Efficient Frontier Insights

Celebratory Cup Cakes at Efficient Frontier Innovation Summit – London

 
Last week, Efficient Frontier hosted its 2010 Innovation Summit in London.   It was a long anticipated event after the original event was postponed due to the Ash Cloud flight chaos.   The purpose of the event, which was attended by more than 70 clients and industry luminaries, was to engage with our UK clients in discussion on improving their digital marketing performance.

As the name of the event would imply, the theme of innovation was front and centre as speakers and delegates alike reflected on how the challenging economic times of the past few years has increased the pace of innovation in the digital marketing industry.
 
David Karnstedt, Efficient Frontier’s CEO kicked off proceedings by pointing out the large gap that still exists between online spend and consumption – some $50 billion per year -  representing  a significant opportunity. 

David was followed by Mark Howe, Country Sales Director, Google who presented Six Pervasive Trends in the Internet, covering timely themes such as Social, Local, Personal, Commerce, Mobile and Enterprise.
 
Our own European Client Services Director Jonathan Beeston then took the stage to moderate his Power Panel of brand advertisers. Special thanks goes to Mark Howe, Graham Donoghue, Managing Director of moneysupermarket.com, Nick Rudge, VP of Marketing at Holiday Cottages Group and Roland Mueller-Buchner Head of Marketing at TUI Germany for sharing their thoughts about the recent economic downturn, their experiences and what might be in store for the future of performance marketing.
 
After celebratory cup cakes marking Efficient Frontier London’s fourth birthday, Google’s product managers presented fascinating best practices on post click strategy for web conversions and wowed delegates with some seriously cool mobile innovation demonstrations, including voice search.
 
Efficient Frontier’s VP of Marketing and New Product Development, Justin Merickel was next up to present on the company’s progress in search innovation and expansion into new business areas. Stand-out innovations included product feeds for automating frequently performed campaign management tasks, as well as the ability to dynamically change numerical values in creatives without causing Google to consider the creative as new. The customised cross channel reporting templates were also a well discussed topic, as were the updates to the Efficient Frontier multi-channel algorithms.
 
One of the core themes to the day was Efficient Frontier’s move into the display exchange marketplace. After hearing from Laurent Cordier, Google’s EMEA Director for ad exchange and display partnerships, Justin talked about how Efficient Frontier has built the first integrated Search and Display management and optimisation platform by integrating with the largest ad exchanges, including Yahoo!’s Right Media and Google’s AdEx. He went on to cover real-time bidding capabilities and seamless reporting and attribution spanning search and display.
 
Signing off the day we were privileged to hear from special guest speaker Richard Eyre, Chairman of the IAB who presented his thoughts on innovation and change as the recession recedes.

If you would like a copy of any of the presentations from Efficient Frontier’s Client Innovation Summit, please get in contact via twitter @efrontier.

Merinda Peppard | Global Marketing Manager

Search & Display: Understanding Cross Channel Influence on Conversions

At Efficient Frontier, we recently updated our platform to include our first cross channel reporting capabilities inclusive of both search and display. The report gives marketers a quick view of all conversions on their website and insights into what advertising channels are driving those conversions. Additionally, our cross channel report shows how many of the attributed conversions were preceded by events from other paid channels.



Many advertisers continue to have display and search teams working separately and often use different tracking and optimization systems.  As a result, conversions with overlapping events (ex. a search click preceded by a display click) are typically double counted. That is, each channel (search and display) will independently take credit for such conversions. Lacking the visibility into how each advertising channel is influencing the other, advertisers over-estimate advertising efficacy and may over-pay for placements and terms. Let’s examine a site retargeting scenario to illustrate the challenge.

When you are retargeting visitors to the advertiser’s site you are inevitably reaching visitors that came to the site through paid search clicks. This means users who have come through paid search clicks and then viewed a retargeted display ad and then converted will be double counted if the advertiser is not using the same tracking systems across these channels or not using the right attribution model.

