successfully manage all pieces of the “macrotization” process. Those that can will deliver true efficiencies for their clients because they can seamlessly connect and control all pieces in the value chain—from audience identification through media delivery and resulting insights—in a completely transparent manner.

(Disclosure: The post can also be found at Lotame Learnings. Lotame is my current employer)

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The $800k Hotdogs

A cooked hot dog garnished with mustard.
Image via Wikipedia

I heard a story recently that went something like this…

(This is a true story, although the actual conversation below is fake)

A guy calls a reputable consultant for advice. This consultant also happens to be an Ivy League Law School Alumni, successful investor, and successful entrepreneur. Let’s just say he knows a thing or two about business.

The call goes something like this:

Caller: Hey Mr. Consultant. I got a great business that I need help with.

Consultant: Ok, what kind of business?

Caller: I sell hot dogs. I have 2 hot dog carts.

Consultant: You sell hot dogs?? Why the Fu*# are you wasting my time?

Caller: Well, I grossed over $800k last year from just two hot dog stands.

Consultant: Wow, ok. Now you have my attention…

Now, you can only imagine what the next obvious question is…

Consultant: …where are your hot dog stands located?

Before I give you the answer, just think about this for a second or two. This guy, in a cash business, made over $800,000 gross profit from selling hot dogs. Yes, hot dogs!

So you might say the hot dog stands were located in a city. Maybe Times Square. You might say the hot dog stands were located in a mall or perhaps some football stadium. Maybe a baseball stadium.

If you guessed any of these you’d be wrong.

The reality is, the hot dog stands were located in front of…

Home Depot.

Crazy? Not really, and think about that for another second.

From the minute Home Depot opens to the minute it is closed (around 7am – 11pm depending on the local store) subcontractors and construction workers are in and out buying materials, tools, and other wonderful construction accessories for their jobs. Middle class, blue collar workers who are looking for a quick bite to eat, and what could be a better snack then a $2.00 hot dog with perhaps a $1.00 can of soda?

Moral of the story here?

If you are thinking about the next, new big idea, just remember this guy. He took a very old idea but gave it a new twist. A boring idea perhaps, but this guy will never go hungry.

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From the Industrial Revolution to the Knowledge Era – Next Up: The Data Renaissance

1913 photograph Ford company, USA
Image via Wikipedia

The world will never be the same. Our society used to build machines and parts, in factories and in assembly lines. Today, our society builds computer programs and data bases, on laptops and in many cases, from anywhere around the world. People and businesses are becoming more efficient. They are working smarter, not harder, because they are beginning to leverage the most valuable employee of all: Data.

Take for example the airline industry. Consider all those times you got bumped off of a flight, rescheduled, canceled, or offered money to take a different flight. We’ve all been there and it always happens for a reason. This reason is that airlines try to prevent the loss of business and in doing so, they look at dozens of consumer driven behaviors such as how long you travel for, how many weekend flights you take, how many return flights you take, how many flights you take during the week, if you are a frequent flier, and the list goes on. All of these individual data points are used to inform a business decision. The decision is objective. The decision is data driven.

But what happens when we can make decisions using even more data points? Much more data points? Literally, hundreds of thousands if not millions of data points, and did I mention, in real time?

Welcome to the Data Renaissance. Thanks to increasingly efficient and scalable technologies like solid state drives, mobile devices, and cloud computing, the possibilities of data analysis are endless. I mean, just think about how much time we either spend online or connected to a mobile device. This has tremendous implications from travel, health and fitness, to finance, education, and media and the best part is, we haven’t even scratched the surface.

Like I said before, the implications here are huge. Many companies recognize the need to have these comprehensive data sets while having ways of analyzing that data. The digital media and online advertising industry in particular are both in a unique place since their very foundations are dependent upon these high growth technologies; digital devices and the Internet. In this space, companies are racing to a holy grail of advertising where they can leverage millions of individual consumer behaviors to inform brand engagement opportunities and purchasing decisions. Unlike the airline industry, online advertisers can leverage millions of data points instead of those “dozen,” and if done correctly, the consumer experience will be better than it’s ever been before. Everything will matter. Everything will be relevant. We will all become more enlightened and informed to things that interest the most because these new technologies are launching us into the very early, but still uncharted, data renaissance.

