Here is the press release we jointly issued this morning.

At first this may not make sense. I can understand why you want to identify a user expressing intent at or very close to the time they are expressing it, but why would you want the opposite. It’s quite simple. Most of the time, a user is doing something specific online, something (perhaps a few things) is/are occupying his or her attention and if the advertising is not specific to that task (like search) it is ignored or deemed extraneous.

But, if the user has just completed a task (the closest thing to “emptying the mind” you will see) then that mind which  has now shifted into a “no-intent” state can be filled with other types of marketing messages. The marketer has a unique chance to encourage the user to take some form of action, to consider and act upon a compelling message.

Thus we as advertisers online must think not just of the audience’s intent, but also of the audience’s “no-intent” zones where they are amenable to suggestion. A place their task is not interrupted. A space online where a vacuum has been created waiting to be filled by the best and brightest thing. The former is harder because while intent is often present, you need to match the user’s intent with your product (hence the search keyword, behavioral targeting etc.). The latter is hard information to gather too – but arguably more valuable since it may then apply to lots of different products and services – when the user is in this “no-intent” zone, you could advertise all kinds of things with a much greater response rate than you would get elsewhere.

Advertising done successfully is thus a story of both intent and non-intent.

I hear some talk in the market from Publishers and Pub aggregators about “pricing technology” and pricing rules they will use to combat a predicted downward pull in prices that results from automation and RTB.

I am not really sure what these pricing rules will be or how exactly this could possibly work. It seems that marketing and economics might have taken divergent paths on this one. Let’s examine the concept of price floors and why they probably cannot be an effective tool to increase revenue for publishers in this case.

A price floor is an artificial price set above the equilibrium clearing price in a market environment. This means that the quantity of a good demanded will decrease by some amount while the quantity supplied will increase. The amount of the change in quantity supplied and demanded will depend on the elasticity of both curves, respectively. In this particular case, this type of mechanism would likely have an adverse rather than beneficial effect on revenue for publishers:

1) Elastic Supply- Despite the fact that online ads as a whole are not commodities and as such do not represent a pure example of perfect competition, there is such an enormous surplus of supply in each of the various “value tranches” of inventory that the benefits of differentiation kind of becomes void since collusion at this scale isn’t really possible (fragmented across too many pubs). A supply aggregator might argue that unifying the fragmented market is a great reason to choose one platform and create universal and enforceable floors; this brings us to a textbook example of a prisoners dilemma…however in this case, there are too many players in the game to reasonably expect adequate levels of cooperation (and not cheating) to properly execute this scheme. Thus, the publishers become price takers within their niche (if we construct a view of the traffic in 3 dimensions; price, quantity, niche/value tranche and then slice it up by niche/value tranche, we will see a bunch of cross sections where market supply is virtually unlimited at an equilibrium price level).

2) Elastic Demand- Advertisers don’t want specific placements as much as addicts want cocaine. There are a lot of different supply sources with similar desirability and value in terms of performance levels and/or audience attributes. If a particular publishers is artificially charging too much for a placement, no sweat…a buyer can just go somewhere else to find it at its intrinsic price.

Does the fact that price floors and pricing mechanisms are not the solution to increased revenue mean that publishers are doomed? No, it just means they should embrace the free flow of market dynamics and allow for more transparent information so advertisers are able to target more effectively. The whole point of advertising is to drive a person to buy a particular product or service. If an advertiser is able to cut through the noise and find their targets more effectively, that means they will be willing to pay more for that acquisition and the externality of significant spend going to uninterested users will be reduced (Ie. Publishers with valuable audiences and placements will get the money they deserve and publishers who are lacking in either department will also get what they deserve…good for some, bad for others). In general, the acceptance of a free market in the age of automation will enhance the overall value of the industry rather than act as a zero sum game reallocating the rents. Outcomes are not permanent either, so a pub who is an initial loser can certainly make changes to enrich the value of their audience or placements.

ComScore has been rolling out the new system for months and says it can now use it to report on 25 percent of the 50 biggest sites on the Web. Another 50 percent of the top sites have agreed to work with the system, Abraham says.

ComScore lets publishers who are already clients participate in the program for free. But it will charge everyone else $10,000 a year, which the company says helps cover the cost of new servers and other equipment it needs to process the new deluge of data.

Gawker/Valleywag says it more bluntly “Comscore Blackmail: Pay Us $10,000 or We’ll Keep Under-Reporting Your Traffic”. Because the figures are consistently biased downwards in the legacy reporting, it creates a distinction in traffic reporting between those who place the tracking codes on their site and those who don’t, that is very correlated with higher ad revenues today (hence the idea of “blackmail”). Most sites won’t ever pay $10,000 so this means only the largest sites will even consider doing it, lessening the burden for comScore’s (probably not very efficient) infrastructure for doing so. This distinction in the costs to participating vs. not exists in a very different way with Quantcast, although the compensation and benefits a publisher gives up are a bit more subtle in their case since there is no cost for participating with them – namely that Quantcast will use their aggregate data to help marketers find similar audiences. By no means a small or easy task and kudos to Quantcast for taking that on. Reporting is one thing – but actionable data based on reporting is quite another.

Three points worth making, though this is interesting and there are many more to think about:

1) the “size = more ad revenue” should (but will take some time still to) become less meaningful, as more centralized inventory access and price discovery is possible. A good reason to work with three big sites versus thirty small- or medium-sized sites is that trafficking and setting up ad buys with people takes time and is grossly inefficient. And we’re all nothing if not lazy in the media business.

