ADOTAS — Batten the hatches, Facebook! Apparently hacker collective Anonymous — which rapped up all kinds of media attention last year for DDoS attacks on the websites of MasterCard, PayPal, Amazon and others — wants to make sure the social network remembers, remembers the fifth of November. That’s the day Facebook is going down, according [...]
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More than any other change in the marketplace, we believe it is app stores along with their integrated advertising and fullfilment solutions that have to potential to help drive digital advertising to reach its true potential.

A marketers dream is an advertising platform that allows consumers to both purchase and receive fulfillment directly from the advertisement through a single action, such as a click or tap. The marketer should be able to measure this platform from cost to revenue and ultimtely to ROI in near real time. With a help from players like Apple, Google, Amazon, Ebay/PayPal those advertising platforms will likely be coming to us all soon.

This is a tactic that some marketers have already taken to varying degrees in the past. Apple has done this in varying forms through their iTunes marketing efforts. Apple has used their banner advertising to drive users directly into iTunes for immediate purchase and fullfilment. Once they are within iTunes, registered users can can purchase with a single click. Historically, this required Apple to do so through a two step process, as it required sending the users into iTunes first, but the advent of the iAd Network changes that for Apple and potentially for others.

Although advertisers have shown that digital advertising is capable of accomplishing selling directly from a banner now, adoption remains extremely low. We believe the primary impediment to further adoption has been that no single payment platform has a large enough userbase to successfully accomplish this strategy at scale online. Paypal could be used as one click to pay solution and while they have “87.2 million people worldwide using PayPal” that number remains a relatively small share of total worldwide users. In order for advertisers to become interested not only does the platform need to be turn key to implement, but it needs to be able work for the vast majority of the people that the advertisers media willactually touch, not just a small percent of them.

Apple now has the pieces in place to build this advertising platform and offering it to advertisers is a logical next step. We theorize that the vast majority of iPhone, iTouch, and iPad users have their credit cards saved to their devices, which is at it’s basic level what enables one click purchasing.

Connecting the dots between the iAd network and the iTunes billing system is an obvious next step that Apple could roll out to advertisers. Having an advertising platform that can specifically target an audience, transact with them through one click purchasing, be used for fullfilment and do it at scale is where the opportunity is. iAds may in fact revolutionize advertising, but not in the way originally expected and certainly not because it can make a more beautiful engaging ad, that responsibility lies on the people making the ads.

Some advertisers are already doing just this.  However, the types of advertisers that can do this right now, without additional back-end billing integrations are only those advertisers who are selling their products directly from within iTunes.  This has the potential to work work well for app developers, TV networks, and movie studios.

Image and walk-through notes from BusinessInsider.com

Our perspective is that the iAds business model will ultimately look more like Amazon than that of a rich media vendor or even that of a typical ad network. The current iAds structure allows developers to get paid on both a CPM and a CPC basis. This hyrbid pricing model was new to the industry and shocked many, but if Apple is already charging for impressions and clicks, what’s to stop them from also charging for sales on a CPA basis. Adding “Cost Per Sale” as third potential cost to advertisers is not unreasonable if Apple being compensated for handling fullfulment and payment. Apple’s pitch will relatively simple to marketers and developers alike, “Use our App store to sell your products, use iAds to promote them, and use the iTunes billing system for payment”.

This functionality already exists for developers who choose to advertise there own apps. Courtesy of BusinessInsider.com ideal for transactions that can be delivered through the app stores themselves, this new ad model can work for many offline trasnactions as well. Here are a few potential examples:

-Around dinner time you’ll see ads for Pizza advertiserss. Papa Johns special is just one click away! They will be bill your iTunes account directly with an option to tip the driver through iTunes as well.

-In the weeks before Valentines Day you’ll be delivered ads for flowers. The Valentines Special can be purchased using one-click payment. You’re asked if you would like them the flowers to your house, business, or pick them up at a location nearest you which is determined by the GPS in your device.

-Banks will advertise the opportunity to sign up new accounts within the ad itself. Once given approval they could access your basic information from the Apple Store, download their own mobile banking app onto your device, and begin to create your account. Login and confirmation details would be stored in the recently downloaded app and emailed to the address you have stored within your app store.

Some transactions may not work well, if at all, in a one click fashion. For the immediate future you can scrath the idea of anything that involves a relatively complex transaction including both cars and homes. Other types of transactions might be more simple, but still be difficult to implement in a way that doesn’t attract regulation and close scrutiny such as getting a prescription refill from your pharmacist.

