AudienceScience has always been in the business of firsts: from being the first DMP for publishers to the first behaviorally-targeted ad network. We’ve seen tremendous growth in the digital advertising market and radical changes in how technology impacts buying and selling. Through it all, however, something hasn’t been quite right. For all their investment online, large global brands have lacked the tools and transparency needed to spend more than 5%-8% of their media budgets in digital. Intermediaries and arbitragers have prospered while brands (and consumers) have struggled to find value in digital advertising.

In fact, we find that for every dollar an advertiser spends, 50-80% gets whittled away through waste and intermediary fees, leaving brands stuck with little of what we call Productive Media Quotient – the percentage of a marketer’s media budget that directly reaches the intended person, at the right frequency and in the desired place.

For the past year, we’ve been working closely with some of the world’s largest brands to maximize Productive Media Quotient and to eliminate waste and excessive fees through total transparency and advertiser control. Today, we’re announcing that AudienceScience is solely focused on a new first and dedicating the entirety of its resources to its global SaaS-platform for marketers, AudienceScience Gateway.

What does this mean for AudienceScience going forward? We’ll continue to support our strengths in these key areas:

• A technology built for the marketer. Agencies are critical partners for marketers, but ensuring full transparency and maximizing Productive Media Quotient across multiple brands or business units on a global scale means marketers need to take ownership of their enterprise digital marketing technology. We’ll continue to align our product and services to the needs of marketers, empowering them to make the most out of every dollar.
• A truly integrated system for data and media. While it seems theoretically appealing to “separate church and state” and manage data and media separately, practically, technical disconnects between systems and subsequent data loss only result in more waste and operational inefficiencies. We operate a unique, integrated system today and our first-hand experience tells us that this approach maximizes efficiency and effectiveness for marketers.
• A global solution. Major brands in North America, Europe, LATAM and Asia are already executing through the system and we’ll continue to invest in our best-in-class global technology infrastructure to support large global marketers.

This decision to focus on supporting marketers through technology also means we’ll be closing our ad network business as of January 1, 2013. Networks have had an important role in the industry, but ultimately networks and trading desks obscure marketer spending to the advantage of middlemen, not the marketer. Being able to support greater transparency for marketers makes this an exciting time for AudienceScience and our clients. We look forward to sharing more in the weeks ahead.

I’m not sure what it is that predisposes marketers towards creating complexity. But while peers in operations, supply chain, and product development strive daily to simplify the complex, marketers sure seem immensely prone to creating absolutely epic Rube Goldberg machines in response to even the simplest problems. For evidence of this, look no further than a recent article seeking to persuade marketers that “multiplatform” buying works – that is, running multiple DSPs and programmatic buying platforms on a single campaign.

To be clear, it’s true that each DSP has its own methodology, optimization approach, and technology. But this simply means each DSP has a different way of showing the same customers the same ad creative (and deciding on the right combination of the two). Some DSPs may be more reliable and efficient, manage frequency more consistently or be better at differentiating between real humans and web bots. These things matter – a lot – but they don’t improve as you add more platforms. Ultimately, the author’s assertion of multiplatform superiority rests on the “more is more,” “these ones go to eleven” logic that costs marketers millions in tech fees and wasted impressions while creating no incremental value. So what’s the reality when it comes to running multiple DSPs?

• You might get more impressions by adding another DSP, but not more reach. The author argues that buying at scale for targeted campaigns requires multiple platforms. The logic behind this theory is that adding another platform somehow enables the advertiser to find more people, even in the most niche of segments. The problem is that what additional DSPs allow you to add is impression volume (likely in the form of more frequency), not necessarily reach.

Want to actually reach more people? Then you have a few options: ask your DSP to add more supply partners (although most major DSPs pull from exactly the same pool of SSPs and exchanges), get more data (either through first-party, third-party, or partner sources), or expand the definition of whom you’re trying to reach. In some exceptional cases adding a new DSP may allow you to access new inventory providers, thus finding more reach (for instance, Google Bid Manager can’t access Facebook’s exchange), but for the most part there are better, simpler paths to finding more people to target.

