PubMatic has made its excellent report, distributed to attendees of its Ad Revenue 2009 Conference on October 8, available to all. Beginning on book page 36/pdf page 39 and running more than 20 pages is “The 2nd Channel Ecosystem,” a special section that I researched and wrote.
AdRevenueReport_PubMatic
Great lineup for next week’s conference all about helping publishers successfully navigate the challenges and leap the hurdles of our insanely complex business and tech ecosystem. Conference details here: Ad Revenue 2009
I’ve enjoyed a great opportunity to work with the conference’s tireless organizer and champion, Eric Klotz, PubMatic’s director of marketing, and with CEO Rajeev Goel, Chairman Amar Goel, and the whole team. I hope to see you there as well!
Part of my contribution to the 64-page report that attendees will receive is a nice reworking of my inventory naming chart, reproduced here.
WELCOME TO THE 2ND CHANNEL
Welcome to the 2nd Channel!
Originally published on Right Media Blog
http://www.rightmediablog.com/blog/2007/04/20/what-keeps-you-up-at-night/
What keeps you up at night?
By Bennett Zucker
April 20th, 2007
It’s a good question to try to answer now and then, especially if you like your zzzzzs but you’re heaving too many late-night ohhhhs.
Here’s a shot at what might be troubling you if you’re responsible for sales executives calling on agencies and advertisers for ad dollars. Brood on these for a bit and we’ll deliver some insomnia relief later.
1. Unsold and undersold inventory.
It’s 3:00am and you’re reliving yesterday’s heart-pounding snatching of defeat from the jaws of victory. There you are, proudly presenting your record-breaking performance at the quarterly review. You know things are heading the wrong way when the CEO and CFO glance knowingly at each other. It falls to the finance guy to call you out:
“Why the hell are we paying ad serving fees higher than the revenue we earned on more than half a billion ad deliveries?”
2. Sales productivity.
Toss, turn … Maybe assigning one full-time rep to sell excess inventory to ad networks wasn’t such a great move. The CFO wouldn’t have cared as much if we weren’t also paying sales commissions on those deals. But he has no idea how hard it is to keep salespeople.
They all want to sell the same easy deals on the home page and section fronts. They all sell the same targeting parameters, sponsorships and rich media slots. And they leave me with tons of available inventory they say only the networks will buy.
How can I keep all my salespeople focused on selling the value of my site and audience when I have all this leftover inventory to get rid of?
3. Operational inefficiency.
Toss, turn … Then the CEO wants to know why, with all this unsold inventory, we turned away a great new advertiser and underdelivered others. He asks what we’re doing wrong? The marketing guy was a big help, telling the CEO that he delivered the users and new inventory I asked for, so he’s clear of blame. I start telling them about high-frequency impressions nobody wants, but they tune out and move on.
I ask my ad ops group for recommendations. “How about firing any sales exec who sells inventory that’s already sold?” gets the most high-fives.
Toss, turn … 3:45am … Might as well get up and start working on the problem. But where to begin? We’re making the calls, winning awards, expanding the audience, creating new products.
We need better sales training in the basics, that’s for sure. This is advertising, people. Do we understand our prospects’ marketing objectives and what they want to accomplish with their online advertising? Are we making the match between that and the value of the audience we deliver?
As for the leftover inventory, is its value really different from what we are already selling successfully? Are there tools that can help us uncover the value, bring more potential buyers to the table, and get them on board easily?
What about these ad exchanges I keep hearing about? Maybe there’s something there. Can a couple hours sleep and a couple of phone calls fix what’s ailing me?
Earlier this year, Matt McAlister uploaded pages from the January 1998 prototype issue of The Industry Standard, the late, great, fattest magazine of Web Bubble 1.0. See the pages here
On this page, Michael Tchong worried about whether online advertising was flattening out when, toward the end of 1997, it was looking as if web advertising would not attain its first $1-billion dollar year after all:
“Although the industry had hopes of topping $1b in sales this year, it now looks like revenue may reach only $870 million. Are advertisers growing disillusioned with the benefits of Net advertising?”
The Standard, meanwhile, grew fat and happy, throwing legendary parties from rooftop to rooftop, coast to coast. At Real Media (later to become 24/7 Real Media) we contributed to the fun with 2-page magazine spreads and web ads that showed the little Real Media people jumping from a right-rail ad to the “attractor” banner at the top. Below are some I dug up for this little retrospective.
All the “action figures” in these ads were Real Media employees. We had fun doing the shoots and seeing ourselves in ads on bus shelters and billboards in New York and San Francisco in those good old dot-com days. Alas, the agencies we worked with – Mezzina, Brown in New York and Lot21 in San Francisco – are also gone. 
Attention, watchdogs. You are sniffing up the wrong butt!
Mark Rogers Photography on dogster.com
Consumer watchdogs, privacy advocates and others who prefer government regulation to industry self-regulation of data collection, cookie tracking and behavioral targeting put entirely too much faith in government.
Ironically, they’re even more wrong about how well any of this actually works in practice today on the web.
As an industry insider, I do all that I can within the bounds of safe computing to optimize my computer to allow cookie-setters, data gatherers and targeters to show me what they can do. Most often, the results are only fair or poor. On rare occasions, a truly relevant message appears that surprises and delights me and, more important, offers me something I’m actually interested in at that moment.
If it’s usually difficult for me to see the effects – good or bad – from the use of my data for commercial purposes, how is it possible that people with no inside knowledge are dead certain that malevolent forces are out to destroy our privacy via online targeting?
