Oliver Thylmann’s Thoughts

I wrote about the ad market needing a change in July of last year, and now Emre Sokullu explained the idea very well in his post entitled Plan B for Microsoft: Split up the Advertising Atom.

He take the Microhoo deal as a starting point, thinking about how Microsoft can beat Google, but it’s not really something that is unique to Microhoo. The suggestion he has is something that is bigger than Google, bigger than any advertising system out there. Think VISA for advertising.

His idea is best explained via the picture below from his post:

The idea is that you split everything up, and create it around a standard so that the different silos can interact. The cool thing is that this is how our AdServer at Ormigo is structured, first because it makes for an amazingly efficient ad server that runs on Amazon’s Web Services Infrastructure, and it provides for some interesting new possibilities.

Our products that we advertise are within different objects stored on S3 (inventory silo) and the Placement Silo is really our AdServer that holds all the information about the Placements. The very cool thing about the above model is that you can have different inventories fill the same placement, or add on top of that different parameter silos that take care of optimization. Thing content match or behavioural targeting.

The cool thing is that you would enable Open Innovation. Of course there are lots of things still to be thought out to make it really open, meaning you make it a VISA model in which everybody can use everything and can do what they want with it but they will need to adhere to a set of rules and standards. This might make prices more transparent, and open up for real competition, which will not be good for everyone. But the thing is that it enables is a really open market place where different people can write a Placement Silo for TV ads that suddenly grab the right Ads from the Inventory Silo, optimized through a Facebook Parameter Silo to only show ads my Friends like. Who gets what? Who pays what? What about the wining and dining part of advertising? Lots of things not settled, but worth thinking about.

The first one I’d like to briefly talk about is AdScale from Germany, which is really another copy cat, this time from AdBrite. Having launched yesterday, it obviously still has very very little traffic on there, which is really the thing a network needs. But with one of their Investors, the European Founders Fund, has also invested in Performance Media, I presume that to fill up rather quickly, but this depends on how the two systems can really interact, and with AdScale needing their code on the site they serve banners on, this might not work out as (possibly) planned. We will see.

The interface is really nice and I can easily set up my own site to become a member of their network. I will then choose a category and also choose keywords my site is about. These keywords can then be booked by advertisers. Having gone through the advertiser process first I was wondering if they were reading out the content of publishers live and serving banners similar to Google, which would be a huge undertaking, but that does not seem to be the case. At the same time, this makes the keywords a little bit a mute point, and the problem becomes that with each publisher choosing 5 keywords for any one placement (I presume to be able to give more than 1 placement), the keyword density will just be too low for efficient booking on the advertiser side.

The really nice thing is that you can give AdScale a fallback ad. So you could say that you want a CPM of 5 EURs on your blog, as an average over the banners they serve, and otherwise serve AdSense. Again, the problem is that either advertisers book with very high CPCs or you they need very good targeting, both not really being the case from my first looks. They do have MyVideo and others (many investments by EFF and Holtzbrinck Ventures I might add, both investors in AdScale) but based on the millions and millions of ads MyVideo serves, the current AdImpressions AdScale has point to the fact that they are just booked on few sites per default and can book on MyVideo if there are deals in the system that MyVideo wants (becoming very similar to Performance Media). It’s really the chicken and egg problem that advertising networks always have. And remember that we had advertising networks en masse in the first bubble and they slowly disappeared again.

There is one much more interesting startup that plays with an idea that has been in my head for a long time. I talked about it in my post from July entitled We need a small little change to banner serving.

The problem I am starting to see, especially for the smaller sites, is that they will have to choose one network, like AdJug to serve their ads. Then they are quasi locked in. I personally want the highest paying ad running and I don’t care where it is coming from. I can now go into my installation for OpenAds on my blog and choose to run AdSense ads or AdJug ads or like I set it now, Ormigo Ads (just testing my own stuff here, nothing for your to test, sorry) when people come from Germany. It’s all sub-optimal though. Because for any given page, AdJug might have the better ads, or we might or somebody else might or I might choose to just run AdSense, or even opt to have a CPL AdSense campaign shown when it really fits super well.

What we need is a VISA kind of market for advertising. In general I would love to do this as a start-up, but the thing is that it’s not really a start-up as it is not there to go public or get sold or anything else to make money of as an investor. It’s a separate entity that will make sure that the ground rules are clear.

This is where PubMatic comes in. What they do is a first step in the right direction, again a lock in, but the right direction. You give PubMatic your accounts for YPN, Blue Lithium, AdSense and others. They will then monitor how much money you make when displaying certain ads and certain pages and in the end, will start serving those ads that work best for any given page. Now that is cool! That’s the performance bit that I believe in, and that makes it easy for a publisher to always run the best ads. The thing we now still need is an open specification, a cloud of ads somewhere, where I can gather information of what runs best and choose it. That’s the next step. The thing is that the publisher business is 99% about profit, but they will have to take some strategic decisions soon in terms of which networks they work with and which client relationships they want for themselves, that’s for the big ones at least. But I do love a company addressing the problem.