(Disclosure: The post can also be found at Lotame Learnings. Lotame is my current employer)

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The Maturation of Data Intelligence

With all of the latest advances in digital media, we are still in the infancy stage when it comes to data intelligence and informative decision making. Consider what is currently happening in the display advertising space. Data and media are continuing to diverge as two separate commodities. On one hand there are data exchanges making cookie files or user information available for purchase. On the other hand, there are media exchanges that make media available for purchase letting businesses use primary or secondary cookie files from other sources to make the ad decision.

This new divergence between data and media, coupled with the notion that bigger is better when it comes to data, makes for an interesting dynamic in today’s industry. Companies are looking to build their own, large cookie pools. In some cases, these are companies with no real technology or mathematical expertise. The natural assumption is that by having large data sets, it would allow for informative ad decision making and that assumption is absolutely warranted. But again, we are only in the infancy stage when it comes to data intelligence and information decision making so it is important to understand all layers involved while pursuing the “data” path.

There is an entire meta-layer between data and media, and that layer is around delivery and optimization. It’s the ability to marry delivery, performance, and backend metrics with data collection and custom audiences. Without this connection, data is meaningless. Imagine for a second you spent $5,000 on the latest and greatest Flat Screen High Definition TV, $600 on the latest Blue Ray DVD drive, but decided to use old audio/video composite cables instead of investing the extra $150 on some good HDMI cables. Your investments in the television and the Blue Ray drive aren’t even close to maximized unless an additional investment is made in the “connection.”

This is unquestionably one of the most important, yet most overlooked aspects of today’s ecosystem. Data is only as valuable as the intelligence or “connection” behind it. In the coming months, the companies that are positioned to efficiently collect and segment data and, more importantly, are able to tie that data in a meaningful way to media through enhanced delivery and optimization techniques, will see an increase in sales, margins, and ROI. By valuing audiences and media separately, there is also a new arbitrage opportunity available to those that truly understand the three aspects of data, media, and delivery.

At the end of the day, companies will need to make smart investments on technology vendors and third party solutions in order to help achieve their goals. As the economy continues to shake out, as costs and expenses continue to be cut, and as resources continue to be reallocated, it is all that more critical for companies to make sound investments that contribute to increased efficiency and productivity. In order to do this, companies will continue to turn towards “data” in order to make informative decisions, to both business and literal ad serving.

(Disclosure: The post can also be found at Lotame Learnings. Lotame is my current employer)

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Loosing Your Virginity – Getting Your First Piece of…Business – Runaway Productions

CraveRedCrossEventSAE
First contracted event

During my sophomore year of college my fraternity was shut down. As a result, all of our events were canceled and to make matters worse we couldn’t even participate in other organized events within the Greek system.

This sucked. It was a huge problem especially for my group of friends who enjoyed going out and doing the social thing.

But where there was a problem, there was also a solution.

At this point in time, my friend and I decided to build a college marketing company that would encompass three themes: (i) host events in a safe and secure environment (ii) be honest and upfront with our partners and vendors (iii) create recognizable and memorable marketing events that would promote the company brand in a positive and unique light.

In the short aftermath of my fraternity’s suspension, we hosted our first event. The first was all it took. It gave us some confidence, experience, and most importantly, momentum. From that point on we were able to grow the business, form new partnerships, hire more help, and keep the ball moving forward.

We were beginning to be featured in the local newspapers and magazines and were starting to become a focal point of the local community’s social scene:

HalloweenPoster06RP


“Yet another alternative to Freakfest is Runaway Productions Halloween 2006, the first event of its kind to be held at Madison Avenue. Runaway Productions, a company run by UW students, organized this 18-and-up event with Sony/BMG Music Records and CO-ED Magazine to provide an alternative environment for those in search of a riot-free good time. According to Managing Partner Daniel Reich, the Halloween 2006 event was created as a “legitimate venue so people can party in a safe, controlled environment.” Instead of wandering around aimlessly amid the drunken antics of State Street, students will have the opportunity to dance to their favorite artists at the dance club on University Avenue.

Runaway Productions intends to appeal to all sorts of listeners with a variety of musical acts. Hip-hop, reggae and rock fill the bill with artists including Golden, Collie Buddz, Fahrenheit and Displace. Also performing is special guest Sa-Ra from Kanye West’s record label GOOD. The event runs tonight and tomorrow, and attendees can purchase tickets from ExchangeHut.com.”