• You’re not going to win trying to optimize the optimizers. The author contends that a multiplatform operation can drive incremental performance by optimizing the optimizers – finding the optimal allocation of budget across platforms by analyzing each DSP’s individual algorithm while also reverse engineering how SSPs optimize against those DSP algorithms. If it sounds complicated, it is. And the author admits as much, noting that managing continually evolving technical relationships and optimization methods requires “highly-skilled traders and analysts,” essentially using humans to try to out-optimize the machines. It’s also at best a zero-sum game. Sometimes the optimizing the optimizer approach will win and sometimes it will lose, but with their vastly superior processing capabilities, my money is on the machines over the humans.

Ultimately the case for “multiplatform” rests on a few faulty assumptions that, even if true, still don’t outweigh the benefit of doing what only a single integrated platform can do: ensure that ads are shown to real people your brand cares about, at a reasonable frequency, and in a place where those ads can actually be seen. The fact is, by simplifying the technical complexity and focusing on the basics, marketers can save millions, achieve massive global reach and ultimately focus on the stuff that really makes a difference – creating messages and experiences that resonate with their target customers. That’s something no machine, no matter how complex, can do.

Imagine that you are a wealthy art collector who likes to buy art at auctions, but you don’t have time to attend them yourself. You find an agent, tell them the kind of art you like and ask them to bid for you at several auctions. You’re so happy with your results that you retain a second and third agent to bid on more art for you as well. Now imagine that the three agents are arch rivals and never talk to one another. They attend the same auctions and bid against each other to buy art for you! Imagine how much extra you paid for the art you could have gotten from just one agent, or how much more art you could have gotten if you could find a way for the agents to collaborate and prevent overlap.

Obviously, I’m describing what happens when you employ too many partners to buy digital advertising for you. Most vendors are arch rivals and access the same art (i.e. target customers). They develop complex optimization strategies to get credit for obtaining the customer and cost you a lot extra in the process. Not only that, but as a result, many of your campaigns look like they aren’t performing that well because of the extra cost.

But let’s be honest: If you are like most advertisers, your agency planner can hardly erase the whole plan and just suggest that you spend all of your money with one vendor! Surely you’d be looking for a new agency if they did. What about scale and reach? What about the custom data, exclusive content and the like?

The truth is that your planner is unlikely to suggest one vendor because of their incentive structure – they’d simply make a lot less money because they get paid for managing all of those vendors for you.

This “more is more” set of behaviors leads to a typical display setup that costs advertisers much more than it earns them. In most cases, simplicity is far more effective than complexity. Here are a few reasons why:

• Buying the same audience again and again under different names (also known as “the illusion of reach”) – Most big advertisers buy with some combination of strategies: content integrations on premium sites, a few targeting campaigns, video, maybe some ad networks and RTB for reach, etc. But unless one technology is managing to a frequency across these buys, the likelihood is that a small pool of online users will see the bulk of the ads many times at an inflated cost to you. Each partner is targeting to some version of your ideal customer and often competing against your other partners for either that data or that actual impression.
• Cookie bombing – Because of the heavy competition to show your ads to your target audience, many “reach” type vendors, including DSP’s and networks, have developed technologies to serve massive amounts of third party cookies at high speed all across the web. The result is that when someone does click or convert, the vendor appears to be the accredited partner. The truth is that most conversions that these marketers chase would have occurred anyway. Their incentive is to take credit for all conversions rather than to exert their resources adding new converters to the pile.
• Complexity over clarity – Vendors know that you are taking a portfolio approach, so their only way to stand out is to be different. Would you pick a new inventory partner if their RFP response said “We target the same people as your other partners but with a slightly different approach”? Of course not! Think of how many flavors of inventory and targeting are out there: click retargeting, social media retargeting, mobile, mobile video, contextual targeting, audience targeting, etc. But in reality, all of these partners offer you access to your same group of customers. If you could only find a way for these various options to be streamlined through one methodology, you’d be able to compare, apples to apples, which methodology works. But these vendors have no ability or incentive to do this on their own.

So what does an advertiser do? As it stands, you’re paying extra for customers who would have converted anyway. You’re creating incentives for vendors to compete and drive up prices. And you’re ignoring the consumers who might take some extra nudging to convert but would ultimately grow your reach in real terms.