With their recent announcement of the Mac App Store reinforces this is crucial to their strategy. The applications themselves provide the advertisers a place to advertise, but the stores give them a place for fulfillment. Having a store on the Mac itself opens the door to a wider market than of potential advertisers and developers. One click purchasing proved its value for products on Amazon. Now it will prove valuable for all the app developers, media distributors, and content providers that participate within the iTunes or app stores.

While Apple may be best positioned to take the lead, they are almost certainly not the only player with a potential interest in the space. There has historically always been some level interest in trying to sell products directly from banner ads. Startup company Infused Industries is among those trying to push out fully functional ecommerce capabilities within banners and social settings such as Facebook, but they too face the challenge of lack consumer adoption of any single payment system for a one-click system. While they are able to have fully enabled ecommerce banners, it can’t be a single click-to-purchase process for most users, if any.

Google wants your credit card and their numerous moves into paid consumer businesses fit well into this new ad model. Google needs consumers credit cards, just as Amazon and Apple would, in order to compete in this new ad model. The Android app store, Google’s expected music service, Google Checkout, and Google TV are all tools within their arsenal to increase their access to this data. Overall, one thing is clear… Google wants your credit card.

Amazon may become the central piece to all of this as they hold the patent on one-click technology which Apple has licensed for years. Interestingly, Amazons now building building their own App Store for the Android platform according to the WSJ), which actually complicates matters even further. significantly for anyone else interested in creating a one-click app store platform…Google, Ebay, Apple. Amazon could be angling for a partnership with Google on Android. It is one of the few cases where a company might have leverage against Google partly because of the Amazon patent on one-click technology and partly because Amazon has the billing and contact information across millions of consumers. Those are two key components in any one-click based advertising platform. It will be interesting to see how Amazon plays their hand in the app store space because they could potentially hedge their bets in a number of ways.

To us it makes most sense for Amazon to focus on building relationships that place their engine and future app store at the core of as many other platforms as possible while using the one click patent to give them the negotiating leverage to do just that. Just as with any other app store advertising would run within many of the available apps and in an Amazon app store we will would likely see significant use of the advertising to push sales through their own ecommerce platform and using these methods to drive deeper integrations with marketers. While competition to build the early platforms might be between the technology vendors, if Amazon is successful in this space it significantly better enables them to compete against the Best Buys and WalMarts of the world. It may seem strange to think that Best Buy would want to compete in this space, but as the WSJ article referenced above notes Best Buy has given some thought to building their own app store.

Lastly, it’s important to not discount the wireless carriers. They are another set of players that would love to increase their share of advertising dollars and they have a key place in the app store landscape. Regardless of who makes the phone or the software, consumers are only ultimately only forced to have an ongoing relationship with their service providers. Consumers are already used to receiving monthly bills from their service providers and are accustomed to seeing incremental charges added on for digital goods such as ringtones.

Technorati Tags: ad network, e-commerce, iad network, mobile

This is a repost of a research report created in August of this year.

Introduction

Numerous attempts to measure ROI on Facebook have been attempted.  However, measuring ROI often involves questionable methodologies that apply a monetary value to one or more metrics.  At the same time, most major marketers have accepted they should have a Facebook presence even if they have not figure out exactly how to measure their efforts.  Given that acceptance, a relative analysis of how brands are performing compared to their competitors has significant value.  Additionally, a relative analysis should be subject to less debate as it does not arbitrarily assign a monetary value to any of the metrics gathered in the research.  In this study we look at the automotive sector with the goal of measuring how well car makers are using Facebook to reach their audience.

Key Findings

• Aspirational brands scored highest on reach and uniquely positioned brands generally scored higher on engagement.

• Practicality doesn’t build a large fan base.  Subaru and Hyundai scored lowest on our reach analysis.

• American brands primarily over-indexed on engagement while Asian brands primarily under-indexed.  European brand engagement scores generally fell between that of the American and Asian brands.

• Low cost tactics that reflect how Facebook is naturally used can generate very cost-effective engagement

• Facebook doesn’t shut off at the night or over the weekend.  During these times, some brands are noticeably missing, while others are driving high engagement levels during these times.

About the Methodology

We focused on reach and engagement as the measures of success. However, in light of the different tactics brands can take to build reach and engagement we needed to find a least common denominator that provides an apples-to-apples comparison.

