Wednesday, March 19, 2008

The Mess - Ad Serving, Publishers, Ad networks, Affliates and the cookie

Two things, first as per the feedback I will try to keep this entry a bit short, it seems my rhetoric in previous entries have gone a bit longer. Second, as per the title, this entry will be a reflection on the mess, and as an entry will be non-conclusive.

An ad server is a computer server that stores advertisements and delivers them to website visitors – the Wiki definition. This delivery can be targeted in terms of behaviour, and also in terms of the context (contextual targeting). The server churns data on clicks and later conversions(with help of tracking pixel or a cookie on a “thankyou - closure/goal” page). Now this information is simply used in creative optimization, as in serving the ones which are more productive, and weed out the non-productive ones. This thing can reverse used to maximize publisher’s revenue out of a single advertising position serving various campaigns options.

Now other than just this Ad servers capture a huge amount of information, which is the base for the whole confusion on the Google double-click buyout. The confusion is the information Google will hold about the user and the control over a major chunk of the online inventory. We will get into its details, but the merger is complete, with European Union (antitrust regulators) cleared it on march 14th and the US regulators already closed on it in December. The other side is Microsoft and other firms shouting that "Double Click and Google together can have access to the majority of worldwide online behaviour, which can be severely misused”. Along with the closure of merger, surprisingly Google launched a free Ad-server for all called the Ad Manager(invitation only), which looks conflicting with double-click model of paid serving, but on getting the surfing data, it’s the final nail in the coffin for any other player.

So what does all this mean, what will Google do with all this data and information, everyone knows the answer to this “Behavioral Targeting”. So From 18th March onwards, Google becomes the number one firm in behavioral targeting, sealed and closed. With 70% of worldwide search and same percentage of worldwide serving, they know more than anyone else. Now this will make sure that dynamically this information increases effectiveness and efficiency of combined network. And with Ad Manager, they like to understand the smaller players. Now Microsoft has reacted by taking over an ad management firm rapt, in addition to their earlier acquisition aQuantive, a big ad network.

So it is all about controlling the Ad serving, Ad networks and Ad management tool companies. Just moving to networks for a while, for a successful Ad Network the efficiencies really need to come in terms of performance, clicks in most of cases. Now with the big impact of behavioral targeting, this can really change for small networks, who are not part of any big consortium like Google, Microsoft or yahoo. It may sound too big a statement at this time, but somehow dynamics indicate that. The good news for small networks is that they will be picked up well by some of the bigger players. Now coming to affiliates, who are the middlemen, as of now do not have a big influence on this scene. But on the information piece, they are chasing customer right till the end to benefit from original referral traffic.

Now coming to the customer, since the deal is in clear, the impact still needs to be seen. Just taking the fiasco around the Facebook’s beacon, which allowed partner sites to do behavioral targeting. This created a furor in US, due to privacy concerns, inspite of claims, the opt-out option didn’t work for users, and finally in December, 07, option was implemented. This came along with the apology from Mark Zuckerberg, the youngest self-made billionaire of the world. So the challenge for the consumer is huge, but normal consumer will not be able to chase it, still the privacy concern stays.

In India, we are not talking about it much, but this is really important, as performance of campaigns as we see it will change and so will be the cost of buying online media. It is going to impact everyone from Ad serving firms, publishers, Ad networks and internet users. As far a net junky like me, it gives me a rush, to see some new conspiracy theory to think about!! Adios…….for now!