This will give smart advertisers an advantage in expanding user attention – by (a) creating richer experiences (b) delivering a better mix of digital channels, and (c) achieving higher relevance with more accurate targeting.

2007 saw increased attention on behavioral targeting, in its media-buying incarnation. Publishers emphasized targeted offering, and behavioral networks further enhanced reach. Consumer responded positively: a Jupiter Research study finds that behavioral advertising outperformed contextual by as much as 22%.

Such propositions are not without limitations. Behavioral Media buying is often confined to a single publisher – in which case, how do you follow the user as they roam beyond the browser portal? 

Also, often the conception and design of the campaign are totally separate to media buying – seriously limiting the ability to mesh behavioral aspects into the campaign concept. Behavioral targeting circa-2007 merely took a given creative and attempted to place it where relevant. This is a great advancement, but digital advertising can surely do much better than that.

Furthermore, consumers have expressed concerns over privacy aspects. , stirring the FTC to come forward with suggested self-regulation for behavior tracking. No-one likes the eavesdropper. Behavioral targeting can potentially infuriate users and shake their trust in publisher and brand alike. Targeting indeed does not require formal permission, but it could benefit from does require an obvious, unmistakable one.

Furthermore, often the conception and design of the campaign are totally separate to media buying – seriously limiting the ability to mesh behavioral aspects into the campaign concept. Behavioral targeting circa-2007 merely took a given creative and attempted to place it where relevant. This is a great advancement, but digital advertising can surely do much better than that.

Creative Behavioral Targeting

Recent innovations in dynamic creative alongside user behavior tracking gave birth to a new approach to behavioral targeting – one that covers also the campaign creative. Rather than rely on private data, these campaigns respond to actual user response to product messaging. This technique simply optimizes, in real-time, the type and content of the message being delivered. Some smart advertisers already took advantage of such innovations in 2007, and examples included:

~Consumer electronics enthusiasts were greeted with their name and photo on a recurring series of sweepstake campaigns

~Smokers were greeted with a personal reminder of how many cigarettes they lit and inhaled since a previous interaction with the ad

~Movie buffs were targeted with their favorite genre of DVD based on their prior interaction with the campaign.

Getting a highly targeted message, consumers responded with a positive lift in performance across relevant metrics.

Consumers were targeted based on information they directly provided to the brand. No surprises – rather appreciation as the messaging is pinpointed, accurate, and narrow casted. If I told the anti-tobacco agency’s banner how much I smoke, the permission to use this data has in fact been quite obvious. Creative behavioral targeting also gives full freedom in media buying – users can be tracked targeted on any site, IM application or even in-game experience. This gives added flexibility and increases ROI.

The consumers have spoken, and we’ve seen that the old way of conducting digital advertising won’t cut it. Users are ignoring standard ads and can be hesitant to interact. But Behavioral Optimization is great for ROI, because it identifies the right consumers and hones the message, in real-time, accordingly.

I find this fear to be unfounded. The number of dominant players will continue to increase as additional publishers arise from the online landscape or migrate from traditional media. Rather than kill competition, this environment will actually enhance the role of independent, third party operations that provide unique value for agencies and advertisers.

Supporting the Buy-Side

Advertisers, creative studios, media agencies and everyone on the buy-side ultimately want to know that an ad solution will operate with their strategic interests at heart. An ad platform that is connected with a publisher or network – no matter how pervasive – will always have conflicted interests, and will be limited in what services it can provide to clients. 

As advertisers and agencies grow accustomed to this landscape that is dominated by publisher-dependent ad platforms, it will become increasingly evident that no publisher will be capable of cornering the market. While these large networks simplify the buying, selling and serving of some online ads, they complicate the execution of large campaigns. This includes delivering media to the respective publishers, optimizing campaign performance, swapping creative or making tactical adjustments, tracking performance through the use of multiple systems and assimilating analytics data that may reflect partiality, coming from publishers themselves. 

Proprietary formats, divergent tracking capabilities and other discrepancies in process and product will force agencies either to limit their media buy or seek out a solution that spans across multiple publishers, channels and formats. In order to maintain their productivity, agencies need comprehensive, publisher-agnostic ad platforms.