–The Badger Herald, State Street not only show in town this Halloween

(Disclosure: Sa-Ra never came and the headliner was Collie Buddz. It was his first live US show. One of his songs here)

 

 

At the end of the day, “the first” was all it took. Although we did many events and functions thereafter, “the first” is what really put us over the top. It is probably the hardest thing to do when starting a business or doing sales, but once one is knocked down, the rest just kind of fall into place.

Sidenote: It’s been three years since we parted with Runaway Productions and three years later it is still going strong.

(Posters from other events below)

RunawayCoEdRP
MadAveGirlRP

(Pictures from other events below: Collie Buddz and Golden performing)

collie-buddz2
golden

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“My name is also Daniel Reich, and strange as it seems, I found your blog doing a bing search on my own name.”

This is a damn small world. The Internet makes it that much smaller. Just read the title of this post as proof (or see entire comment here from another Daniel Reich).

For the rest of your life, everything you do and say will be public information and will be easily accessible. You can argue with me all you want but 10 years from now, if by some chance I recall that argument and feel like being in a “I told you so” mood, I’ll be sure to take your most embarrassing picture and make it its own website just to remind you how right I was.

Ok, I probably won’t do that (even though I or anyone else could).

The point is that in today’s world you must control and own your own web presence.

Go to Google, type in your name, see what comes up.

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Death and Failure Happens When You Don’t Properly Assess the Situation

Myself and fellow rescuer assessing the scene and pateint (Mount Snow, Vermont)

This October will mark my 9th consecutive year as an emergency health care professional. In all those years, the most important thing I learned (besides teamwork) is that assessing a situation correctly and completely could literally be the difference between life and death. The “assessment” is the most critical aspect when saving lives, treating the injured, or tending to the ill. Emergency health care or health care in general, is the most seriousness business of all (other than war), and within this business, great “assessment” skills are absolutely necessary.

Now think about your own life for a second. Think about your job, your company, your family, your significant other. How could you improve any one of these things if you spend a little more time observing or assessing, before you act or do anything? Think about the job of a manager, quant, marketer, or salesman? As an example, how much better could a salesperson be if they spent more time understanding a business’ needs, before they blindly push a product onto a prospective client?

With that in mind, consider the following few paragraphs:

As a salesman, you must perform a quick but thorough assessment to identify a prospect’s needs and to provide proper business solutions. Prospect assessment includes many steps and is the most complex skill that you will learn in the field. To make the task easier, it is helpful to identify and discuss the key components and skills of prospect assessment before you learn the entire process.

As you begin your assessment, you must gather and record some key information about the prospect. You will also need to obtain and evaluate the prospect’s vital signs of their business. The failures, struggles, or needs and the history of what occurred before and since you arrived are key pieces of information that you will have to obtain by asking a series of questions. You must also learn about the prospect’s past history and overall health of the business.”

Gathering Key Prospect Information

You will need to know which questions to ask and how to ask them. By using your deductive powers, you will be able to interpret the meaning and implications of your findings and the information that you have gathered. When assessing the prospect, you will have to look, listen, feel, and think.

If you couldn’t tell, this excerpt was actually taken from an Emergency Health care manual, with a few words changed. (Outdoor Emergency Care, Comprehensive Prehospital Care for Nonurban Settings, 4th Edition). The real excerpt is below.

Point is, you can’t possibly solve a problem or address an issue, without fully understanding the problem in the first place. In health care, this could possibly mean death. In business and in relationships, this could possibly mean failure.

Think, assess, and only after, act.

“As a rescuer, you must perform a quick but thorough assessment to identify a patients needs and to provide proper emergency care. Patient assessment includes many steps and is the most complex skill that you will learn in the OEC (Outdoor Emergency Care) course. To make the task easier, it is helpful to identify and discuss the key components and skills of patient assessment before you learn the entire process.

As you begin your assessment, you must gather and record some key information about the patient. You will also need to obtain and evaluate the patient’s vital signs. The injuries, illnesses, or symptoms and the history of what occurred before and since you arrived are key pieces of information that you will have to obtain by asking a series of questions. You must also learn about the patient’s past medical history and overall health.”

