Others Online Blog

Others Online Acquired by the Rubicon Project

On September 15, 2009, the Rubicon Project announced the acquisition of Others Online.

Others Online was founded on the vision of advertisers being able to reach people, not pages. When I had looked at the revenue growth of Internet advertising revenues from 1997-2007, I noticed two clear growth trends. The first growth trend, from 1997 through 2000 (v1.0), was primarily fueled by content targeting -- Web sites and content were the proxy by which advertisers reached people.

The second growth trend, starting in roughly 2002 (v2.0) was primarily fueled by keyword targeting -- search and context keywords were the proxy by which advertisers reached people.

My belief, and the bet we made with Others Online, was that the evolution of the Web would result in a third growth trend (v3.0) -- the ability for advertisers to reach specific audiences directly, thereby supplanting the use of proxies. Indeed, the industry is seeing tremendous growth in the area of audience targeting. However, the ability to correctly identify specific audiences is dependent on two things:

1. Lots of audience attention data, representing what we're devoting our precious attention span to online.
2. Technology to aggregate, process, score and summarize the audience attention data.

Audience attention data is everywhere. Every online media company has a fragment of attention data, and we've seen a number of companies form in the data space, each offering valuable data for sale to advertisers. Not just "behavioral" data either -- contextual, demographic, purchase intent, location, search keywords, etc. But that's the problem; no one has a complete picture, merely fragments. The true market growth opportunity can't be realized unless/until there's an aggregation point for audience data, coupled with media inventory, and the mechanism by which advertisements can be targeted based on the multiple facets that define us as people, at scale.

Others Online built a powerful technology platform to aggregate, process, score and summarize audience attention data, with services that helped publishers better understand, segment and target audiences. In our discussions with the Rubicon Project, we quickly realized the power of combining their global reach and scale (45B monthly impressions to 500M users, across 30K Web sites) with our technology to not only provide incremental value to everyone connected to the Rubicon Project platform, but also to fuel the next growth trend in audience-targeted online advertising.

As with all announcements though, there are bound to be misconceptions. Though future press releases will certainly add clarification, I thought I'd at least try to dispel a few potential misconceptions upfront!

• This acquisition does NOT make the Rubicon Project a "data exchange". We do not resell publisher or 3rd party data, nor will we. We provide a platform through which 3rd party data providers are developing an incremental distribution and sales channel.
• The Rubicon Project (still) does NOT sell media directly to advertisers. We remain 100% focused on providing value to premium Web publishers, helping them make more money, protect their brand and save time.

The Others Online team couldn't be more excited to be a part of the Rubicon Project. But mostly, we look forward to adding value to their publisher partners and in doing so, hopefully realize the market opportunity at hand.

If you have any questions, please leave a comment below -- we'd welcome the opportunity to answer them in a public setting!

 - Jordan Mitchell, founder and CEO of Others Online, and now VP of Data Intelligence at the Rubicon Project.

When Does Behavioral Targeting Work?

A lot of publishers in the advertising/media business don't understand the situations when behavioral targeting will almost always result in better eCPM rates than contextual targeting.

For the sake of this post, let's disregard the fact that there different methods of behavioral targeting, each with their strengths/weaknesses. We'll stay with the standard definition of behavioral targeting -- when you target online consumers based on their past online behavior. Contextual targeting is when you target them based on the current page they're on, and what that page is about.

My rule of thumb is that contextual targeting always performs better than behavioral targeting, if the context is clear and of commercial value. I've got over 5 years experience in the contextual/behavioral landscape and have proven this over and over in various tests. However, if browsing context is poor -- either no context whatsoever (only images on the page, for example) or there's a high signal/noise ratio (social media) -- or of no commercial value, then behavioral targeting will always perform better than contextual targeting.

Let's consider several types of Web sites, indicating for each the targeting that generally works better (big "X"), never works better (no "X"), or sometimes works better (little "x"):

Type of Site	Contextual	Behavioral
Search	X	x
SEO	X
Community/social		X
News & reference		X

Search sites are all about current context. Contextual targeting almost always works better, but there are exceptions -- such as when the search keywords have no commercial value and the user is searching images. In that situation, contextual advertising doesn't work and you're better off targeting the person based on their previous interests.