We typically see 30-40% of all conversions arriving from a display impression, or click, are preceded with a paid search click. This overlap is significant enough that marketers need to pay close attention to attribution. However, double counting conversions is just one problem. The other issue is that advertisers are not getting the proper visibility into how one advertising channel is influencing the other.

In our campaigns, we have seen that up to 10-15% of conversions that had a prior display impression had the last event as a paid search click. And when we looked further into the path to conversion data, it is interesting to see that many of these users see multiple banner ads and, within minutes of seeing the last banner ad, visited their favorite search engine and searched and clicked on a search ad prior to conversion. Clearly display influenced the search, although that ad will rarely be given credit. Looking at the issue in reverse,  we see that 20-30% of conversions that had a prior display impression or click had a paid search click prior to the display event. In essence, this 20-30% overlap consists of users that came to the advertiser’s site through a paid search click and then saw a re-targeted banner ad prior to converting.

What this data shows is that there is significant cross channel influence between search and display. The key for advertisers is to have both a centralized tracking system to ensure they can obtain cross channel insights and an optimization platform that can activate this data in display and search buying. Only with centralized tracking can different conversion attribution models be tested, making cross channel optimization possible.

The cross channel report is a new addition to our optimization platform. The vision for Efficient Frontier is to optimize media spend not just based on the direct conversions but also account for the indirect conversions. We deliver strong results by providing the right data, partnering on the right attribution model and optimizing across search and display campaigns.

Suman Basetty
Director, Product Management

More Reasons Why Biddable Display is Similar to Search

As Efficient Frontier continues to dig deeper into the world of biddable display advertising, we're finding a lot of similarities to search. I have just posted an article on this subject on AdExchanger. Feel free to read and tell us your thoughts.

Justin Merickel

A Question and Answer with Suman Basetty, Efficient Frontier's Director of Product Management

What is new in the display advertising world?

More and more non-premium inventory is being accessed through ad exchanges.
A big addition to the exchange supply is AdSense inventory now available through Google's Ad Exchange platform. Ad exchanges and publisher side yield managers are making inventory available through Real Time Bidding (RTB). With RTB, advertisers can decide which impressions they want to buy and at what price. Additionally, data exchanges are selling data independent of media, providing advertisers with information to better target their customers in non-premium inventory.

For several years, we talked about how search and display advertising complement each other. But advertisers did not have tools that track, report or optimize across channels. Cross-channel optimization is coming to fruition now that platforms like Efficient Frontier's are available. All of these changes in the industry have put more focus on performance based display advertising.

What do you mean by biddable display? Can you define it and explain how it's different?

Historically, display ad inventory was bought by advertisers that negotiating CPMs directly with ad network or publishers on a monthly basis as guaranteed buys. This was inefficient both for the advertisers as well as publishers. Advertisers ended up paying for much of the inventory that wasn't valuable to them and publishers didn't make as much as ad networks which took huge margins in between.

With ad exchanges, publishers can now add their inventory directly on the exchanges and advertisers can bid for this inventory. With the addition of RTB, advertisers can bid at an impression level much like search.

Can you explain how to best integrate a display campaign with a search campaign? What are the benefits of doing that?

There are three key areas of integrating a display campaign with a search campaign:

• Tracking: With integrated tracking across search and display advertisers can not only attribute conversions to the right channel but they can track the complete path to conversion across multiple channels.
• Reporting: Provides visibility into cross channel insights. Such reports will give marketers visibility into how search and display are complementing each other.
• Optimization and budget distribution: There are several common dimensions across search and display such as site/channel, time of day, day of week, geo targeting etc. that can be modeled and optimized based on the learnings from one channel to the other. In addition, if you have visibility into the complete path to conversion, you can optimize your display campaign’s bids not just based on the direct conversions but also based on how they are assisting search keywords conversions. Finally, you can distribute budgets across search campaigns and display campaigns based on the marginal costs per conversion. 