“Gathering Key Patient Information

You will need to know which questions to ask and how to ask them. By using your deductive powers, you will be able to interpret the meaning and implications of your findings and the information that you have gathered. When assessing the patient, you will have to look, listen, feel, and think.”

(Outdoor Emergency Care, Comprehensice Prehospital Care for Nonurban Settings, 4th Edition)

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The Importance of a Real Vacation

Riviera Maya
Image via Wikipedia

By “Real Vacation” I mean: Do whatever you have to to clear your mind. Don’t think about anything. Think about nothing.

I recently came back from a long week in Mexico (Riviera Maya – Secrets Capri) and it was indeed a REAL vacation. I highly recommend it as a “Real Vacation” spot.

A “Real Vacation” is not a trip to Las Vegas, it is not a trip to Montreal, it is not a ski or snowboard trip (although my mind is pretty clear when I do those things), it is not a trip or visit back to college or a road trip to a sporting event.

In this day in age, it’s nearly impossible to escape. I’d argue that 80% of your day is spent with your phone or computer. Whether or not your are using it, its there. You are thinking about it. Thinking about who is going to call you or text message you. And because you are thinking about it, you happen to break it out  and read the news, send someone a message because your board, or check Facebook.

And if your not thinking about the next possible message vibrating out of your phone, your thinking about work, your family, your significant other, the television show you watched last night.

I also hear people talk about how they have ADD or ADHD, and while some may very well indeed have chemical imbalances, the rest of us are just ADD brainwashed because of how much multi-tasking occurs in our daily lives. Some Buddhists call this “Monkey Brain.” We call it ADD.

All of this put a huge strain on your physical and mental self. We call this stress.

Do yourself a favor. When you get a chance, take a REAL vacation and clear your mind. You’ll thank me when you do.

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MetaBusinesses and the Aggregation of Anything

The Internet and technology makes it so easy to do anything.

  • Want to be a musician? Grab a mic, plug it into your computer, hit record.
  • Want to make a movie? Grab a camera, edit on your computer.
  • Want to be a journalist? Create a blog, start writing.
  • Want to learn a new language? Download language software.
  • Want to be an artist? Draw a picture and make it available online.
  • Want to invent something? Sketch an idea and outsource production?
  • Want to be in finance? Use the latest in market analysis software.

Point is, as technology makes our lives easier it also becomes easier for anyone anywhere, to create something of value for the rest of us to use or consume. It really is incredible.

As a result, we’ve seen this mass explosion of user generated [fill in the blank] because the barriers of entry to do anything are being reduced every single day. This creates an overwhelming amount of information, ideas, music, movies, businesses, services or whatever else you can think of. There are so many options and so many choices. How are you supposed to know what’s best or most relevant to you? How are we supposed to know what’s right or wrong, good or bad, true or false? I mean, people actually thought actor Jeff Goldblum died because they read it on Twitter (video below).

With all of this noise creation comes an opportunity to create filters or smart methods of aggregation. A sort of Meta-Business if you will. This concept isn’t new, but the methods that will be used will be.

Some quick examples:

  • Brazen Careerist – Aggregates “top Gen Y thought leaders” thereby filtering the noise of all the other junk of us millennial
  • StockTwits – Aggregating all of the stock market conversation using Twitter, and more recently have begun aggregating a network of top financiers
  • Properat – Intelligent filters for email or “Assistance for enterprise users to manage the growing volume of e-mail and to seamlessly embrace new messaging media” (In the finals of Cisco’s 09′ Global Business Competition)
  • The Hype Machine – Collection of music from all over the world both user generated and by well known artists
  • Lotame – A collection of consumer insights and web properties, that allow advertisers and marketers to pick the most relevant consumer segments for their marketing needs (Disclosure: My current employer)
  • Digg – Filtering the most popular stories online

Their are plenty of people and companies doing this aggregation and filtering thing already, in very smart ways, and it’s only the beginning.

(Video – Colbert: “According to multiple tweets..actor Jeff Goldblum passed away on Thursday in New Zealand“)

The Colbert Report Mon – Thurs 11:30pm / 10:30c
Jeff Goldblum Will Be Missed
www.colbertnation.com
Colbert Report Full Episodes Political Humor Jeff Goldblum
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