Recipe for Success

As agencies work with these large networks, the need for standardization of tracking measurements and ad formats becomes even more vital. Here’s how to make sure any ad solution will be able to perform on all networks, regardless of publisher or provider:

Video format. With various publishers providing proprietary video players that require different video specs and formats, an independent ad solution should be able to convert video files for use in any and unit, on any network – including compatibility with Brightcove and proprietary Flash players.

Comprehensive analytics. Each publisher provides different tracking metrics with varying analytics capabilities, which creates extra work for agencies and complicates the process of campaign tracking and optimization. The right ad platform will provide robust tracking tools that work evenly across all networks. In addition, compiling data and gleaning insights should be facilitated, not encumbered.

Intuitive campaign management. No major campaign will rely on only one publisher network. As such, agencies need a separate, third party campaign management tool that will enable simple campaign management regardless of channel, provider or format. Today’s campaigns need to be optimized and adjusted at the speed of light, and working with a variety of quirky campaign management tools is not an efficient expenditure of valuable agency time.

The more the major publishers try to consolidate power, the more fertile the climate is for competition among independents. Now more than ever, the industry needs competition, because competition leads to innovation, and breakthroughs in standardization and scalability will eventually help migrate budgets online more effectively – a big win for agencies as well as publishers.

Tremendous Opportunity
In order to drive budget migration to the online sphere, the big brands need a mainstream platform. This platform goes beyond what we currently define as premium inventory. Such super-premium ad inventory would be the web’s equivalent to the Super Bowl, the Oscars or the Seinfeld finale.

These programs draw big-brand advertising budgets because of their premium entertainment and simultaneous reach. An ad at halftime of the Super Bowl is as much a cultural phenomenon as the Super Bowl itself; advertisers know that millions of people consume the same message at the same time, and they depend on this impact and the ensuing “water-cooler chat” the next morning. Major brands devote huge portions of their ad budgets to these pop culture events because their association with exclusive content, sought-after celebrities and premium entertainment puts their brand in a positive light.

By contrast, online advertising currently takes advantage of market segmentation and individual experience. This is extremely effective for lead-generation, but major branding initiatives rely on the perceived value-exchange that comes with premium, exclusive content. 

As online programming trends further toward user-generated and highly-segmented content, a tremendous opportunity presents itself. Big-brand advertisers are open to the promise of the Web – the demand for premium ad space has already overwhelmed Yahoo’s inventory – but they’re still waiting for the online program that can deliver a sizable simultaneous reach comparable to its offline counterparts. In short, they’re in search of that super-premium inventory hat delivers a critical mass in reach.

The Convergence Is Coming
As technology continues to meet user habits, those programs are coming. Last month, former American Vice President Al Gore teamed up with MSN to produce Live Earth, a series of concerts that took place in seven continents over twenty-four hours. The event, conceived and produced to raise awareness of the global climate crisis, featured performances by top tier entertainers. Live Earth was the largest global event in history and broke the record for online viewership: MSN reports that Live Earth generated more than 15 million live streams. In the week that followed, the concerts were streamed over 30 million more times. 

Live Earth could represent the future of premium content. Like broadcast media, it featured a broad reach and a simultaneous, shared viewer experience; but it also showcased some unique facets of the Web, such as its global scale and interactive capabilities, including user-uploaded content. Chevrolet and Phillips were among the global brands that took advantage of the opportunity to spread their messages to the audience.

We’re already seeing a greater convergence of content and delivery that will provide excellent branding opportunities in the interactive space. TimeWarner’s TNT and Walt Disney Co.’s ABC and ESPN recently agreed to pay the National Basketball Assn. $7.4 billion over eight years for the rights to televise NBA games and, in one of the first deals of its kind, stream action on the Internet and mobile devices. The digital elements account for a large part of the 22% increase over the current agreement. Basketball fans looking for their fix will be able to watch live games on TV, online through ESPN360.com or on their mobile devices via ESPN Mobile. Highlights will also be available on digital versions of ESPN’s signature shows. This increased access also translates into expanded inventory opportunity for advertisers.