By using a cross channel optimization platform, advertisers get better visibility across display and search. And more importantly, they can make their campaigns efficient by integrating them.

What should the industry look for in 2010?

Advertisers will demand more transparency in display advertising and will work with platforms that can integrate both search and display. There will be more focus on performance based display advertising and an emphasis on mobile advertising.

Today, there are a lot of companies specializing in niche areas of the display advertising ecosystem such as dynamic creative optimization, real-time bidding or retargeting. Our prediction is that there will be consolidation and many of these companies will merge to provide complete offerings to the advertiser.

When Impressions Count: the Efficient Frontier of Display Advertising

While we applaud the recent MediaPost column about the next efficient frontier of display advertising, given our namesake and recent entry into the display market, it makes a few assumptions that deserve clarification.
 
Assumption 1: Transparency of Information

By way of background, the efficient frontier is the outcome of the Modern Portfolio Theory (MPT). This theory, developed by Harry Markowitz, assumes an efficient marketplace i.e. all investors have access to the same information at the same time. No marketplace is purely efficient but many come close. The U.S. stock market is one example and another is search marketing (although quality scores definitely do make it less efficient). The current display industry is a highly inefficient one. Most advertisers do not even know where all their ads are shown or have access to reporting tools to find them. Ad Exchanges promise to change all of this, with a public auctioning system to ensure both efficient pricing  and a complete tracking solution. In this case, the issue of ads being unknowingly shown on porn sites is moot. If your ad is being shown on a porn sight you will know this right away and will have an efficient mechanism to stop it.
 
Assumption 2: All advertisers have the same goals.

There are brand advertisers, advertisers who focus purely on ROI, aggregators, lead generators who rely on the strength of other brands etc. Their goals are different. A brand advertiser might not want her ad seen in an adult site but what about an adult dating service? The issue then is not that ads are seen in inappropriate sites but more that the ads are seen in websites that are inappropriate for the advertisers goals. However, in a scenario where the entire funnel is tracked, one can optimize to a goal (Example: revenue) or a blend of goals (example: Impressions+ Revenue).
 
The key here is that, the ad exchanges have to provide easy control to advertisers to manage their campaigns to specific goals. We expect this to be the trend, as exchanges such as Adx and RMX have begun providing API access to marketers.
 
Assumption 3: There are multiple frontiers and multiple markets.

Just like there are stock markets and commodity markets which operate on different exchanges, there are multiple markets in online advertising. There is a display market and a search market. Within the display market there is and will be a branding marketplace on premium sites like NYT and Yahoo! Finance and non-premium sites like weatherbug. It does not mean that you cannot apply portfolio theory. In fact, you have to apply portfolio theory in different markets just like we select stocks within the asset allocation model. For example, an advertiser may have to determine how to efficiently spend their advertising dollars between Yahoo! Finance and NYT just as one picks stocks among large cap U.S. companies.

One other piece that I think deserves further clarification is the issue of retargeting. The idea is that a consumer who visited your website would be more valuable then one who saw the ad for the first time. There is more to it. If you have the capacity to track the user on display, search, mobile and organic advertising then further optimization is possible. In this case, the efficient frontiers would combine to become one curve that would answer the question "What would be the best way to allocate all my online advertising dollars and what type of returns can I expect from it?". Tell me one CMO wouldn't like the answer to that question!
 
At Efficient Frontier, we believe that the success of this approach depends on several factors.

