How can Publishers re-establish a commanding position within the digital advertising market? The role of performance marketing and personalization - key lessons from the Danish market AEDE - November 2010 Sections The Market Relevance drives Value - and why search is the key to Performance Advertising and Personalization The Publishers Challenges Responding to Publisher requirements - The OAX Service The Danish case Section The Market The Market Global Ad Spending: Advertising Money follows Eyeballs Ad Revenue per User = $46 in 2009E vs $28 in 2005E* *Morgan Stanley The Market Ad Spending in Europe: “Search” is the largest and fastest growing segment European online ad revenues ** In billion € (estimates) ** Source: Forrester research 2009 The Market Who will seize the opportunity? % of Time Spent in Media vs % of Advertising Spending* (2009 US) % 50 BUSD Global Opportunity *Morgan Stanley The Market Preliminary Observations The Market Environment Publishers are desperately seaking new revenue streams Ad spending is rapidly shifting from paper to online Search based advertising will dominate - relevance is the key competitive factor Search based ads already more than 50% of online ads of which 1/3 is contextual All publishers will need to tap into search based advertising if they want to secure the digital revenue stream Section Relevance Drives Value - and Search is the Key Search is Key What is Search? Explicit Search Car rental Explicit Search Ads: Ads being presented with results when using a search box Search is Key What is Search? Implicit search Implicit search: contextual display ad Implicit search: contextual text ad Ads being presented on regular sites based on automatic matching between: • article content and ads – contextual ads • user intents and ads – personalized ads Implicit search ads constitutes 1/3 of Google revenues The Challenges Publishers Preparing for Digital Business: Key Considerations Search based & performance advertising will dominate the digital advertising market in the foreseeable future Relevance is the key driver creating value and revenues in search based & performance advertising No single Publisher can benefit from networking effects and establish and control a competitive performance advertising network The war to control key digital advertising assets has since long started – the main competition is not between Publishers but vs new tech players (eg Google, Facebook, Apple) New competition within the traditional value chain – the role of Advertisers and Media Agencies is changing A fight for repositioning is going on Publishers must reconsider their organization, digital assets and products – concepts, user relations, user data and traffic becoming more important than content The learning curve is steep - the costs of getting on board will only get higher The Challenges When publishers consider their alternatives The publishers dilemma Users Advertiser Publishers Agency Google is a Black Box Currently only Google can help publishers tap into search based ad revenues, - but the price and strategic setting is unacceptable • No revenue control • No direct relationship with advertisers • No transparency or transfer of key knowledge • No control on role, strategy or level of engagement • Google is a B2C: Direct competition for users, traffic, user data, services and revenues Publishers locked in a subcontractor position with their main competitor The Challenges Preparing for Digital Ad Revenues The Dramatic Explosion of Ad Features - How to explore, test and develop the right offerings? Relevant Ad Placement • Display • Text • Video • Interactive • Manual • Tagging • Search based matching – contextual • Search based matching – personalization Business Model Format • Queries • Generic/News sites • Verticals/Classifieds • eCommerce • Gaming • Social Networks Channel Price Model • CPM • CPC • CPA • Fixed price • Auction • Revenue share Section Responding to Publisher Requirements - The OAX Service The OAX Service Executive Summary OAX – the short story OAX = + Google AdSense A Business Model made for Publishers A search based Trusted Third Party ad network for Publishers A pure B2B – neutral – independent – transparent – The OAX Service OAX value proposition for site owners Applying search technology to match ads, content and users End Users The OAX Service Building Key Competitive Advantage Yield Optimization Personalization Contextual Relevance & Performance: • Matching of ads with content • Performance = Google Adsense Formats: • Textual ads only Reach & Channels: • Web sites only Position: • 1st national publisher network in Europe with contextual advertising 2010 Relevance & Performance: • Disruptive personalized targeting based on multiple dimensions • Doubling of CTR New Formats: • Image ads • Video ads Reach & New Channels: • Tablets and Mobile Position: • 1st publisher network with search based and personalized targeting Relevance & Performance: • Real time yield optimization handling all digital ad inventory for publishers New Formats: • App ads Reach & New Channels: • IPTV Market position: • 1st Adexchange with personalization and yield optimization Time 2012 Building a unique and sustainable business position for Publishers Section The Danish Case The Case First national contextual ad network for Publishers in Europe Becoming market leader in the Danish market The OAX service was launched in DK in June 2009 A strong foothold in core segment: 85% of premium Danish content sites are members Gradual expansion into other Danish segment 10 mill PI/day The Case General Performance: OAX levels with Google Adsense re revenue generation for Publishers Effective Revenues (eCPM): OAX provides superior revenues in News Category* OAX provides superior revenues in Entertainment Category* OAX is still behind in Sports Category* * Based on directly comparable data of revenues generated by Google Adsense and OAX for leading Danish web site in June / July 2010 The Case General Performance: Danish OAX Key metrics improve The Case Product development Testing New Ad Products Image ads Product ads The Case Product development Testing New Ad Products Exclusive ads Intertext The Case Publishers lessons in Denmark: ”New” Insights The Key Considerations: Operative response from Danish Publishers All Publishers have included search based and performance Search based & performance advertising will dominate the digital advertising market in the foreseeable future advertising as part of their offering Relevance is the key driver creating value and revenues in search based & performance advertising Leading Publishers have started digital ad product development No single Publisher can benefit from networking effects and establish and control a competitive performance advertising network The Publishers have started a much closer cooperation, using OAX as a common advertising infrastructure The war to control key digital advertising assets has since long started – the main competition is not between Publishers but vs new tech players (eg Google, Facebook, Apple) Publishers have reduced/stopped short term gains (making business with Google), selected long term interests (staying in control of and building own assets) New competition within the traditional value chain – the The Publishers have started explore new business models role of Advertisers and Media Agencies is changing A based on a common infrastructure where they are in fight for repositioning is going on control Publishers must reconsider their digital assets and products – concepts, user relations, user data and traffic being more important than content Publishers are reconsidering their internal organisation and incentive schemes The learning curve is steep - the costs of getting on board will only get higher The Publishers have started on a learning process - which is surprisingly hard Thank You