I recently read this:

http://tech.fortune.cnn.com/2011/09/15/aol-yahoo-microsoft-online-ads/

and actually the whole efficient ad marketplace has been slowly moving in this way with groups of publishers in certain markets like France gathering together to create a virtual closed marketplace. Its been active for some time it’s just now that the larger publishers have decided to band together to control the ecosystem of efficient automated ad buying and its (in the publisher eyes) inefficient pricing mechanics.

AppNexus is the most likely choice of DSP/ad exchange aggregator as it is the most agnostic in the marketplace even if heavily invested by Microsoft.

The concept of unsold inventory massed together into a closed marketplace and to have each other sell the other’s inventory is in theory efficient for a publishing business that can only see it revenues dip if its large user base are not worthy data points so this banding together suggests a deep ingrain fear of the understanding of each publisher’s inventory worth. It’s not surprising as often these large publishers have so much data they can’t efficiently manage the true insight data.

I differ in opinion that this is a desperate move – it’s a strategic move but one which comes far too late. The marketplace is now bought into the concept of efficient ad trading and the buying not of named publisher inventory but instead of audiences. So; the slick trading desks and the savvy DSPs are not really going to see this move as sensible at all.

If anything the move looks counter-productive given that all three have investments in this type of technology or dataplay. All three companies have challenges when it comes to buying technology and then integrating it into their own eco-system. It also means their own salesforce will have to become much savvier in how they sell their inventory and again; it comes down to how much of their inventory they want to sell versus the need to hold back inventory in order not to plunge eCPM levels.

After all no one publisher from the three wants the laws of diminishing returns; it most cases these three publishers will still want to manage a minimum bid price for their inventory which means it’s not a true dynamic closed marketplace.

I think the horse bolted before the barn door was shut…..  I have a soft spot for Yahoo; I worked there through Rightmedia  and I had my first email account with them at 18 but in Asia – this does not count for much as Gmail penetration in India is killing off its largest long-term indian rival; Facebook penetration and take up in Indonesia and Vietnam is indicative that the new generation will have a new relationship with these publishers and sadly the long and well established publishers are slowly losing market share.

All these changes in ad buying are great for the user as the value of their eyeballs are now more directly measured against their ROI against the ads they are seeing and relevancy kicks in to encourage better clicks, conversions and overall a better user experience for all. Engagement is the new King.

I am still in belief that the online ad market will grow in value especially in Asia and so every large publisher should see ad revenue grow not decline; the publisher just has to ensure that they make use of the data that each user brings in order to monetise efficiently against each user and that’s where the smaller niche publishers should see a very different playground to the one they see now.

Google’s main business is search and its arena of activity was namely through the pc or laptop.  Hardware has in fact changed the way we interact with the web and now its on the move through various devices; ipad, the iphone or other smartphones.

The challenge with such hardware is fragmentation of hardware and operating systems. This means that having uniform applications are no longer applicable much like they were with the pc (unless of course you are a mac user).

Mobile Internet usage has surged in Asia namely because of Japan initially but now as the emerging asian countries start endorsing the web, the infrastructure and indeed the monetisation it could bring; the interaction of the web and the growth of new online countries means the growth is in Asia.  Some Asians will not be able to afford the pc or laptop and will settle for connectivity to the web through their mobile.

Google is merely preserving its dominance in search and its existence by ensuring that the new age of internet users have Google at the forefront of their mind when logging onto the web.  Google has also built many functions that will try to navigate the user back to Google through maps, Google daily deals etc.

Google does not need or in my opinion want to get into the hardware mobile business but this was a strategic move to press ahead with Motorola patents that assist in the user journey and also given the price differential between Apple iphones and android based phones – why would it not be smart for Google to have control of the price elasticity of the smart phone market and sell Motorola android based phones at a distinct price variance to Apple? and thereby control a greater share of the market.

I think this strategy would make perfect sense in Asia especially since price sensitivity would be fairly high in this region as markets here are just emerging and economies are moving to the new dawn of prosperity.

Let’s say if Google brought down the price of smartphones to 50 USD against Apple’s 200 USD then its safe to assume that at a price elasticity of 4x the multiple of the Google smartphone – that it would cause an effect in the marketplace. Of course I have only looked at price here – the largest component of buying an iphone is desire. Desire is ingrained in our being and not something that can be manipulated by price – but it can if the masses cannot afford it and look for the a version that is affordable.

With Google giving back a better revshare model back to its app creators and Google itself developing such useful apps like Google Earth, GMaps its likely that the differentiators may only in the future exist through the hardware not through the app market.

