Selling Advertising 2013

6 — Selling Advertising

From Code to Product gidgreen.com/course

Million Dollar Homepage

From Code to Product Lecture 6 — Selling Advertising— Slide 2 gidgreen.com/course

Aversion therapy


Tempted?


Lecture 6

•  Introduction •  Types of targeting •  Price models •  Ad formats •  Ethical issues •  Web Sudoku


Traditional advertising

•  Mass media – Newspapers, magazines, TV, radio, outdoor – Local or national, not global

•  Big one-time purchase •  One message to all recipients – No filtering or personalization

•  Success measured indirectly – Did sales increase this month?


Digital advertising

•  Digital media – Web, mobile, email, desktop – Global in scope

•  Pay as you go, small increments •  Messages targeted by recipient – Filtering, personalization

•  Success measured directly – Views, clicks, actions


Underlining the difference

“Half the money I spend on advertising is wasted; the trouble is I don't know which half.”

— John Wanamaker, store owner “Ninety-nine percent of advertising doesn't sell much of anything..”

— David Ogilvy, advertising executive


US ad spending (+projected)


0

$10B

$20B

$30B

$40B

$50B

$60B

$70B

1996 2001 2006 2011 2016

Web

Mobile

(world totals approximately double)

Media and advertising


Online ad breakdown


Search makes strong gains in first half of 2011

• Search has remained the leading format since 2006, having strong sequential growththrough the period depicted. After losing some of its overall share in 2010 toDisplay/Banners, Search increased its market share in the first half of 2011 to 49% ofadvertising revenues.

• The past six years have seen Classified advertising losing more than half of its marketshare of revenues, with sharp declines over the past five years. Classified revenuesstabilized in 2010 but have declined in 2011, with a market share of 8%, down from the18% of advertising revenues the format commanded in 2006.

Advertising format share (% of total revenue)*

Historical format trends

60%

2006 2007 2008 2009 2010 HY 2011

14PwC

* Format definitions may have changed over the time period depicted, both within the survey process anddefinitionally by survey respondents.

0%

10%

20%

30%

40%

50%

Search Display/Banners

Classifieds Rich Media &Digital Video

LeadGeneration

Sponsorships

2006 2007 2008 2009 2010 HY 2011

IAB

Inte

rnet

Adv

erti

sing

Rev

enue

Rep

ort,

Sep

t 20

11

How it works

•  Direct sales – Hard to find advertisers – Transaction cost vs volume

•  Ad networks – Aggregate 1000s of publishers + advertisers – Copy-paste code snippet – Take 20%—50% of revenue

•  Big sites use both


Top US online ad networks


Top US mobile ad networks

AdMob (Google)

24%

iAd (Apple) 15%

Millennial Media 17%

Other 44%


2011 figures from IDC

Lecture 6



Geography


Demographics


Traffic source


Contextual


Contextual


Behavioral


Behavioral


Affiliate advertising


•  Direct sales – But no

transaction costs

•  Payment on sale only – Open to all

Affiliate advertising


Real-time bidding (RTB)

•  Most online ads bought in advance – Volumes and targeting predefined

•  RTB ads bought in real-time – User visits page with RTB ad –  Impression auctioned to buyers – Highest bid wins

•  Works like an ad network •  10% of display ads, projected 27% in 2015


Lecture 6



Fixed price

•  Predefine: – Where ads will show – Proportion of time – Time period (week/month)

•  Direct sales only •  No tracking required – Advertiser can monitor performance

•  Money left on table?


