Others Online Blog

New Partner Application Form Issues

Hey, just a quick note regarding a mess-up on our end. If you've signed up to partner with Others Online anytime from July 17th through mid-day the 25th, then we have NOT received your application!

It's our bad. We migrated to a new data center, did all that fun testing you're supposed to do (with success), but then somehow the hostname within our new environment was not set to our public DNS name, which made a bit of Java code execute wrong.

I'm not the engineer, so the explanation is probably a bit weak, but I've asked our team to post all this stuff on our blog from now on. We've only just recently come out of hiding, so we have to remember to post more often now!

Blog Post Catch Up!

For the millions that visit this blog, thought I'd confess that we just added 6 blog posts -- all back-dated to make our blog look less stale! These are cross-postings from my blog actually. (This has to violate some sorta blog etiquette, yes?)

We're just about to release a major update to our Web site, reflecting a shift in our market strategy. Over the last 6 months, we've achieved quite a bit of traction deploying our technology with online media companies. So we're updating our messaging to convey our shift to B2B from B2C.

Drop in Social Media eCPMs and Forecasts

Just read two separate data points regarding social networking advertising, and the struggle for advertisers to figure out how to make it work -- resulting of course in a hindrance on average eCPM rates earned by social media companies.

First I read that eMarketer has lowered their estimates for US social networking ad spend in 2008, from $1.6B to $1.4B. They claim the economy is partly to blame for this decrease, as companies cut experimental ad dollars first. As important, they claim that social networking sites are still trying to figure out what works. Net net, it's the same reason -- the ROI isn't there yet for advertisers.

Next, I read PubMatic's AdPrice Index for May which is real data (not a forecast). They found that eCPMs earned within the social networking category of sites dropped 47%, from $.37 in March to $.19 in April. Average eCPM for large Web sites (>100M pageviews/month) dropped from $.38 to $.18, and 95% of all Web sites with >1M page views per month earned less than $1 eCPM. (Keep in mind that PubMatic's data set is only remnant inventory, not direct sales.)

I've been talking a lot lately with social media companies, and they are indeed having a tough time monetizing their page views. Ironically it's such a rich source of information in terms of describing an audience and their affinities, yet it's so undervalued by advertisers. What they need are tools to help them harness that information and segment their audience into concise targeting parameters.

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!

eCPM Ad Rates for Remnant Inventory

Small sites (less than 1M page views/month) earn 3x better on their remnant ad inventory than medium (>1M page views/month) and large Web sites (>100M page views/month). Interesting data from the PubMatic AdPrice Index which shows average eCPM ad rates for Web site publishers in Jan-Mar 2008:

Month/eCPM			Large	Medium	Small
Jan-08			$.31	$.34	$1.00
Feb-08			$.33	$.33	$1.15
Mar-08			$.38	$.34	$1.18

This pricing data reflects text and banner inventory sold to ad networks (remnant), not any inventory sold directly, and is net to publisher (excluding the ad network commission). Nothing was said on whether the eCPM calculation (which is net revenues per thousand impressions, regardless of pricing model - CPM, CPC, CPA, etc.) included or excluded the display of unpaid (unsold) "default ads". I would expect it does include defaults in the calculations.

In my opinion, the reason for the large delta between "small" sites and medium/large is that small sites are often much more focused in their content and incur fewer page views per user visit. Large sites have more challenges segmenting/optimizing their inventory, because their content is frequently more generalized and broad in nature.

CPM Ad Rates for Facebook Apps

Andrew Chen links to some data from Facebook app developers on the CPM advertising rates they're making. I was surprised to see that it's a little higher than I expected, but he noted the issues with sell-thru ("fill rates") -- the % of ad inventory that gets filled with an ad vs. remaining unsold.

If your eCPM with one network is $.50 and your sell-thru (or fill) rate is 50%, then you're no better off than the network making you $.25 eCPM with 100% sell-thru.

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.

Listed on KillerStartups. Hamsters Forced to Work Overtime.

As a result of the exposure caused by Others Online being listed on KillerStartups.com, our data center is being taxed beyond reasonable limits. The hamsters we employ to keep the servers going are dutifully jogging in their wheels though, which means we should be just fine.

If you feel sorry for the little guys, please give us a vote -- it may not mean much to you, but it makes their little hamster hearts swell with pride!
 

Just Increased Approved Keywords 143%

Serendipity: unexpected and fortunate discoveries.

Our users are now 143% more likely to connect serendipitously across the Web, because we just increased our approved keyword count by 143%.

For obvious reasons, we don't just connect people around any ole' keyword or phrase -- we can't connect people around the topic Christmas or Harry Potter for instance until those been approved. The keywords and phrases have been organically harvested and approved, by users themselves and also through our proprietary "scrubbing" process. Every day our approved keyword/phrase count increases. But Neal just increased it quite a bit.

We've long since had the standard interest keywords in there ("music, hiking, photography, etc."). We're primarily focusing now on adding (and connecting people now) around much more narrow keywords, such as "virgin coconut oil, xm satellite radio, pierre cardin, blue man group, pet health insurance, etc.".

Last month we doubled the size of our keyword count and it increased the depth of people matches 25%. This should provide even better results! Please let us know what you think ...