Aided and unaided engagement was measured individually and averaged together to create an overall engagement score.  Aided engagement was measured by calculating the number of fan comments on official brand photos, per fan.  Unaided engagement was calculated based on fan submitted photos per fan.

We measured reach based on the total amount of fans that a brand has across single or multiple profiles.  However, unlike most other studies we found we believed that reach should not be measured on an absolute basis, but by the number of fans each brand has relative to their market share.  After all, having 100,000 fans may mean one thing to Toyota, but something entirely different to Subaru.

Our analysis used the data sources listed below.

Facebook:

• Number of Fans Per Brand (unduplicated measure across all brand profiles)
• Fan Submitted Photos (measured on a “Per Fan” basis)
• Fan Comments on Official Photos (measured on a “Per Fan” basis)

Automotive News Data Center:

• U.S. Nameplate Sales YTD 2010 (January 2010 – April 2010)

Fan comments on official photos and fan submitted photos were used as proxies to measure engagement for the following reasons:

• Data is publicly available
• All brands can post official photos and allow fans to submit their own photos.
• All brands can choose to let fans submit photos.
• Brands that successfully build their fan base through campaign specific initiatives should see a rise across all Facebook metrics, not just the metrics directly related to the marketing tactics used.
• Engaging with photos is a major part of Facebook’s overall usage.

• Car photos have traditionally been a large way in which enthusiasts engage with automotive brands and how brands market themselves.

Reach Analysis

While consumers are increasingly buying on value, they are not fans of practicality. The ability to generate a large fan base in relation to a brands size is partially based on the aspirational nature of each brand.

Exotic brands had the largest fan bases relative to their market share and their ability to generate a large fan base should be noted.  However, they had to be removed from the analysis as they skewed the overall results and represent a relatively small share of the automotive market.

Of the included nameplates, aspirational brands (Jaguar, Audi, & Mini) were able to build the largest fan bases relative to their market share.  Audi had almost 10x the fan levels as Lexus, despite a year-to-date sales volume that was roughly half of Lexus’.

Mass market brands had challenges reaching fan bases that were reflective or their market size.  This is likely because they must appeal to a broad market and aren’t uniquely differentiated as a result of that.

Hyundai and Subaru, both known their practical minded buyers, had the smallest fan bases relative to their market share.  However, they are among the few brands showing strong sales growth over the last few years and each won “Marketer of the Year” awards in 2009.  We believe that their growth may have largely come from value oriented buyers they have not yet turned into fans.

Engagement Analysis

Chrysler topped the engagement analysis while Jeep was the second best performer.  Upon further inspection, Chrysler is taking a “keep it simple” approach, and doing it well.  Chrysler’s Friday Fan Polls pits pictures of their cars together and asks simple question, such as, “Wagon or Coupe”, “Sporty or Luxurious”.  This simple, low cost, tactic is generating more than 100 comments per post.  For comparison, Hyundai had fewer than 100 comments across all official photos at the time of our analysis.

Chrysler's Friday Fan Poll

Jeep scored second highest on engagement levels and with over 16,800 fan submitted photos, it’s fair to say that boys love to share pictures of their toys, especially when the toys are covered in mud.

Some of Jeep's 17,000+ fan photos

With the exception of a few outliers there were clear distinctions among the performance of American, European and Asian brands.  Domestic brands primarily over-indexed on engagement, European brands were clustered around the center of the engagement index, and Asian brands mostly under-indexed.  This may be due to the heritage that the domestic brands have behind their brands.  Hero vehicles such as the Ford Mustang (485,000+ fans) along with Chevrolet’s Camaro (275,000+ fans) and Corvette (100,000+fans) are driving large parts of their respective brands reach and engagement scores.  Meanwhile, the Asian hero cars, Toyota Supra (29,000+ fans), Nissan 350z (39,000+ fans), and Nissan GT-R (4,000+ fans) all lag behind their domestic counterparts in both reach and engagement levels.  This may also be a result of differing strategies as the Asian brands have largely focused on using Facebook to help introduce new vehicles while the domestics have seem to put a larger degree of focus on their more established model lines.

Subaru’s high engagement level is a great example of doing good work with minimal effort.  On a recent Saturday, Subaru asked what their fans were planning on doing with their Subaru that weekend.  This question generated almost 150 comments in less than twelve hours.  The timing (early on a Saturday) and the method used to reach their customers (Facebook on an iPhone) both reinforce how easy it has become for marketers to engage their audiences in an age of social media.