As more deals of this kind take shape, so will the convergence of mass audiences and premium content that creates super-premium ad space. Traditional broadcast networks are already producing web-only content and pop culture stars such as Tom Green have launched live, recurring, web-only programming, and with deals such as News Corp.’s acquisition of Dow Jones, we will see even more online programs that create good value for users. Additionally, new devices such as IPTV increasingly blur the line between online and offline entertainment, accelerating viewers’ online migration.  And where the viewers go, so go the ad dollars.

Recent advances in campaign analytics – especially in cross-media conversion path tracking – provide fresh insights into elusive conversion trends and the effect of rich media has on them. New campaign data analysis is raising questions about the traditional rich media – standard banner mix. It’s becoming clear that rich media, already the basis for over 35% of all display online advertising, is not only a more effective at engagement, but also is a more cost-effective, driver of conversion.

Until now, few would dispute that rich media is the clear frontrunner in engagement and interaction over standard banners, but practitioners have suffered owing to challenges in measuring the effects on dual conversion that a mix of standard and rich impressions has.

The problem? Conversion drivers are a fickle thing, and until recently cross media reporting was an apples to oranges proposition at best. It was also often difficult to reconstruct the full path to conversion, and thus to establish what steps on this path carried the most weight. More robust cross-channel campaign analytics provide much needed insight into solving this conundrum.

Recent advances in campaign analytics – especially in cross-media conversion path tracking – have granted fresh insights into elusive conversion trends, and the effect of rich media on them.

Engagement advertising professionals know that impressions, not clicks, are by far the more accurate baseline for predicting measurement of conversion. A recent Eyeblaster research study campaign data analysis has shown that impressions (without clicks) – not clicks – drive upwards of 80% of all conversions. In fact, we found that conversion rates were not impacted by CTR at all. Our research revealed that – campaigns with low CTRs showed similar conversions to those with sterling CTRs.

These findings support the current trend in online advertising to recognize audience sophistication. As users become more savvy participants in advertising – and advertisers learn to better engage their target audiences – today’s rich media conversion metrics will find the better metrics to measure interaction rate (IR) engagement over “dumb” clicks.

Interaction Rate (IR), as an example, by way of definition, is the rate of positive user interaction based on measurement of user-initiated actions involving rich media display ad features – a mouseover is a positive interaction, whereas stopping an autoplay video or closing an ad is not.

Not surprisingly, unlike campaigns with higher CTR, campaigns with higher IR show higher conversion rates.

Conversion Path is Critical

Few would question that rich media clearly drives more interaction, but the real question in debate until now has been whether, and to what extent rich media campaigns are also cost-effective in terms of conversion. To gain true insight into this question, I propose a more holistic approach to measuring conversion.

Consider the entire conversion path. A recent report released by Avenue A | Razorfish concludes that “incorrect attribution of a conversion to the last exposure or action can be misleading…” So it would seem the key to measuring conversion, it is now evident, is considering the entire path to conversion.

And here’s the clincher, in our own study, when you look at conversions based on their actual path – the 1-5 impressions that preceded a conversion were weighted, and the true effect of rich media revealed itself. Extensive examination of conversion path data from representative online-only campaigns has shown that rich media impressions and interactions are behind the vast majority of conversions.

In campaigns where on average only 75% of total impressions were rich media, 82% of conversions were directly rich media- preceded by a rich media impression. But, when a conversion path existed and was factored in, in both rich and standard conversions, 98% of all conversions impressions had a rich media path. This means that rich media impressions created a halo effect that even conversions from the standard display adbanners were actually based on rich media ads.

The implications are clear. Online advertisers, who refrain from rich media campaigns in favor of massive, standard banner only buys, might do well to consider a mix of rich and standard. The study showed that, even with conversion from an ROI perspective, the implications are clear. Nearly every path that ended with a standard banner, the path to that conversion was heavily influenced by rich impressions. As a result, Eyeblaster recommends pursuing campaign management solutions with powerful analytics that facilitate a quick identification and execution of your optimal rich and standard banner mix. Traditional conversion measurements may be flawed, and conversion rates for standard versus rich media display ads are likely far higher than we thought. Thus, advertisers who were previously forgoing rich media in favor of massive, inexpensive traditional standard display buys, might want to reconsider their spending focus.