I define SEO sites as those that focus entirely on search traffic. They optimize their content and links specifically for indexing within Google search results. And as a result, >95% of their traffic comes from Google -- users click on the link within the search results, go to the page, then usually leave within 1-2 pageviews. Google AdSense tends to work best on these pages, offering "secondary search results". Behavioral targeting doesn't work at all.

On community or social media sites, page context is usually very poor and many sites require logins, which means Google can't index the pages to determine context. So contextual advertising programs (like Google AdSense) don''t perform well. Behavioral targeting can work much better, if done right. People tend to spend quite a bit more time on these sites, and provide a lot of good information about themselves and their interests. Our affinity profiling software knows how to weed through the noise and figure out what people care about. And recent tests have shown 70% lift in eCPM rates using that for targeting instead of page context.

The content in news and reference sites is usually of poor commercial value. Contextual targeting can therefore be difficult, and can also result in badly placed advertising. So targeting the user based on his/her interests (instead of the page) will almost always work better than contextual targeting.

Summary

Targeting someone based on their previous behavior/interests doesn't result in better performance if the user is on a page narrow in context and commercial value. The reality though, is that there are a lot MORE pages viewed these days that are very poor in context -- blogs, social networks, videos, images, news, dating, email, family pages, etc. In that situation, targeting the person is much more effective than targeting the page.

Audience Targeting vs Site/Category Targeting

Interesting comment from a recent Adotas blog post regarding targeting people instead of pages:

In a recent eMarketer study, 90% of advertisers said they plan to use ad networks in the coming year and the top two factors that they will use to differentiate networks were the quality of inventory and the audience targeting. Networks that have quality inventory and rich audience targeting capabilities should be some of the first places marketers and agencies look in 2009 and beyond to keep revenues flowing at lower costs and greater efficiency.

The Coming "Ad Network Shakeout"

This post was originally posted over at MetaMuse, Jordan's blog ...

Any of you who keep up on the online advertising market through related blogs, articles, etc. have certainly noticed the rapidly developed "ad network shakeout" meme. The story goes like this -- as the economy worsens, companies will continue to decrease their marketing/advertising budgets, and the hundreds of new ad networks that have popped up over the last few years will have to compete more vigorously for the diminishing dollars available, thus resulting in a shakeout where many won't survive.

While I'm in full agreement, and feel their survival depends on technology, targeting and optimization (an ROI differentiation), that's another post altogether. But I did want to note a few smart comments I read recently, made by folks within ad networks. Philip Smolin of Turn notes in this article:

Some media buyers still think of contextual and behavioral targeting as separate ‘silos’ – you choose one or the other, but you don’t use both at the same time. And in fact most advertising platforms don’t enable you to combine them even if you want to. But in reality both are very powerful predictors of advertising performance – you get better results when you combine the power of the two.

Some of our algorithms at Others Online combine the power of both contextual and behavioral, and we've also found this to improve results. Contextual targeting (behavior now) generally outperforms behavioral targeting (past behavior) except when page context is just really bad. And it's just logical to reinforce your contextual targeting with behavior you've seen in the past.

Who’s going to survive? The platforms with unique technology or differentiated solutions that make advertising more effective – they’re going to thrive. Behavioral will be a key component because of its effectiveness in display advertising.

Behavioral has always been about display advertising, and yes it will be key. But what about text ads and other keyword-based (not category-based) targeting? I find it interesting (and exciting) that Others Online is the only company today offering behavioral targeting technology for keyword-based ad inventory.

Another interesting comment made by Joe Apprendi, CEO of Collective Media at Behavioral Insider (link requires password/registration, unfortunately):

It used to be people bought media with a site-centric mentality. It was a legacy of the print planning and buying business. You looked at what sites indexed or reached your target. Today that site-centric mentality probably represents about 70% of the overall display media spending. But there really is a shift going towards this audience-centric buying methodology. Marketers and largely brand advertisers are recognizing that there are alternative ways to reach target audiences. We believe that no matter what the overall demand for display media, there is a shift happening from site-centric buying, which is usually more expensive and the softest area of the display market. It is going from 70% to 50% very fast. A lot of that is reliable behavioral targeting, not absolutely dependent on what site you are running on.