Subaru Drive’s Fan Engagement on the Weekends

Conclusions, Notes, and Implications

Mini has the largest fan base and among the lowest engagement scores.  Brands like Jeep are able to drive significantly larger levels of engagement with smaller fan bases by proactively engaging their fans.

Uniquely positioned brands, including Scion, will likely continue to engage their fans through lifestyle oriented efforts such as their Scion Art and Scion Audio/Visual pages which have a combined 10,000+ fans.

Our most interesting finding was how strongly brand nationality affected their engagement scores.  We didn’t expect to find that almost all American brands are engaging their fans better than almost all import brands.  Clearly, the import brands have a hurdle to overcome because it’s not a lack of trying that is driving their lower engagement scores.  The heritage that the American brands have generated with their “hero” vehicles is significant and a model the Asian brands may want to take a look at.  For example, currently buried deep within Toyota’s site resides a long since forgotten mini-site, The LandCruiser Heritage experience, whose assets could go a long way towards building that enthusiast base on Facebook.

While many advertisers are spending significant sums of money to build fan bases or drive engagement it was often the simplest of tactics that drove high volumes of engagement.  Brands such as are Chrysler, Subaru and Jeep are often driving large volumes of engagement simply by asking their fans a question.

Small but highly engaged fan bases of Subaru, Buick and Chrysler could be leveraged as brand ambassadors in order to grow the size of Subaru’s fan base.  Subaru may have scored low on reach due to its practical positioning, but its fan base clearly loves that positioning.

Technorati Tags: automotive, facebook, social media

Ad blocking software has the potential to have a tremendous impact on the digital advertising industry, particularly as their use continues to grow.  However, this is a seldom discussed topic in our industry and we decided to raise attention to the issue by sharing some high level ad blocking statistics.

Before we go too far, there are at least four reasons why consumers may choose to use ad blocking software.

1. Ad removal
2. Cleaner looking pages (ad space removal, not just the ad…see example below)
3. Faster page loading times
4. Minimized data tracking of your surfing habits

The two screenshots below show the OC Register with and without an ad blocker enabled.  Not only does the ad blocker remove the ad itself, but instead of leaving white space where the ads were supposed to be delivered the ad blocker actually pushes up the appropriate content on the page.  The result is not only a page without ads, but much cleaner and a better user inerface.  In this case, when the ads are removed significantly more content appears above the fold resulting in a much more pleasing user interface.

OC Register with and without ads blocked

Ad blockers maintain the number one positions in both the Google Chrome and Mozilla Firefox extension download centers.  The leading ad blocker in each platform has almost 50% more downloads/users than the second most popular extensions.  The fact that each of these extensions has remained in their top position for a while and that many users choose to sort extensions by popularity has likely contributed to widening download margins between these ad blockers and the second most popular extensions in each platform.

So how many people are using ad blockers?  Well, the Adblock Plus extension alone averaged 11.3MM active daily users last week and averages about 8MM active daily users per day.  Users from the United States represent almost 1/3 of that total.   The Adblock Plus extensions has received almost 100MM total downloads since January 2006 (likely introduction date).

The table below shows how many users Chrome is reporting for the various ad blockers on their platform.  The numbers shown for Firefox represent all time downloads for each of the ad blockers found on their platform.   Neither platform reports on both downloads and users for all extensions.  Only select extensions within Firefox, such as the Adblock Plus, have publicly available in depth statistics as shown in the image above.

Ad Blocker Usage Statistics

Total usage is difficult if not impossible to measure precisely.  While we were able to easily gather statistics about Chrome and Firefox, information for Internet Explorer and Safari are not as easily found. While ad blockers can be found for both Internet Explorer and Safari (even within Apple.com), the browsers themselves are not as open in how they treat browser extensions, the category of software that ad blockers fall into.

Although Apple does not have a standard ad blockingprogram available within the Safari Extensions Gallery, they are including what might be the next phase of ad blockers, including those focused on blocking social media feeds as seen below.

Tired of seeing Facebook everywhere?

The Orange County Register homepage, with and without ads

Live chat platforms are essentially instant messaging platforms, on steroids, and designed for business.  Some contain voice and video capabilities, others don’t.  The use of live chat platforms is gaining traction in the business world.   Many online retailers are using it to improve sales conversion rates and handle customer service in a timely and cost efficient manner.