In most industries where small technology vendors have complicated the picture, the next logical step is to pick a few of your favorite partners and try to connect them together. This is often called a “best of breed” approach to technology implementation. Next week we’ll look at the issues with this approach in the digital advertising marketing.

In this third section, I have one more analogy for you. This one is in regard to “best-of-breed” integration of several small vendors to solve one big problem. Let’s look at it in terms of a car. If you are a typical car owner or mechanic, taking a “best-of-breed” approach to a car would mean buying an engine from BMW, a transmission from Mercedes, a body from Audi and so on. Even if all of these individual parts are well made, you need to be extremely adept at custom car making to assemble the parts, let alone for the car to run well. Not only that, but where do you go when the car needs service? And if there is an upgrade to one part, how does that affect its ability to function with the other parts?

In our space, there is no incentive for these smaller vendors to work together. In fact, each of them charges you for a wider set of features than you actually use because each wants more of your business. Their goal is to get more of your money and to push out the other vendors.

As a result, unless you have a well-staffed, incredibly powerful marketing technology department, “best-of-breed” solutions tend to increase rather than resolve inefficiencies. The problems are manifested across both technological and operational lines.

Technology problems include:

• Data loss — Complex synchronization of audience data between different platforms results in substantial loss of valuable audience data.
• Data on-ramping costs — The continuous expense from migrating data from one system into another adds up quickly.
• Incomplete optimization — Independent systems struggle to holistically optimize audience profiles and media.

Operational problems are just as common, such as:

• Siloed customer views — Multiple tools for data management mean that the customer view stays stuck in tech silos. Customer data can’t be relevant at every touchpoint.
• Inefficient media execution — Multiple media execution tools make true frequency capping impossible, meaning 20-80% of impressions go to waste.
• Lack of agency flexibility — Agency-owned tools mean that data stays with the agency over the long-term, not with the advertiser. This is especially problematic if you change agencies.

Control spend with your own platform

The best way to reduce waste is to consolidate. One platform that combines data management and media buying can reduce waste by 80% almost immediately. More important, marketers must control the technology to ensure that they have complete authority and transparency from segment creation to frequency capping to campaign delivery. Finally, avoid partners who charge on a percentage-of-media basis; they have an incentive to keep volume high, even when the advertiser isn’t happy.

Despite great leaps in advertising technology, fraud is still a major problem for multi-national advertisers. One look at the LUMAscape is enough to give anyone a headache, with myriad players overlapping and conflicting one another. Every player is trying to solve one issue, and there are certainly several pieces that try to prevent one of advertisings’ biggest problems: fraud.

But what happens when fraud still creeps through? We just saw it happen to Mercedes Benz, where one campaign reached more bots than people, as reported by the Financial Times. As indicated within the FT, Mercedes and its media-buying partner used a variety of fraud-blocking services to prevent these kinds of things. The LUMAscape is at their disposal, but they couldn’t stop fraud.

It doesn’t have to be this way. Right now, many advertisers find that picking the right partners to help them get the best value from their campaigns can be a mine field, especially when the definition of a DSP, DMP or SSP (or any number of other acronyms) seems to vary wildly from one company to another. This is why so many advertisers have ended up wasting so much of their online advertising budget on fraudulent impressions.

So what is the solution? The answer lies in Enterprise Advertising Management Systems (EAMS), which eliminates the messy task of picking through assembling an ad stack from all of the partners in the slide above. An EAMS (ours is called AudienceScience Gateway) revolutionizes how global advertisers manage their data and execute their digital advertising campaigns by streamlining the process. Gateway eliminates intermediaries (aside from the planning arm of an ad agency), so the client knows exactly where their advertising budget goes.

Looking specifically at the fraud issue, Gateway filters out bot-traffic, keeping it from ever reaching the client. With Mercedes, we saw how they deployed different systems to block out suspect traffic, yet still served their ads to bots. Gateway eliminates fraud by automatically blocking any impression that doesn’t reveal the URL. This means that advertisers never even have the option of bidding on suspect inventory – it simply doesn’t reach them.