The smart phone users are getting smart…. we’re not necessarily convinced that a convergent phone is actually a better phone – unfortunately the call quality, the battery life are affecting the core feature of the hardware….it being a phone. I know my largest battle with the iphone is not the aesthetics or the apps but actually the amount of time I have left on charge to make a call. Also the fact that you cannot buy another backup battery which is something I usually have with me is challenging with an iphone. Sure you have various iphone devices that you can attach that make the iphone look as long as a UK telephone box, but they are not the same as having a spare battery.

One of the interesting things about Motorola and Google buy was that Motorola does not have a large presence in Asia; in fact Motorola is more dominant in USA and some countries in Europe. So the excitement of this deal I believe will be felt in Asia – Google with Motorola should make an interesting play in Asia with the other larger smart phone hardware providers here being HTC and Samsung.

So if new internet users are coming from emerging markets; mostly Asia than its fair to say that Google will want to ensure its status in search remains in prime position; and if these users are interacting with the web through their smart phones then its makes full sense this is not just about litigation or patents alone.

It’s a smart move and  this is why Google dominates because it has the vision to do so. It also makes perfect sense when Microsoft is working through Nokia that Google would look to buy a mobile hardware company. After all, sad to see it so but the web world looks set for dominance by three players;  Microsoft, Google and Apple.

RightMedia was a spot market for advertising; a clever piece of revolutionary technology that allowed anyone from any country to buy and sell inventory in an automated fashion, through one common platform. It was the tipping point…..

Programmatic buying is a glam word for exchange buying the real change has been in the ability to process information much more quicker. This is where cloud computing came to the rally and where companies like AppNexus built its technology and processing on.  Efficiencies within media buying and selling has largely come about through cloud computing the data processing element which is fuelling the growth of RTB.  RTB is complex, a mine-field of decision tree mapping and can’t at this moment in time utilise 100% of inventory through RTB – the amount of processing of every piece of intricate black box attribute is impossible for 100% of inventory in real-time.

It will be when all ad exchanges are RTB enabled and each DSP is capable of that processing power so programmatic buying in theory is the utopia but when inventory is not being traded 100% through DSP’s then programmatic buying has inefficiencies. It’s not an absolute but it’s so close.

I’m working with some large publishers and ad networks that are moving into this arena in Asia and one of the problems I encountered in the early days of RightMedia was how do you explain simplicity when the audience thinks that the platform is a magic pill and complex? The simple answer is you have to go back to the drawing board and explain the intricacies within media buying and that as great as programmatic buying is; it’s still needs managed hands. In other words it’s not 100% automated; the best DSP’s out there actually have huge managed service teams; because as amazing as mathematical probability is in deducing a predictive outcome on whether someone is likely to click or convert – the one big difference is statistical significance; that can take hours, days or weeks depending on budget and other factors.

The human can see in some cases faster than the automation of programmatic buying because the algorithmic decisoning that is working in the background has to go through qualified levels of variables before it assesses whether it should buy or not buy an impression. Imagine doing that for every single impression.

Asia is leap frogging from traditional media buying towards programmatic ad buying by the emergence of DSPs in the marketplace. You have Julian’s Brandscreen setting up office in Singapore outside of its AU HQ, Adgile growing from HK and USA and now ADZ which has just recently appointed Eduardo Saverin from Facebook fame to join its board and lead one of its investing rounds.

I’d also expect some large publishers to start selling media through these asian DSPs – just imagine the Indonesian market is over 250M people almost 70% of the US population, that is just one market. Asia is going to be huge.  However, not all markets are equal in Asia and the Australian market is disruptive and publishers are not embracing programmatic buying.  With good reasons….. they will see revenue plunge initially. Fairfax is indicating that it will not make any of its inventory through these platforms. Publishers if in agreement could in theory alienate such platforms if they continue to resist and are large enough to oligpolically force change. Its unlikely in the long-term as the push is coming from advertisers. If advertisers continue to bulldoze through programmatic buying then publishers have no residual power left to command a revolt. When you mix this in line with our economic instability you can glare that advertisers will win in the long run.

It also is evident that the growth of asian silicon alley is booming also; quite a few VC’s are swirling around and the Asian Governments like Singapore are handing out some very lucrative tax advantages in investing in home-grown businesses. This is further fuelling the growth of digital technology.

Its certainly exciting to be in Asia right now….

I’ve been researching this for some time and have been discussing this with a colleague in the UK who is one of the most nanotechnologist nuts of them all and the best way to explain 3d printing is to show you…. this is a great video on ZCorp and the future is really going to be interesting and potentially challenging for copycat China – you will see what I mean when you watch the video….