Couldn't agree more. If I'm an advertiser, I'm only interested in reaching an audience with certain product/market-oriented affinities -- otherwise it's just a waste of an impression ("spray and pray"). I hear this a lot from ad networks, and it's frustrating them because most of them have NOT indexed their audience -- they've only indexed the sites in their publisher network.

Online Advertising 101 - For Web Sites

This post was cross-posted from MetaMuse.

There are a large number of Web startups relying on an advertising revenue model, many of whom may not understand the landscape. For them, I think I have a fairly sound and business-oriented way to describe the online ad space, which consists of Web sites and advertisers, and of course the myriad ad networks and companies connecting the two. This isn't a "how the online ad industry works" primer, but rather a simple analysis of how your Web site fits into the online advertising ecosystem. Let's think in terms of the following two axes and follow with an explanation.

All Advertisers (horizontal line) are  interested in reaching the right people. Simply speaking, there are big $ advertisers -- the folks that have huge online ad budgets -- and many many more long-tail advertisers who might only spend $50/month. For all advertisers, the more targeted their campaigns the better their ROI (regardless to how you define "targeting"). Advertisers often use online agencies to buy on their behalf, but for this post let's assume "advertisers" and "agencies" are interchangeable.

Web sites (vertical line) are the proxy by which advertisers reach people. Advertisers evaluate Web sites (among other ways) on the basis of their content, since it's the easiest way for advertisers to understand the audience/people.  Vertically-oriented sites are those with narrowly focused content, which offers advertisers more straightforward targeting. Advertisers in the auto market, for example, buy campaigns on sites about cars.  Edmunds.com is an example. Horizontally-oriented sites are those with widely diverse content/focus. It's much more difficult (and often inefficient) for these sites to sell advertising on a targeted basis, because they have content about anything/everything.  MySpace.com is an example.

For big $ advertisers, volume/scale is the 2nd most important consideration. If you don't have a sufficient audience size, it doesn't matter how good your targeting is as a Web site -- it's more efficient for them to allocate each $100K they spend across 1-5 sites instead of 50-100. And of course, Web users visit all kinds of different sites so it's hard for any one site to offer a ton of volume.  Ad networks therefore serve the necessary purpose of aggregating many sites together, organizing them by content type, and offering advertisers scale at some level of targeting.

While some advertisers certainly buy direct from Web sites, the majority of advertisers buy through ad networks of some sort (roughly defining an ad network as any company connecting the buyers and sellers of ad inventory). Let's mark them as red below, and explain further from the perspective of the Web site publisher.

Vertical Content Sites Make More Money

If you have a vertically-focused Web site then you'll have a much easier time selling your online ad inventory AND earn the best eCPM rates (defined: the value per thousand impressions, regardless of rate type -- CPC, CPM, CPA, etc.).  Medium/large Web sites (more than 1M unique users per month) fit in the lower left quadrant. Since they offer both targeting and scale, they're able to sell direct to advertisers (making the most money), and they have their pick of ad networks to monetize whatever they can't sell directly (which is called remnant inventory). This quadrant is where most traditional ad networks hang out -- since they primarily consist of a direct ad sales force, they make the most money as a business by focusing on big $ advertisers and vertically-focused sites that can deliver volume.

If you have a vertically-focused Web site with a small audience then you most likely won't gain any traction with big $ advertisers or traditional ad networks; you are in the lower right quadrant.  Google AdSense is your best option, and you may even earn better eCPM rates than medium/large publishers. Google and a variety of others created this market by inventing a self-service advertising model which provides you as a Web site with a ready supply of advertisers and revenue. By eliminating the need for a direct ad sales force and automating campaign targeting, sales and delivery, they're aggregating and matching long-tail advertisers with long-tail publishers.

Horizontal Content Sites Make Less Money

If you have a horizontally-focused site (content about "anything/everything"), as is often the case with social media and user-generated content, then you'll have a tough time monetizing your ad inventory. Average eCPM rates on social media sites are low and decreasing.