This is a crucial component of AudienceScience’s larger transparency initiative. EAMS technology is put directly in the hands of the client, so there is no sorting through the LUMAscape for the right tools. You can picture it like this:

The brand’s in-house ad or brand manager can turn on their PC in the morning and see a clear, real time view of their ad campaign through their Gateway dashboard. They get to choose their inventory sources. So, while other intermediary partners promise premium inventory, Gateway actually allows the brand to pick their supply partners, so the brand knows where those ads will appear and who will see them. That’s total transparency up front, eliminating the potential for fraud, as well as any hidden supplier or arbitrage costs.

You can only imagine how bad things must have been at Mercedes the day they learned more robots than humans were viewing their ads. When logged in to Gateway, the brand manager can see straightaway what’s working and what’s not and can change the campaign instantly to drive better results. There are no unfortunate surprises, no crises to manage, and most importantly, no headaches from trying to navigate the fraud prevention options in the LUMAscape.

It seems that the benchmark for coming of age has shifted from 18 years to 18 months – or at least that’s true in the world of advertising technology. A year and a half ago AudienceScience radically changed its business model away from behavioral targeting to becoming an Enterprise Advertising Management System (EAMS) company, providing a platform for advertisers to regain control of their online advertising campaigns with total transparency.

As new kids on the block, bringing a totally new way of doing things into the marketplace, we have been working hard to bring on board the best available scale and quality of inventory for our advertiser clients.

This has been growing fast and, as of today, we have over 1,543,000,000,000 impressions available every month in our worldwide display inventory alone.

Being a technology-driven firm, this has meant dealing with publishers on behalf of advertisers to integrate their inventory into our system. However, with the launch this week of our Open API (application programming interface) initiative, called ASI Inventory API, things are changing – and signaling a real coming of age for AudienceScience and the EAMS approach to programmatic trading.

So why are Open APIs such a big thing? First let me explain what they are: a means for us as an enterprise business to open up our system to external partners and make it much simpler for them to link with us. Ryan Holmes, CEO of Hootsuite, explains Open APIs in the Wall Street Journal with the analogy of a Walled Garden versus Partner Ecosystem. Essentially, working with the Walled Garden model, a tech company keeps access to its suite of products closed, strictly controlling access to partners. In online advertising, this means that advertisers have to request that their DSP (demand side platform) make a custom integration with a supply partner, which typically takes weeks of development.

However, the Partner Ecosystem model centers on Open APIs. In our case, with our ASI Inventory API, we are enabling supply partners to integrate their inventory with our EAMS, AudienceScience Gateway, much more quickly. These integrations are handled en masse without any resource constraints, making the process significantly faster and more efficient, while still maintaining inventory quality. Initial supply partners already taking advantage of this include LiveRail, MARKETPLACE (AOL Platforms’ SSP) and sovrn.

It makes total sense for us, as a technology company, to communicate with other systems in a very inter-connected way, rather than via manual work. However, for the industry this is a change in mentality and, with more and more adoption on the sell-side, the overall integration time is reduced and the advertiser benefits from getting hooked into many inventory sources across the globe independently and programmatically.

What’s also interesting to me, though, is that Open APIs mean that publishers are integrating with us by working to AudienceScience’s specification, rather than theirs.

Why is that important? It’s because the launch of ASI Inventory API is a result of increased outreach from quality inventory owners who want to be part of Gateway as they understand that, if they’re not, they’re going to be missing out on a huge sales opportunity. The reason why this signals a turning point in programmatic buying hierarchies is because it shows ad tech partners no longer have to chase inventory – it’s the inventory owners that are starting to do the chasing.

To me, this is another indication that EAMS have proven their case and are starting to take their rightful seat at the top table. For AudienceScience, 18 months on, I guess it’s a case of ‘API Birthday’ rather than Happy Birthday!

For support with poster advertising, visit www.shoutmedia.co.nz

We sat down for a conversation with Nick Manning, Chief Strategy Officer at Ebiquity. We discussed his perspective on the current state of digital advertising and the issues that need to be addressed for a successful industry model.

What does Ebiquity do and what is your role there?

We are a global independent data analytics business which helps major advertisers to measure, understand and exploit the changing media environment – ultimately leading to better performance and return on investment. As Chief Strategy Officer I make sure that the products and services we offer are what advertisers need, both now and in the future – so I have my eyes firmly fixed on the media horizon. 