Why this is a disruptive force is because the cost of this printer will in time shift and be an affordable must have for personal use….. the digital age is changing not only media but the manufacturing industry….

I had to share this with all. I’ve been told from folks in China that this is already being made a reality so let’s see how disruptive this force becomes in the next 5 years.

NFC, or near-field communications, is a way for two devices to communicate small amounts of data when they’re placed about three-four inches apart – almost virtual payment where neither party needs use any other form of payment.

The London tube has been using it for years, and also HK and Singapore underground. It’s mostly seen as the next evolution stage of wireless payments transfers. The future gateway is a vision where your mobile phone will become the only thing you need to carry as it will become your tool to seamlessly pay for goods/services like transport; foods and restaurant bills.

Imagine this coupled with your budget app which can then add onto your bank account and predict your real liquidity at any time of day. Wow!

It’s all going through the motions and the recent below article on Sequent raising funding for NFC payments has got NFC back into the spotlight:

http://techcrunch.com/2011/05/10/sequent-software-raises-funding-aims-to-simplify-nfc-mobile-payments

Google is adding its presence to the NFC forum and weighing in on its future especially with its new android operating system.

The US big 3 telecoms partners are also producing the ISIS platform to become a new way to pay through retail, f&b and travel.

For those in the know it’s a x2 RFID tag where it communicates both ways. The first time I remember reading about RFID was for farming preservation. These are the types of tags placed on livestock on a farm.  Don’t ask me why I was bored at the doctor’s office reading a magazine on subsistence farming!

It seems that NFC has many challenges but given that Apple, Google et al are racing to be the first – it will be coming soon near you.

Many hype about this but think of the possibilities – you get foursquare delivering you integrated marketing offers – you go in to take advantage and you don’t even need your wallet. I may call it daylight robbery or entrapment where temptation hits you for your favourite handbag is on sale whilst you walk past a shop…. hhm…

However NFC has limitations including speed and London is especially aware of this:

http://www.theregister.co.uk/2010/12/23/oyster_london_nfc/

We tend to live in a world where we want on demand services at the speed of light….so NFC has some way to go to ensure delivery of that.

Maybe Jack Dorsey’s Square company should not fear just yet – NFC has a lot to live up to.

They are all cowering over the sea-changes from technology and from the adoption of hardware by users; that are rapidly changing the existing eco-system.

It’s certainly a change for the better down the line to users but  as always in technology there are always casualties.

Digital convergence is changing performance attribution and as content cross-populates through various devices and mediums so does the adoption uptake with users.

Let’s take the example of newspapers – they have a shelf life offline (until you throw away the paper; most likely) and then the same content can be kept alive forever through web presence (the newspaper online website). This article may for some reason be appended to a twitter post and the content can live on through digital convergence.  In this case its a little clearer to see attribution but what happens when there is a large campaign for an advertiser who uses multiple  data sources to identify a potential audience. How do you verify what actually led to the ultimate conversion?

The last click to conversion or first click to conversion in the conversion path is flawed on some levels but when you have so many convergences digitally – how do we truly attribute conversion success? Well; there is no real answer here – lots of  debate but no real answer. We ultimately need new tracking metrics in order to understand conversion and its attribution to the right cause and effect.

TV Ratings to me has been a bug-bear one because it’s not wholly accurate but two because often great tv programmes have been axed because apparently they did not get enough rating points to deliver the key advertising revenues per show.

We have digitally evolved now to have cable boxes, freeview boxes (for those in the UK) and also DVR (or  Tivo for the States) and the latter actually allows you to scrub (ad skipping) through advertising and just simply watch the content you prefer.  How does tv ratings adopt to that new technology? How are advertisers going to receive their ROI based on such technology evading their customer base?

Some will consider IPTV interaction; others will diverse advertising revenue into online advertising.

Gaming seems to interesting especially in Asia where Gamers are more likely to enter gaming communities and Gaming companies are trying to making the Games more interactive with advertising and mobile, IPTV and the web.

Advertising is changing at such a rapid pace that those in the industry have to take notice and almost adopt the change as it occurs in order to understand, facilitate their business to the new world digital convergence order.

It’s surprising that those in USA and Europe are still only starting to move towards HTML5 – Asia is leap-frogging to the new technologies more rapidly; a major reason is the growth of broadband; the affluence of Asia and the adoption of different hardware platforms.