1. People know what they are doing: There will be advertisers who succeed with this approach and some who will fail. Its not because the approach is poor but because of their lack of expertise using it.
2. The availability of technology to adopt this approach: From the advertiser side, the portfolio approach is highly automation and technology intensive. To truly leverage the long tail, one needs to be able to dynamically change bids on the ad exchanges over thousands of sites based on ROI and other pre-conversion metrics. This places huge demands on technology. In search you have one knob to turn i.e. the bid for a keyword, in display you have 10 or more including the bid, the site, time of day, the number of times to retarget etc.
3. The ease of use provided by the ad exchanges: At present display exchanges are a dime a dozen. There will be maturation and consolidation in this space with the largest exchanges providing advertisers with the best controls for a more efficient marketplace winning out. In the end, the advertiser will win.

At Efficient Frontier, we have always held the belief that an efficient marketplace serves the best interests of both the buyer and the seller (call us Milton Friedman-ian!). Our beliefs have served us well and have made us the world's largest SEM company. We now look to apply this same portfolio theory to display despite its unique challenges.

We say, bring it on!

Dr. Siddharth Shah

Efficient Frontier for Display

This past weekend marked the official launch of Efficient Frontier's platform expansion into Display advertising. Over the past several months, we have been working hard to integrate with the leading display ad exchanges as well as building out the infrastructure to buy, deliver, track, and optimize display campaigns on behalf of our advertiser clients. We have been very pleased with the results of beta tests, and, in most cases, exceeded our incremental reach and performance expectations.

Is Efficient Frontier another DSP (Demand Side Platform)? 

While Efficient Frontier is certainly buying, aggregating, and valuing display impressions on ad exchanges, we think we are in a unique position to leverage our years of experience in predictive modeling and algorithmic optimization of Search. We can leverage the client specific Search performance and conversion data to inform their display buys. This will allow for increased audience definition, bidding, optimization and budget distribution within and across media channels.

Our recent release provides not only access to display campaign performance data in the same dashboard as SEM, but it also provides cross channel conversion attribution insights that can be used to influence optimization of both Search and Display. In subsequent releases, we will be integrating with additional inventory sources and third party data providers. Additionally, we will continue to enhance our reports and analytics to provide clients with the cross channel view that we all strive to achieve. Our core optimization algorithms will continue to be tuned as we learn more about audience behavior across Search and Display.

So rather than lumping us into the freshly coined DSP category, think of Efficient Frontier as a cross channel marketing optimization platform. And needless to say, we're excited about the future.

Andy Torgerson
VP Product Management

The Future of Biddable Media

Every day, Efficient Frontier's technology executes millions of bid changes on behalf of our clients. Dozens of servers contact dozens of other servers at Google, Yahoo, Microsoft and Baidu to adapt campaigns depending on changing market conditions and business goals. A constantly evolving set of APIs makes the communications efficient and seamless.

But for a moment, just imagine a world where this doesn't happen. Where there are no APIs, no automated setting of bids, and not even an interface to set those bids by hand. In fact, every bid needs to negotiated one-by-one, over the phone or in person. Sounds awful, doesn't it? Welcome to the world of online display advertising.
 
The banner is the grandfather of online advertising. It has spawned different sizes, formats, targeting over the years, but like many grandfathers, it still has an old-fashioned way of behaving: trading.

SEM has a dynamic ecosystem of biddable marketplaces that advertisers can value and buy media. Third party technology, such as Efficient Frontier, helps those advertisers evaluate market data to determine when and where to show their ads, and at what price. The time has come for this remarkable system of decision-making and trading to come to the display market.

For too long, display advertising has been hamstrung by an antiquated method of trading that delays decisions, creates inefficiencies and suppresses investment by advertisers. Ad exchanges, such as Doubleclick and Rightmedia, are creating marketplaces that will provide an efficient and dynamic environment for media owners and advertisers to do business.

All the trading benefits that we currently enjoy in SEM are being brought to display, for advertisers and publishers alike. At Efficient Frontier, we are rapidly immersing ourselves into this new world. As biddable market places become a bigger feature of the display world, we will be helping advertisers track, optimise and forecast - just as we do today in search. Performance marketing is about to get a lot more exciting.

Jonathan Beeston
Client Services Director, Europe