What are the biggest issues that face advertisers in terms of accountability and measurement of their campaigns? 

A fantastic range of opportunities for marketers has opened up as a result of the massive explosion in media channels– but with that come great challenges too, as advertisers struggle to identify the best channels to use to achieve their objectives, and in what combination. Part of the problem comes from the fact that brands are also working with too many agencies – often with one working on each channel they use. As a result, they have stacks of advice – but it’s not always objective advice as each agency has a vested interest in their own channel. But the biggest single issue is measurement. With so many channels on so many devices, getting the technology and analytics right is difficult, but vital. 

The Lumascape shows an infamously complex digital advertising ecosystem – what impact does this have on advertisers and what should they be doing to simplify this? And why?

What they need to do is stop using it as it over-complicates the reality! Every advertiser has different needs and objectives so, rather than trying to work their way through the Lumascape, they need to take time and impartial advice to simplify their digital advertising process and understand how they can improve effectiveness, and in so doing improve cost-efficiency. They then need to properly brief their selected partners and ensure that they incentivise and remunerate them appropriately with clear and well thought-out contracts in place. Too often, advertisers pay their ad partners according to the volume of impressions they serve, rather than for any specific outcome and this actually drives down quality and drives up cost. 

Is the recent drop in TV advertising spend a result of advertisers looking to spend their budget in more accountable, trackable media?

This fall in TV spend hides a number of different factors. In particular, traditional TV spend may well have declined but a proportion of this budget is highly likely to have been shifted into online video instead. However, it is difficult to track this shift as the measurement systems vary and online TV is harder to monitor.   While the decline of print media is inexorable, I believe that TV is pretty resilient and will remain as one of the most effective channels for advertising, as our studies consistently prove. While programmatic TV is not yet a reality, significantly more TV will be delivered via the internet in the next five years. My hope is that programmatic technology will enable TV to become even more powerful as a result of making ads more addressable to their audience. 

Does the programmatic power lie with the advertiser, agency or ad tech firm? Is it where it should be?

Far too much control still lies with agencies and ad tech firms with far too much of an advertiser’s spend disappearing into the supply chain across multiple, often unknown, intermediaries. This means that only $0.40 out of every $1.00 actually reaches the publisher, even before issues of non-human traffic and viewability come into play. 

As more campaigns are delivered across multiple devices, what implication does this have for measuring digital advertising?

Campaign measurement is becoming an incredibly complex affair. It’s not just multiple campaigns across multiple devices that we need to think about but also campaigns across different channels, in different languages and also across online and offline. Advertisers need to have very good technical infrastructure to capture first party data in order to track customers across multiple channels. However, while agencies do a great job at understanding and reaching consumers, few have strengths in cross-device tracking. This means that advertisers are just not tracking across devices and channels – so they can’t do the analytics and make informed decisions. Advertisers need to capture as much data as possible and have the right tools in place to make sense of that data so that they can identify the important signals from amongst the noise. It is often in their interest to use an expert third party company to do this for them so that they can measure every channel and receive impartial advice and analysis. This is the only way that advertisers can be confident that each channel is represented and measured in the right way. 

How much is ad verification an issue for advertisers (viewability, ad fraud, ad blocking)?

Ad blocking is what is making the headlines at the moment but it is not as big an issue to advertisers yet as non-human traffic and viewability. Together they are leading to 50% of online advertising being wasted (as identified by both Ebiquity, Google and other independent parties); that adds up to $100bn lost ad spend globally. Agencies that are placing millions of ad spend should be tracking and reporting on viewability and fraudulent impressions as that is the only way that the industry will be able to understand the scale of the problem and take the appropriate action. However, advertisers are not routinely being provided with data on how their campaigns are being affected, as it’s not in the agencies’ interests to do this, given that they get paid for all impressions, viewable or not. As advertisers demand more control, the agencies that champion better practice in this respect are likely to get kudos for doing so.

Ebiquity has been selected by the ANA to conduct an investigation into the US media market. As one of the two firms selected they will investigate the issues surrounding the industry with the view of improving the level of transparency for advertisers. As Mr. Manning illustrates above, this is a crucial issue that must be addressed, we look forward to the new media transparency principles and learnings that result from this effort.