When it comes to the automotive category, dealers have taken lead.  There is enough dealer business that some live chat solutions have been designed specifically with car dealers in mind, although many more platforms are simply re-branded and then marketed towards dealers.  There is enough dealer generated interest that at least one leading dealer targeted platform, ContactAtOnce! has already ported their software to the iPad.  ContactAtOnce! has a partnership with Cars.com that offers their service at no additional cost to Cars.com dealers.

The forums on car dealer site automotivedigitalmarketing.com has a good discussion on the subject of live chat implementations on dealer websites with a couple dealers touting their success.   Some referenced better than expected results, others mentioned consumers were willing to share a suprisingly high amount of information,  via online chat enough to the point of securing the required information for a credit application.

Lexus has live chat functionality, but hours are limited

While the OEM’s may have lightly tested live chat platforms, the tactic has yet to gain much, if any, traction at the national level.   Lexus is one OEM using live chat on their website.  Kudos to them for doing so,  but their hours of availability are pretty limited and the tool is not heavily promoted throughout the site.  Since most cars are sold on the weekend, perhaps being open on Sunday makes sense.  As more OEM’s come on board I think we’ll eventually see longer hours of operations and nd potentially 24/7 availability. One reason I believe we’ll see expanded use and hours of these systems is that the cost to operate these systems is fairly minimal when you consider they can be operated remotely and that the operator side of the business can scale up and down pretty efficiently.

We’re curious about why these tactics haven’t been more highly adopted by the OEM’s.  Why don’t we see live chat functionality promoted from their websites and, where appropriate, within their digital media plans?

A few obvious reasons for hesitation to move forward are costs and perhaps, nobody has made it simple enough for the OEM’s to operate.  I recognize that not all car shoppers are ready to buy, but most car shoppers do have questions.  Some of the questions can be answered on the website, perhaps in the perhaps in the standard “Features and Pricing” sections most car websites contain.  However, many questions go unanswered and without an easy way to get more information customers have to continue their quest for information elsewhere.

Not only does  live chat fulfill the consumers desire for real time answers, but it has the ability to start a sales conversation and help push consumers closer to purchase.  It can help get consumers into a national CRM system or send them directly to a live dealer contact.   It also provides a low pressure environment for consumers who want more information, but are hesitant to reach out to a dealer.

For shoppers further down the funnel the OEM’s should be able to funnel conversations to their dealers as live leads.

AccBanks are increasingly turning their attention to creating mobile banking applications as consumer usage for mobile banking skyrockets.

Marc L. Warshawsky, SVP Mobile-Channel Planning and Design at Bank of America, was recently interviewed by BankInfoSecurity.com and was quoted as saying that Bank of America now has “over 5 million active mobile Web and app users, and over 500,000 active text banking users”.  Bank of America defines an active user as someone active on their mobile device within 90 days.  Mr. Warshawsky goes on to say, “over the next 12 months, we are predicting an exponential growth in smart-phone penetration. As that penetration takes place, we also believe that mobile banking will grow exponentially, as well.

Clearly BofA isn’t the only bank that has noticed.  A search for the word bank in the iPhone App store returns multiple mobile banking application results.  Nearly all the major banks have a phone as well as many of the smaller banks and other financial services companies.

Not only is growth surging, but the cost equation works out for the banks as well.  According to a recent Mobile Banking study mobile phone transactions are the cheapest for the bank to deliver.  While the majority of transactions still occur off the mobile device more people are using mobile devices to check their banking balances than any other method online or offline.

So, with all this growth, does it surprise you that everyone has an iPhone app?  If you were shopping for a mobile device today would you even consider a moving to a bank that doesn’t have an application for your phone?

Technorati Tags: apple, finance, mobile

Update: Two days after this article was originally published the WSJ wrote an article in their What They Know series that specifically addressed some of the security concerns of Myspace and disclosed the relationship between News Corp., WSJ, and Myspace.

The Wall Street Journal released the latest in a series of articles, found here, that identified Facebook as being in the center of another privacy leak.  The series and the ensuing media storm to follow has created significant noise and already grabbed the attention of Congress.   The  co-chairmen of the House Bipartisan Privacy Caucus, U.S. Reps Joe Barton (R-Texas) and Edward Markey (D-Mass), sent a letter to Mark Zuckerberg, CEO of Facebook (for anyone not on this planet),  which contained a list of 18 questions and a request for response by October 27.  Full text of the letter here in PDF format.