If you offer a massive audience -- as in many millions -- then you're in the upper left quadrant and will have some luck selling directly to advertisers, but only if you can segment your audience in some way. Advertisers require some understanding of WHO their campaign reaches. Even traditional ad networks with experienced sales teams and solid advertiser relationships shy away from horizontally-focused content sites, especially social media and user-generated content.

There are several startup ad networks attacking this upper left quadrant however, given the massive eyeballs/volume and extremely low eCPM rates. These networks, such as Media6° and Lotame, aggregate and package social media behaviors for the benefit of large advertisers. Unless you have a massive audience, they won't work with you. There's nothing long-tail about them. Like all other  ad networks,  they can only support their direct sales efforts by focusing on big $ advertisers and large-volume sites.

So what do you do if your horizontal Web site attracts an audience of <5-10M unique users per month. You have two options: Google AdSense and ad exchanges. The problem with Google Adsense is that it often doesn't work on these pages -- the ads are targeted only to page content/context, and many social media pages (pictures, videos, social networks, etc.) are contextually poor.  You're better off targeting each visitor based on THEIR MySpace profile, instead of the MySpace profile they're looking at!

As a result, I believe the vast majority of this ad inventory is being monetized by arbitrageurs via ad exchanges. Ad exchanges such as Right Media differ from ad networks primarily in their pricing model, which works like a stock exchange. This facilitates an arbitrage model where those who know something about your audience will buy your ad inventory at very low rates and resell at higher rates. Of course, this doesn't always work well for you the publisher -- they don't share what they know about your audience with anyone, because the lower their price the more money they make.

In my opinion, this upper-right quadrant represents the biggest opportunity in online advertising today, given the massive volume and extremely low eCPM rates being earned by publishers today. Just as Google AdSense grew the entire online ad market by matching long-tail advertisers with long-tail vertical content, there exists the opportunity to match long-tail advertisers with people instead of pages.

Enter Others Online ...

In closing, I'll simply point out that Others Online is focused on the upper-right quadrant. We develop a summary of what each visitor cares about across multiple page views (what they're searching for, publishing, reading, etc.) and use that affinity profile to drive  Google AdSense (or any other long-tail ad source you prefer) on any other page.  It's targeting people based on their interests rather than just the page they're on. The result is better targeted advertising and revenues across all your horizontal content pages.

Google hints and behavioral targeting

If you are using Google AdSense on your site to earn revenue and have looked at different ways to optimize that revenue, then you may have heard about something called "google_hints". This is a feature of Google AdSense that allows a site publisher to provide a few keywords to the AdSense script as hints of what ads to show. It seems that google_hints is an invite-only feature from the AdSense team, but if you are lucky enough to be able to use this feature then you are also lucky enough to be able to use Others Online's audience affinity information to automatically provide those hints.

Once you signup for an Others Online partner account, creating a mashup between Others Online audience affinity data and Google AdSense is as simple as adding a snippet of JavaScript to your pages or templates. Here's what it looks like:

<script src="http://www.othersonline.com/partner/scripts/othersonline.com/alice.js" type="text/javascript"></script>
<script src="http://www.othersonline.com/partner/agent/othersonline.com/adwords.js" type="text/javascript"></script>
<script type="text/javascript">
google_hints = oz_adwords.keywords;
</script>

This would then be followed by your regular AdSense script tags (where you normally specify your publisher key, ad unit color, dimensions, etc.). Note - this example uses a demo partner account, you would of course substitute in your own partner account information.

We don't have good numbers on how well google_hints may improve your CTR or eCPM, but if the content on your site is thin or results in silly or poor ads from Google's page-based algorithms, then using Others Online's people-based algorithms likely will help improve the relevance of the ads shown to your audience. The nice thing about affinity based ads is that showing relevant ads will improve your visitor's user experience as well as improve CTR and eCPM.

Behavioral Advertising: Targeting Growth

I was doing some market research and found an eMarketer report on the forecasted growth for behaviorally targeted advertising. Behavioral targeting is when you target online consumers based on their past behavior rather than the current page they're on (contextual targeting), and is generally considered to be a segment of the display advertising market. As you can see from the below graph (courtesy of moi), search advertising (contextual targeting) has been responsible for the continued erosion of display advertising market share.