Cost per impression

•  Priced in CPM = cost per mille (1000) •  Advertiser sets: – CPM rate – “Above the fold”? – Limits per day, per user

•  Popular for display advertising – Viewing ad builds brand recognition

•  Impression tracking


Pay per click

•  Priced in CPC = cost per click •  Advertiser more flexible – Click = user intent

•  Popular for search advertising – Auction between advertisers

•  Impression and click tracking – CTR = click-through rate


Pay per action

•  Priced in CPA = cost per action (sale) •  Suits advertiser perfectly – Only pay if you get paid

•  Popular for affiliate advertising – Any publisher will do

•  Impression, click and conversion tracking – CR = conversion rate – Publisher forced to trust advertiser


Total revenue

Revenue = Fixed price

Impressions × CPM/1000 Impressions × CTR × CPC

Impressions × CTR × CR × CPA From Code to Product Lecture 6 — Selling Advertising— Slide 31 gidgreen.com/course

Total revenue

Revenue = $1,000

500k × $2/1000 500k × 2.5% × $0.08

500k × 2.5% × 2% × $4 From Code to Product Lecture 6 — Selling Advertising— Slide 32 gidgreen.com/course

Defaults and thresholds

•  Defaults – What to show if there’s no ad

•  eCPM = equivalent CPM – All you really care about

•  Threshold – Minimum required eCPM

•  Fill rate •  Check the definitions!


Ad network example


AdSense example


Real-world eCPMs

Type of site Example 300x250 eCPM

Forum $0.25

Gaming $1.50

Fashion $4.00

Real estate $8.00

Local newspaper $10.00

Technology $15.00

Travel $20.00

Investments $40.00


Lecture 6



Online banner sizes (IAB)


Medium rectangle 300 x 250

Full banner 468 x 60

Leaderboard 728 x 90

Wide sky-

scraper 160 x 600

Banner ad code



<script type="text/javascript">

var CasaleArgs = new Object();

CasaleArgs.version = 2;

CasaleArgs.adUnits = "6,4";

CasaleArgs.casaleID = 76546;

</script>

<script type="text/javascript" src="http://

js.casalemedia.com/casaleJTag.js"></script>




Size vs CTR (AdSense)


Click-t

hrough r

ate

Banner area

Interstitials


Pop-up ads


•  Hated by users

•  Pop-up blockers common

•  Also: pop-under

Other online formats

•  Floating ads •  Mouseover ads – Expanding – Audio

•  In-video – Pre, mid, post-roll

•  In-map •  Advertorials


In-app ad formats


Mobile banner 320 (or 300) x 50

Full screen (or almost) 320 x 480 (or 440)

In-app state of play

•  Many other ad sizes – 320x250, 320x320, 320x350, …

•  Landscape getting started – 480x50, 480x60, 480x70, …

•  iPad/tablets to use web ad sizes? – 728x90, 300x250

•  Retina display scales x2


Ads in email


•  Past: text •  Now:

images – Not always

displayed

•  Direct sales •  Some small

networks

Lecture 6



Core problems

•  Ceding control of user experience – Weakens brand/message – Bad ads and bad sites

•  Users don’t like ads – Can harm word of mouth

•  An effective ad is clicked – User gone elsewhere – To competitor?


Privacy and cookies

•  Ad networks and cookies – Track users within sites – Worse: across sites – Enables behavioral targeting

•  User’s identity not revealed – But: IP address – Google searches


Bad ads: Ugly


Bad ads: Offensive


Bad ads: Misleading


Bad sites: Spyware


Bad sites: Gambling


Bad sites: Scams


User complaints

“Your advertisement in support of Rick Santorum is enough to cause me to use some other website for this game. I will avoid coming here again!”

“Why do you accept advertising from nomorerack? They are an out and out scam. Read the feedback.”


Ad network filters


Lecture 6



Amazon ads


Direct ad deals


AdSense + our own products


Banners on puzzle page


-8%

-6%

-4%

-2%

+0%

+2%

+4%

7 Aug 7 Sep 8 Oct 8 Nov

Moving banners

Bright static banners

Quiet static banners

The big break


AdSense + new affiliation


Very highly targeted


Where we are today

•  Ads are biggest source of revenue – ~70% display ads after puzzle – ~20% AdSense above puzzle – ~10% direct deals

•  3 big display ad networks – Monitor performance weekly – Rebalance in response – Ad quality a constant challenge