Its going to be interesting when e-commerce in Asia gets truly mobile; with the likes of group buying and hopefully Square mobile payment sitting on top of iphones. Next is the glorious impact of NFC……

That’s when advertising meets minority report :

I’m going to focus on Yellow Pages. In the UK; its a directory and website for local users but most people tend not to use the big Yellow book anymore for information search.  Enter in the discovery of the WWW by Sir Tim Berners-Lee; yes a Brit discovered it whilst at that not-so-secret placed called Cern; anyway with the internet at the touch of a button we are used to up to the minute information that is SEM and SEO friendly and out goes the big yellow book.

So what does Yellow Pages do now? Its in the same position as the newspapers where it has to actually innovate to stay in the game. Today is an age where success alone and the recipe from yester-year cannot last forever; you have to innovate just that much to make your place in the commercial world.

Yellow Pages re-brands and is now the ‘ Local Search Association’ – smart it brings community and search together in a meaningful way.

Meet the “Local Search Association,” the new branded image of the YPA.

‘Embracing local search and mobile technologies to an entirely new degree, the YPA is lifting the curtain on its new visual identity in order to “reflect the industry’s transition from print publisher to a provider of local search services to small businesses and their consumers.”

According to the organization, while better than 60% of US adults still use the printed version of the Yellow Pages directories, the Internet and, in particular, the mobile web are drastically cutting into that percentage. As a result, the YPA thinks the time has come for a re-focusing of sorts that presents the Yellow Pages as a readily available online local search tool.’

Taken from:

http://www.mobilemarketingwatch.com/yellow-pages-go-mobile-as-ypa-officially-becomes-the-local-search-association-14779

They are not the only ones we have seen a host of smaller companies and start-ups now becoming more localised and concentrating on the community effect – its all about raising the eCPM for the SME business – which cumulatively is a large niche market.

Asia is already pouncing with a wealth of startups that are adding their small level of innovation into the mobile; ad-network or SEM business to localise and start serving the community business aspect and its slowly evolving and looks to help innovate the market further.

It would be interesting to see how soon the APAC VC market ripens; for now its just starting to look really really interesting.

Its getting hot in here…no not the Nelly song but the feeling of mobile ad domination in APAC.

Admob through Google published the below:

http://googlemobileads.blogspot.com/2011/01/where-are-2-billion-daily-requests-in.html

and it’s not only very valid but indicates that:

Three countries – India (26%), South Korea (13%) and Japan (12%) – accounted for just more than half of ad requests from Asia in December 2010. Five countries in Asia – South Korea, Japan, China, Singapore and Thailand – had growth rates of more than 1000% in 2010.

Of course this information is purely from their own network of inventory but given that Admob is the largest player in the space I’d say its a more than fair indicator of what is transpiring. We all know 2011 will be the year of mobile explosion in advertising; its been predicted time and time again but what is interesting is that the Advertisers are pushing the agencies to ensure that mobile is part of their ad campaign.

Sitting from Singapore I’ve had numerous conversations on what that exactly means; is it merely to show that mobile is a tick box where advertisers can say yes we’ve included it in the media plan to their CMO or is it being recognised in Asia as a much needed medium of targeting.

Well its a practice combination of both at the moment but what is interesting is to see if from the point of the country I reside in. Residents in Singapore are more and more engaged with their hardware outside of the home; from carrying ipads onto buses to checking latest football scores from the EPL on their phones. Being born and bred British I know for a fact that its very unlikely to see iPad owners out with their ipads from fear of theft but here in Asia its safe (or at least in Singapore) and seen as an image builder to have the latest gadgets.

So Singapore is seeing advertising budgets being cannabalised and split across different types of advertising mediums although mobile adoption is relatively low among advertisers in APAC generally its being addressed by mobile companies moving out to APAC namely Singapore to set up their APAC HQ’s. Just recently 2 have moved out here with another larger mobile company interviewing for talent. These are large companies with VC funding in their millions so it’s not hard to see the knock on effect in the next few years.

The level of interaction here between mobile users and ads is also very interesting; especially in areas of entertainment. So movies, games and events have very high CTR and with more and more campaigns becoming interactive and creative; the level of engagement will only increase.

OutThere media just recently announced their global marketplace model across Asia and Europe which brings together the mobile carriers and advertisers under a common platform; much like RightMedia did with display advertising. It reaches over 500M subscribers across Europe and Asia and is poised to push the mobile market even further by making advertising more relevant through its marketplace model.

Even Australians seem to be happy to see mobile advertising on their handsets; in research conducted between Inmobi and Comscore approx 75% were comfortable with such advertising:

http://www.warc.com/LatestNews/News/Australians_open_to_mobile_ads.news?ID=27874

Interestingly electronics and entertainment was also top category choices for these Australians who were interviewed.