Most articles in the series have merit and much of what is said about Facebook is technically true, yet many in the industry have accused WSJ of blowing the issue out of proportion and rushed to defend Facebook.  We find ourselves joining the group that believes WSJ blew the Facebook issue out of proportion.  More importantly, we find ourselves leading the group that believes the timing, the possible intent behind the series itself, and lack of full disclosure all represent a clear conflict of interest for WSJ and News Corp.

Our concerns began with the fact that WSJ used a small technical issue, which they blew out of proportion, as the cover story for a much larger conversation about online privacy.  They used the name brand of Facebook to sensationalize what would to most readers otherwise be a relatively dull series about online tracking and consumer privacy.  Perhaps, knowing the relatively dull subject matter the WSJ applied a piece of tabloid strategy and determined the best way to sell newspapers is to write about drama surrounding Facebook?  With a #1 movie and a history of privacy mistakes they make an easy target, but this time I’m not sure it’s justified.

Why isn’t the attack on Facebook justified and why is it blown out of proportion?  It’s simple really, they weren’t the ones doing anything wrong.  The WSJ fails to realize that Facebook is more than a website, it’s a platform that people can build on top of.  In this case, while Facebook may have accidentally left the door open, they weren’t the ones to rob your house.  When you add an app to Facebook you are using the system that Facebook built, but you are using it to go outside the walled garden that Facebook keeps 100% control of.  As a platform, Facebook is similar in at least one sense to an operating system or a web browser in that if you download a faulty program, you can’t always blame the operating system.  If you go to a website that plants a virus on your computer, you can’t always blame your web browser.   If the WSJ wrote a front page article for every malicious ad or software product we would never see another financial news story on WSJ again.  Without applications Facebook would be just another Myspace and maybe that’s something News Corp. would love to see, but change in the digital space is the only real constant.

Perhaps, it’s the constant change itself that the News Corp really wants to combat with this series.  After seeing how an open Facebook platform running on all cylinders took out Myspace this series may be part of a larger preemptive attack against ad networks, ad exchanges, and behavioral targeting providers.  As referenced at least once in the series, advertisers are becoming  more interested in buying audiences and less interested in buying content.  That advertiser interest and the accompanying new business models that come with it represent a direct threat to the WSJ’s ability to command a premium for their advertising in the form of high CPM’s.

Could WSJ/News Corp be trying to protect its own interests by increasing public awareness and interest in regulating online data?  Could the WSJ realistically hope to accomplish anything by raising this awareness?  We may never know the answer to the first question, but the second question is answered by a resounding yes.  Simply look at just how swiftly Congress already reacted to the latest article in the series with their letter to Facebook.  Although unlikely to happen, it could become the straw that broke the camels back that that the Bipartisan Privacy Caucus needed in order begin moving towards more formal regulation of the online advertising industry.  It would be extremely unfortunate if this is what sparks Congress to take formal action.   It that ends up being the case it would be unfortunate that such an important issue as online privacy could potentially be abused by News Corp. and WSJ to serve their own interests, all the while failing to disclose numerous issues that present a clear conflict of interest.

WSJ failed to mention that the their financial interests, and that of Facebook competitor Myspace,  are increasingly tied together as noted by TechCrunch.com.  Myspace continues to struggle with its own share of privacy issues and historically Myspace has been a mess when it comes to online privacy.  They have had to deal with multiple bouts of cyber stalkers and at one point the company removed over 90,000 sex offenders that were already registered on their site, but within this series there is no article focusing on Myspace or about any of News Corps. other digital operations, of which there are many.

In the last two months the ties of between Myspace, WSJ, and News Corp.’s Fox Interactive Media (FIM) division have grown closer and are now at a key moment.  In August News Corp. folded its Fox Audience Network (FAN) into its Myspace operations, as reported by the WSJ.  More recently, in late September, numerous outlets from Adotas.com to once again, the WSJ themselves, began reporting of talks between News Corp and The Rubicon Project.  Those talks reportedly focused on News Corp offloading FAN to Rubicon in exchange for an equity stake.  Should Congress act as a result of the WSJ series the valuation of any deal with FAN could potentially change as a result.  As part of the larger FIM family of digital properties, FAN has an interest in pushing content as opposed to audiences.  Tighter regulations created around user data and behavioral networks would benefit FAN because FAN, as part of the larger FIM family, has first access to the unsold inventory across “premium” websites including WSJ, FoxNews, IGN and others.  If the government tightens regulations, perhaps limiting the ability to pay for data obtained from cookies between 3rd parties, the valuation of audience based behavioral networks would fall while the valuation of content based networks would rise.  While regulation may take time, the impact of these articles can be immediate.  As the attention this series receives continues to grow it has potential to create tipping points of awareness among consumers and anxiety and hesitation to spend in the area amongst marketers who may already rely on behavioral targeting.  Every time an article in this series appears in the WSJ you can bet that some agency, somewhere, is defending the use of behavioral targeting to a reactive and suddenly concerned client.

