ADOTAS – Its potential has been touted for years, but it seems that online video advertising has finally hit its stride in 2010. eMarketer predicts $1.42 billion in spend this year compared to $1.02 billion in 2009. That figure will grow to nearly $2 billion in 2011 and $5.71 billion in 2014.
The rise in revenue can be attributed to many factors, such as more interesting creative (check out YuMe’s latest ad units) as well as advances in targeting. In particular, Media6Degrees, the original social targeter, has introduced its technology to the space with some impressive preliminary results — just like in display, social targeting beat out its behavioral and contextual cousins while the video completion rate was significantly higher than the industry average.
CEO Tom Phillips gave us more details on the mechanics of social targeting, how the system works for video advertising and his affinity for ’70s glam rock.
ADOTAS : Would you mind dumbing down the concept of Social Targeting for us lay people?
PHILLIPS: Social Targeting™ is based on the idea that the people who decide to visit a particular site on the Internet share something in common which drew them there. If some of those people have purchased a particular product from our advertising clients, we take that as a signal that others who visited that site may be interested in buying the same product.
Why do you guys consider yourselves the inventors of Social Targeting?
Media6Degrees trademarked the term Social Targeting to describe our precise methodology, which is a dramatic departure from traditional targeting methods. Rather than building descriptive profiles of consumers and targeting against those profiles, Media6Degrees is the first company to apply social science principles to ad technology and to answer the call for a targeting methodology that holds user privacy and ad performance as equally important objectives. We encourage everyone to read our seminal research paper, which we published in 2009.
How do your methods of Social Targeting compare with your so-called competitors? It’s OK to say yours are better — as long as you explain why.
From our vantage point, Media6Degrees’ Social Targeting is truly unique in the marketplace. We believe other companies that describe their solutions as Social Targeting would be more accurately described as Friend Targeting. Those companies attempt to establish one-to-one relationships between people (i.e., recreate the Social Graph) and believe that if one person purchased a product, the people they have personal relationships with should be targeted for the same product. To use an offline analogy, it’s the difference between considering the people you are sitting with at a restaurant versus considering all the people who decided to eat at that same restaurant.
Why should consumers embrace and not be afraid of Social Targeting? Is there anything creepy about it?
Because Media6Degrees’ Social Targeting methodology does not analyze page content, store URLs, collect personally identifiable information or build personally descriptive profiles of users, we are confident that we provide a truly privacy-friendly advertising solution. Good advertising provides valuable information to consumers and the financial support publishers need to create the content we all love.
How does Social Targeting for pre-roll video differ from display?
The Social Targeting methodology is exactly the same, only the ad format is different.
Why do you think Social Targeting in pre-roll performed better than demographic and contextual targeting in your initial campaigns?
For the same reasons Social Targeting outperforms other methods for display. Everything we do starts with the marketer’s current customers and targets people who have made similar decisions based on where they gather on the Internet.
Though online video advertising has bloomed this year, what factors are holding it back?
Initially, our challenge was a lack of cookie-targetable video inventory. Recently, partnerships, most notably with BrightRoll, Adap.tv and AdBrite, have enabled us to apply Social Targeting to pre-roll video inventory.
Are clicks more meaningful in video advertising than in display? What do you consider their importance compared to video completions?
We asked our clients and, at least for now, they are looking at both metrics. More important, they are reporting that pre-roll delivered via Social Targeting is driving higher click-through rates and a video completion rate significantly above industry average.
Does the consumer practice of regularly dumping cookies actually work to M6D’s advantage?
The impact is hard to quantify and not something we put much focus on. We think it’s important for consumers to exercise choice in managing their cookies or to opt-out of targeting entirely. Our technology is built to accommodate those choices.
You spent three years at Google, including serving as architect of the DoubleClick integration and director of Search & Analytics. How has that experience influenced your tenure as CEO at M6D? What lesson has come in the most handy?
It is a long list for sure. Part of why Google is so admired and successful is that rather than applying offline methods to online situations, they consistently use technology to solve problems in ways that could never be achieved offline. For example, before Google, there were companies whose idea of search involved categorizing websites by topic (like an online Dewey Decimal system). Google created its Page Rank algorithm and the rest is history.
We feel many existing ad technology solutions are simply trying to transfer offline models to online advertising. We also believe that our methods use technology in novel ways to solve advertising in a way that could never be achieved offline. Copying offline models certainly makes for an easier technology sale, but we are confident the industry increasingly understands the difference.
How about your experiences as publisher of the infamous Spy magazine? What has been the benefit of traversing the media spectrum — from offline to online, from publishing to advertising technology?
Now you’re talking about pre-history! As much as I loved Spy as a print magazine, if the Internet existed in 1985, we would have been online. In fact the Spy team still jokes about how we could have been the first great Internet property – if only we could shift time by 10 years.
What do you think is the next step for Social Targeting in general and Media6Degrees specifically? What other frontiers are you looking to tackle? What still needs improvement?
In terms of new frontiers, we have started applying Social Targeting to help our clients target offers to shoppers arriving on their site. Clients have told us that as many as 90% of their site visitors are first-time visitors. We are applying our same Social Targeting methodology to select the best offer to highlight for that arriving cookie.
We are also rolling out Social Targeting solutions for publishers, which will help them target inventory more effectively and drive more page views. Perhaps we can have a separate Q&A around those initiatives in the near future.
Word has it you love 70s glam rock and that conference rooms at M6D’s offices are named after legendary NYC rock venues. Pop quiz: though David Bowie wrote the tune, whose version of “All the Young Dudes” is better — Bowie or Mott the Hoople?
You’re dating me, but I didn’t know Bowie recorded his own song. Mott wins.
Who killed Ziggy Stardust?
Well, Iman, I suppose. And we’re all better off for it. By the way, when we expand on to another floor in our building, we’re naming the conference rooms after noted spouses of beloved rock stars.