1. It’s not easy to be targeted. 
Every browser, anti-virus and pc optimizer program, among other widely-used applications, makes it increasingly difficult specifically to allow your machine to be targeted. This simple example comes from a routine scan (AVG, free version) of a machine which has been set and reset numerous times to ignore every one of these widely known, safe sources of ad deliveries and/or audience analytics. A typical consumer would take the virus warnings seriously and would promptly remove and prohibit such common cookies, which help make browsing more convenient and relevant.
2. On the internet, nobody knows you’re a dog.
The New Yorker cartoon by Peter Steiner generally is still true 12 years later. Sure it’s possible for hackers, law enforcement and others to piece together a story from your many web activities. Since you purposely leave your life’s details all over social networks, it hardly requires a visit from the internet czar to figure out what you’re up to. You can still choose not to reveal anything about yourself online by, well, refraining from using the web, email, IM, etc. Then only your supermarket, credit card issuers, banks, department stores and cataloguers, U.S. Postal Service and many, many others will know all your details. Just unplug your computer and you’re safe at last.
Do you worry that we’re only a step away from Orwell’s omniscient telescreen? I choose to obey the law and not worry. I’d rather enjoy the benefits of the web, including legitimate commercial uses by companies that are guided by respectful consumer-friendly principles and profit-driven innovation.
3. Behavior – online or off – can be misleading. After reading “Find Me Again: A Blizzard of Retargeting,” I visited several sections of the Skechers site, beginning with the women’s shoes section, likely to be the most valuable and heavily-tagged and trafficked part of the site for research purposes. Next step was to go to my Yahoo! Mail account and, sure enough, the parade of Skechers ads – all targeting women – began appearing. Six weeks later, I still see them all the time.
One visit to the women’s shoes department and they retarget me to death. I assume they can do this because they pay only for specific actions generated from ads on inexpensive and plentiful exchange and network inventory.
To the company’s credit, Skechers has been very open about their marketing efforts. In addition to the Behavioral Insider article, there are Skechers case studies from AudienceScience and MyBuys, among others, and open discussion at conferences. If the privacy fearmongers would read some of these, they might be further inflamed by the casual references to targeting consumers. Or they may get the idea that this practice is widespread, innocuous (even if some find it annoying) and, at its best, it results in a satisfying experience for the consumer and the advertiser. If they were to read further, they might even come to understand that this popular and simple form of retargeting is not particularly accurate or effective.
My first Skechers ad on Yahoo! arrived courtesy of Blue Lithium, but it might easily have been associated with other sources identified on the Skechers site on July 1, 2009, including Acerno, AudienceScience, Burst, Fastclick, Fetchback, Interclick, Trafficmp, Tribal Fusion.
4. Will the big dog hunt?
On the web, Google is like the world’s tallest dog, Gibson, measuring more than seven feet tall standing up. He appears to be friendly, but you can imagine how fearsome a presence this towering Great Dane makes, and how he must garner equal measures of respect and terror even among dog lovers.
Google introduced its flavor of interest-based targeting several months ago, so I promptly signed up for over a dozen different categories of business and consumer interests. Ho-hum … I have noticed exactly ONE ad that may have been a result of this program.
Interest-based targeting on Google: not interesting
If the big dog keeps up this performance, you watchdogs can move on to a new fire hydrant in someone else’s industry.
Several years ago I started a list of alternative terms for online ad inventory that I used in presentations when we first introduced the Right Media Exchange. It was part of a larger effort to persuade publishers to think about the importance of having a real strategy for non-premium inventory.
It was simple when the world of website ad inventory was divided between premium and non-premium. The language has evolved tortuously to fulfill the industry’s impulse to redefine anything simple so that it appears to be much more complex and, therefore, presumably, more valuable.
The online advertising ecosystem now includes ad exchanges and marketplaces, yield optimizers and creative optimizers, buy-side platforms and data exchanges, and numerous intermediaries who serve other intermediaries. Not content to feed from the existing language pool, each new organism in the ecosystem spawns its own new language, better to describe why it deserves greater prominence.
A notable coinage used by William Morrison and Robert Coolbrith of ThinkEquity in their excellent report, “The Opportunity in Non-Premium DisplayAdvertising,” inserts a new layer of website ad inventory called “secondary premium.” This strikes me as a rate card distinction, not some previously undiscovered form of inventory found living in the cracks between premium and non-premium. Here’s the ThinkEquity view:
By any name, there’s no denying that publishers are creating more and more inventory that they can’t monetize easily without a lot of help from networks, ad exchanges, and yield optimizers. One of the latter group, PubMatic. has introduced “2nd Channel,” which I believe nicely encompasses and describes anything that isn’t in the premium sales team’s sweet spot. (Disclosure: I’ve consulted for PubMatic.) Here’s the rest of the lineup, organized roughly according to the context in which the terms are typically used:
A non-premium display ad by any other name? 2nd Channel
This is pretty subjective, of course. I’d love to see a neat, descriptive term such as “2nd Channel” replace the mish-mash of differences without distinction represented by the list in the right-hand column. Keep it simple, and focus on the goals of improving user experience, advertiser performance, and publisher yield.
“So basically you want me to work for free?” Priceless.
Revenue Science CEO Bill Gossman, speaking on a vendors panel at today’s OMMA Behavioral Conference in New York, told the crowd, “I believe that we coined the term ‘behavioral targeting.’” Well, Bill, if you believe that, then undoubtedly you give Al Gore credit for the internet, as well.
In fairness, I suspect he might have been referring to the fact that Revenue Science started talking about “BT” not long after digiMine became RSI in 2003. TACODA was selling behavioral targeting – with all syllables – for more than two years at that point, and of course Engage, Yahoo! and others were doing it in the pre-bubble 90′s. So, we’ll cut you some slack, Bill, but you must admit it was a pretty goofy claim!