Conflicts of interest, sensationalism and potential attempts to manipulate the market can be seen throughout what is and what isn’t included throughout other articles in the series.  ”Microsoft Quashed Effort to Boost Online Privacy” which paints picture of advertising hungry Microsoft executives overpowering a team of lowly but ethical product planners.  Another article in the series, “Google Agonizes on Privacy as Ad World Vaults Ahead” presents Google at a crossroad where pressures from a competitive ad industry prevail over a desire to “do no evil”.  There is no article about Myspace, no mention of the Fox Audience Network.

WSJ reviewed smaller websites BBC.co.uk and MSNBC.MSN.com while forgetting to include sister company Fox News in their analysis.

When taking a close look at the data analysis itself we found that the WSJ included data CNN, MSNBC, the BBC, and themselves, but FoxNews.com was omitted.  ESPN was included, but Fox Sports was not.  The data cited is Top 50 properties for US  from Comscore’s October 2009 release, which includes Fox Interactive Media.  The study should have included Fox News within the set, particularly since it included The BBC on it’s own and MSNBC as a roll up of MSN.  The BBC is typically well outside the top 50 sites for U.S. consumers and there is no justifiable reason for including data on them while excluding sister company FoxNews.com.  Data for the month FoxNews as beating slightly beating MSNBC and significantly larger than BBC that month.  It is a notable omission from the data set and it’s not the only omissions regarding the data that WSJ made.

WSJ shapes the conversation towards privacy from advertisers, fellow News Corp property

News Corp. can potentially share your data with over 1,500 affiliated partners

As the basis behind their study, the WSJ partnered with technology consultant Ashkan Soltani to perform the actual data analysis.  This analysis is at the heart of the article, “Sites Feed Personal Details to New Tracking Industry“.  The article is promoted on this index page with the headline, “Personal Details Exposed Via Biggest U.S. Websites”.  The WSJ writes that its survey, “examined the 50 most popular websites in the U.S.” and also mentions they reviewed their own website.  However, nowhere in the article is Myspace mentioned, despite it still being a Top 25 site by the accounts of Alexa, Compete, and QuantCast.

Mr. Soltani’s performed an earlier study, KnowPrivacy: The Current State of Web Privacy, Data Collection, and Information Sharing, which included a section on data sharing between affiliated companies.  In his analysis Mr. Soltani notes that sharing data between 3rd parties is subject to greater restrictions than data shared within affiliated divisions of a large conglomerate.  In the KnowPrivacy study, Mr. Soltani specifically identified News Corp. and Myspace in writing,

“MySpace, one of the most popular social networking sites (especially among younger users), is owned by NewsCorp, which has over 1500 subsidiaries. These numbers include foreign affiliates, but do not include subsidiaries of subsidiaries, so there may be more that are missing. The numbers at least give us an idea of the vast corporate families to which many of these websites belong. Information pulled from these websites could potentially find its way to all of these affiliated companies.”

Mr. Soltani concludes his analysis on affiliate information sharing by writing “the more liberal treatment of affiliate sharing should be reexamined.”  Given that the WSJ likely contracted with Mr. Soltani based on his previous work with the KnowPrivacy study and given that News Corp and Myspace were specifically cited it becomes even more irresponsible of the WSJ  to write this series in the manner that they have.

Here’s to hoping that the WSJ comes clean in a future article, but we aren’t counting on them writing anything that would potentially upset their Sugar Daddy.

Disclosure: This article and website makes use of the Google URL shortener which allows the number of clicks within embedded links to be tracked.  We also make use Google Analytics and a few other tracking tools that we haven’t quite mastered.  Also, if you become a fan of this website on Facebook or choose to Tweet this article out that is public information shown to the friends in your network.  Don’t be stupid with your online data.

Trading Desks or DEM's?