2) there is no doubt that the panel approach undercounts data, especially for the at-work and university-type audiences amongst others. I worked at Nielsen NetRatings and the most common argument we used if we ever gave any credence to these arguments was that most sites were consistently underreported. Hmmm yes. Of course. So it begs the question – if you are being trusted as someone to measure, report on and (often) opine on the health, status and metrics of an industry, don’t you want to be as good as possible which in turn leads to more trust, more business and more money? It is unclear in this case.

3) The capacity and desire for sites to implement a lot of different companies’ javascript code on their site is limited. Sites don’t want to break if any of these third-party pieces is messed up. Use firebug/firecookie or Charles and see what all is loading on the typical large site. Risks increase, and the infrastructure capacity of many of these vendors is far less tested than you might think, especially if the publisher is now being asked to pay for the infrastructure (another typical argument used by NetRatings or comScore or others “the market needs to pay high prices to help fund good quality measurement” which is also total BS).

CPM Advisors has been a participant in the BlueKai Certification Program, which allows marketers to easily define a standard in-market audience profile using BlueKai data while reaching audiences via their media partners, since September 2009. This new enhanced partnership helps reach desired target audiences by offering clients access to BlueKai’s in-market data on over 160 million unique shoppers online all directly within CPMa’s CPMatic (www.cpmatic.com) media buying platform.

“We’ve enjoyed working with the BlueKai team over the past year as they’ve continued to expand their data offerings, and we are pleased to now offer our clients direct access to BlueKai targeting data within our CPMatic display buying platform,” says Rob Leathern, Founder and CEO of CPM Advisors. “We believe that our cross-platform media management and optimization methodologies are uniquely positioned to maximize the value of their data for our clients’ display advertising campaigns.”

“CPMatic is a proven media buying platform, well-utilized by some of the largest online advertisers,” says Omar Tawakol, CEO of BlueKai. “Providing CPMa’s clients enhanced targeting capabilities by means of BlueKai intent data is a win-win.”

ABOUT CPM ADVISORS

CPM Advisors, Inc. (CPMa) was founded in early 2008 and is based in San Francisco, California. CPMa operates CPMatic.com and provides optimized cross-platform media and data buying for advertisers and agencies, integrating with major publishers, ad exchanges, data providers, aggregators and marketplaces. The company’s founders and board members have previously built and funded Internet advertising optimization systems for some of the largest online advertisers. More information is available at http://cpmadvisors.com and http://cpmatic.com.

Dear AdECN Member,

Thank you for your use of AdECN’s services and participation on the Hosted system of the AdECN Exchange for the last few years. We regret to inform you that AdECN has made the difficult decision to close the Hosted system in accordance with following timeline:
• February 15, 2010 will be the final day that ads will be served. This closure will include all ad-serving, any default code, and all other AdECN services.
• However, we will continue to provide UI access until March 15, 2010, after which point there will no longer be any login access to the AdECN Exchange. You will not be able to access the AdECN Exchange, including any data you have stored on the system, after March 15.
• All balances will be paid in full by March 31, 2010.

We are committed to working with you to make this closure as painless as possible. Please contact support@adecn.com to tell us how we can assist you in transitioning your business. Contact support@adecn.com or your Account Manager by January 15 if there are major issues with the February 15 date to discuss how we can make this transition off the Hosted system as amenable as possible.

We will only be able to provide redirect services to third party ad exchanges or servers through February 15, 2010. Billing and serving data will be available via the UI until March 15; on request we can also provide you with copies of the last 9 months’ billing invoices (provided we receive your request prior to February 15).

You may also want to review a list of alternative ad exchanges and infrastructure providers here.

We thank you again for your participation on the AdECN Exchange.

Sincerely,
AdECN Team

Update:  apparently they are shutting down the “hosted” part of it only which is a “legacy product” and will be focusing entirely on RTB. So AdECN lives on. Seems really odd they wouldn’t mention that in their email. Bizarre.

A couple of members of the CPMa team who will be there:

Charlie Lambropoulos (left), who is a new member of our team, working on partner development having just joined us from The Rubicon Project where he was the manager of ad network development. Charlie used to play soccer at Colgate, though he sometimes likes to call it football. He’s also hoping to find some World Cup 2010 tickets and a cheap flight to Cape Town, he tells us.

Kirk Bardin (right), our business development/sales manager who hails from Southern California.  When you meet Kirk, in addition to display optimization, ask him about the Spartans. Or about Pac-10 Football. As usual, there’s a lot of great stuff going on behind the scenes as we continue to build out more features in our CPMatic.com platform and continue to grow the sales, business development and account management teams here at CPMa. Stay tuned.

As I point out in a comment there, research I did at Jupiter (now Forrester) and presented to the FTC several years ago showed that over 53% of users used the same password and username at substantially all the sites they visit. I think the real number is probably still pretty high, despite companies doing a lot to force people to choose better passwords – because there are so many more sites and services that require account creation.

http://www.adexchanger.com/data-driven-thinking/real-costs-real-time-bidding-rtb/

For people interested in just playing around with the figures in this simple example themselves, here is a  spreadsheet you can input your own values: Excel 2007 Spreadsheet

We would certainly welcome comments and thoughts: there is a lot of real value that is and will be created here, but there needs to be further thought given to how it will all hang together.