This was derived from a forecast of US online advertising spending by format, combined with some IAB press release data. Some of the other relevant data points I determined regarding display vs search were:

• Revenue -- search generated $81.65 in revenue per 1000 searches (in 2007), compared to display at $1.99 per 1000 page views. Display continues to trend down, with 83% of display ad volume sold at less than $1 CPM.
• Volume -- display generated 25x more page views yet earned half the market share.

As I said before, display advertising and CPM rates have to stage a comeback, and I think behavioral targeting will be a driving factor. eMarketer tends to feel the same way -- in fact, they say explicitly "Internet advertising is no longer all about paid search. Targeted online display advertising is exploding. Spending for Internet advertising with a behavioral targeting component will soar from $575 million this year to $1 billion in 2008, and that still represents only 11% of the US display, rich media and video market."

Here are three reasons why I believe behavioral will grow relative to contextual:

1. The % of Web page views that don't have very good context is growing. Think about all the user-generated content with poor context -- and this inventory is cheap!
2. Behavioral targeting helps marketers reach those with at least some interest, and reach that audience with fewer impressions, than the typical "spray and pray" model of advertising.
3. User behavior is getting easier to capture. Online users are publishing their thoughts, interests, and affinities more freely than ever.

This said, the behavioral targeting market has several major obstacles to growth -- scale, ease of implementation, and privacy/perception issues.  But that's another post!

Increasing Social Network Ad Revenues

Ever since I heard about the MySpace HyperTargeting program last December, I've been looking for information about how it's been performing.

The theory, which we're proving to Others Online partners and which HyperTargeting is testing, is that ads in social network situations are better targeted not by the context of the page you're on, but on the content you write within your own profile/pages.

Looks like they're reporting 300% increase in clicks in initial tests.

UPDATE: Found a little more information on how MySpace HyperTargeting works and how they're charging. Looks like they are segmenting users into proprietary categories based on the information in their profiles, then selling those categories on a CPM basis at a 50% premium.

Affinity vs. Engagement in Advertising

Others Online has been working on some interesting reports for our partners to summarize in aggregate form what their users care about. As a matter of labeling, we've discussed the term "affinity" vs "engagement". The latter has been thrown around the online advertising space quite a bit recently, so I did some poking around the Web to get a better feel for how it's being used. Usually, going with some convention in labeling in more advantageous, rather than creating your own definitions (which markets get annoyed with IMO).

Stumbled upon an interesting and intelligent blog post on How the New Engagement Metrics Can Impact Advertising Decisions. In it, "engagement" was defined as the nature of visitors’ relationship with a site and how that is expressed in the full range of user interaction, involvement and connection. Kevin then went on to describe categories of engagement that effectively describe the kinds of engagement illuminating and differentiating Web sites for advertisers: loyalty, recency, click depth, interactivity, duration, and subscription. I should also point out that Kevin's work leveraged the work of Eric Peterson. Kevin then wrote:

How  can publishers collaborate with advertisers to yield actionable intelligence?

“We’ve developed Web technology to the point where we have an astounding wealth of data about audiences. Publishers can tell us what content audiences are consuming and the share of content downloads among competing advertisers. All this has been great. But what does it all mean? How can we turn that information into something we can act on?”

Brandon Starkoff, Vice President/Global Director at Starcom Worldwide

Starkoff’s point is critical to the whole point of seeking to establish a definition and a set of metrics for engagement. What does it matter if, as far as media companies are concerned, it doesn’t produce better insights into what will make advertisers successful with even the most “engaged” audiences? The kind of audience knowledge Starkoff says he is seeking is “predictive intelligence-advice on what kinds of advertising will work with a particular audience or audience segment.”

Advertisers right now think about engagement as a way to distinguish sites from each other.

It was in the last sentence that I realized what I felt was wrong with their line of thinking. It's not that advertisers need to distinguish sites from each other, but rather people from each other. Engagement is a term being applied as an attribute of a site, not a person. That's just wrong IMO. That's online advertising 1.0, not 2.0. As long as the industry continues to think in terms of targeting sites and not people, there will only be small incremental improvements to online advertising performance.

Affinity is a term which we feel best describes attributes of people, and what we actually care about. Since Others Online is all about targeting people and not sites/pages (based on our understanding of what they care about), that's clearly the label we need to use.