“Display Engine Marketing” or “DEM” is the new rage that’s not quite the rage.  It’s so big that Google hasn’t even picked up the phrase “Display Engine Marketing” as registering any searches.  For comparison purposes the phrase “Search Engine Marketing” (the phrase on which DEM is based) registers 301,000 global searches per month using phrase match according to the Google AdWords keyword opportunities tool.

So what is DEM exactly?  Mike Nolet, CTO at AppNexus, suggests a definition on his personal blog as “DEM companies are ones that will take your media $ and optimize it for you across aggregators of Display”.  He differentiates DEM’s from Display Side Platforms (DSP’s) in the sense that DEM’s handle the service side of the business, including buying and optimizing media through display based advertising exchanges, while what we traditionally think of as DSP’s, or as he suggests “technology vendors”, are those that build and license the core technologies that make this type of media buying (i.e. exchange trading) possible.

The Digital Opinionator thinks that DEM’s are going to become one of the next big growth areas in the media service business.  As we saw with Search Engine Marketing many agencies and marketers will either move slowly or simply not have the desire or capabilities to build out internal teams.  Enter the Display Engine Marketer, currently referred to as a Trading Desk.  If an opportunity exists and traditional agencies are slow to recognize the opportunity, new specialist players will enter the field.  We saw some of the early SEM agencies go on to have great success, including both Reprise Media and Resolution Media each of whom got acquired by the major advertising holding companies (IPG & Omnicom respectively).

As opposed to the first go-round with SEM, this time the holding companies were among the first to build their capabilities, commonly referred to as trading desks.  This is a smart move that not only allows them to offer a new service to their clients, but get ahead of the curve before their clients moved business away to a new crop of specialists, who for the most part have yet to start arising to any noticeable degree.  But, while the large holding companies and some other digitally savvy agencies have already built their trading desks, most agencies have yet to do so.  They continue to buy media in the old fashioned way.  Even when agencies working with a DSP they are most likely doing so via the managed service model with a sales rep in the middle of the relationship.  This is where DEM’s will come into play.

The DSP’s don’t really want to be in the service business as the margins and valuation isn’t as good as the technology side of the business, but for now they have to be in the space as their are relatively few self serve agency clients.  The DSP’s that decide to remain on the service side of the business will most likely look, talk, and walk like ad-networks.  Ad Networks will likely continue to operate by selling their media on a CPM, CPC, CPE basis and marking up the costs by as much as they can get away with in order to keep their 30%-50% margins.  Many of the ad networks will likely move away from buying exchange based media in order to favor slightly more premium inventory.

DEM’s will sense opportunity in the market by undercutting on price and providing service that is more in line with a partner and less in line with a vendor or sales rep.  To do this, the compensation model needs to change for the DEM and can’t be based on CPM pricing.  To be a partner both the media costs and the service fee must be transparent and if you are selling to your client on a CPM you almost certainly aren’t being completely transparent.  Fee structures for DEM’s will look more like traditional agency compensation models and less like ad network compensation models.  That said, we also expect heavy pay for performance models in order to properly motivate the service side of the businesses and increase what may otherwise be paper thing margins.  Despite the tight margins the goal will be to drive longer and more integrated relationships than what ad networks traditionally experience (as agencies often jump around between networks and certainly don’t treat them as partners).  DEM’s will still be buying media on a “Cost Per X” basis, but the costs will be passed through with a transparent markup.  Instead of negotiating pricing this allows the client and DEM to talk about appropriately setting the campaigns parameters.  Where time was previously spent negotiating CPM’s time will now be spent discussing what the appropriate parameters should be including both front and back end cost efficiencies.

We agree with Mike Nolet and believe that the DSP space needs to categorize itself into service focused companies (DEM’s), technology companies (DSP’s or Technology Providers), and Ad Networks (In house DSP + service).  This will help provide a degree of clarity in a cluttered space.  However, we think that DEM should stand for “Digital Exchange Marketing” and not “Display Engine Marketing” for the following reasons:

• We believe that exchange based media has already evolved beyond just banner based media, which is what display typically would refer
• Exchanges are absolutely core to what a DEM does, while display based banners may or may not be the tactics used
• An Ad Exchange and a Search Engine are very different things.  Use of the word Engine may be somewhat misleading and fail to accurately describe what DEM’s do
• Digital Exchange Marketing is a more accurate definition of what DEM’s will most likely be positioned as since they will be buying exchanged based media through a digital platform across all available channels.

Technorati Tags: SEM