It’s clear to see with marketplace tools across mobile, display and search. Advertising is going to become more relevant, more engaging and more targeted to user habits but it’s also going to compete for engagement across all the other types of advertising to hit the golden ROI; all advertisers seek. Its going to end up as one big marketplace where trades are made based on the single most important factor of all; ROI.

Okay so 2010 has been the year of ad buying power where ad buying has undergone intense creativity with technology pushing towards real-time bidding. DSPs, SSPS and Data enablers have all crept into the limelight but where does that leave the publisher? Kind of like a victim around a few large muggers….!

Publishers have felt the barrage of change in 2010 but that change has not even fully evolved yet. 2011 I believe will be a tipping point for the publisher.

Does the publisher succumb to the DSPs and utilise them or does it shut itself off from real-time bidding and push for its sovereignty. It all depends on the clout each publisher has in the industry and of course whether it can maintain that clout.

What’s making the eco-system interesting is at the height of all these changes on the buy side we’re also seeing similar changes on the supply side.

Take for example social media and its growth. Not only has the leader of the pack; Facebook seen massive growth around the world; its seem ridiculous growth in APAC.  Clearly; the world is becoming smaller as we all connect onto one platform and abandon the small social websites that once were Kings (e.g. Friendster).

This growth in social media is so alarming that its ensuring its competitors; Portals and content aggregator sites are losing ad dollar share and market share.

As users, we are spending longer time on social media sites and in doing so creating hundreds of ad units for Facebook which is leading to so much ad inventory that it has to make an impact on large publishers to a degree.

I’ve used this example many times but let me reiterate it again:

Consider your daily internet usage. Let’s use mine. I get to work log on to www.yahoo.co.uk, then www.telegraph.co.uk for news then perhaps some more Yahoo Singapore and add in a peppering of Twitter, Facebook and some TechCrunch and the odd search term.

I am the same user that went to all of these different websites and if some of these websites are selling their excess inventory onto the ad exchange and then DSPs – it means that an advertiser can at differing points of my journey purchase me at different price points.!

So on Yahoo I might be worth $4CPM, on twitter I may be valued by the exchange as .50 cents and on FB perhaps .25 cents. Technically you can buy my view or eyeballs for that specific ad buy on RTB at the cheap price of .25 cents.

Why then would the advertiser want to still pay $4CPM for the same person?

Well its a little more complicated than the above scenario because as you know with ad exchanges like RMX et al your impression is calculated based on its activity and its propensity to click or convert so it’s decisioning and prediction modelling kicks in to justify that a cheap impression coming from a user who is also accessing premium websites may not be hitting an advertisers ROI goals.

That’s easier to explain in my interaction with each website:

1. On Yahoo I may click on ads as I use this as a portal/aggregation of news, interests and email.

2. Twitter I go in to post a url and comment and come straight out.

3 On FB I interact longer (rarely, as I don’t have time) but never click on anything on the right hand side (where the ads are) because I’m interested in spending time catching up with family or friends.

So the predictions/learning models within ad exchanges/DSPs have an ability to capture this type of association and then value the eCPM of those impressions; but that and history building takes time so there is a chance that I can still be purchased cheaper than paying $4CPM on premium site.

So coming back to my original point; publishers will see major disruption in ad dollars as DSPs come to the fold in 2011 but they can still hold out and push back on entering RTB.

Is that wise?

RTB is still a utopia as no one single exchange or DSP can serve 100% of its inventory in real-time bidding. The only one I know is RMX but that is with approximately an hour or so delay from actual real-time bidding. So when it does arrive, will publishers be pushed down this road?

In my opinion; Yes you can’t stop it.

Publishers tried hard not to  work with ad exchanges (well 80% is usually unsold! so its a no brainer they eventually did) but reluctantly had no choice and utilised them in order to avoid sales channel conflict. Publisher power is diluting because the large social media website Facebook is taking such a foothold of market share that reach numbers are fading with the major publishers and actual time spent on publisher sites is declining across the board.

Hopefully crowd sourcing can save the day and content creation from the crowd can help offset the greater decline; its unlikely.

Publishers will dilute their power but they will have to add creativity and differentiation in order to hold onto the ad dollars. It will surely be a 2011 year of discontent where the onus is on each publisher to work harder and show advertisers why they should choose them. In an age where users are loyal only to themselves and their hardware; publishers will have to come up with some compelling sticky content to keep the ad dollars coming in.

What is more likely to happen is that publishers are fearing the dawn of the Data Enablers (some call them DMPs – data management platforms) because most publishers have been sitting on their own data for some time and not thinking about its core value. In an age where data segments are now trading between advertising value chain players – they should be in fear because a publishers own data is extremely valuable – only when used. Publishers still will only be able to manage their own data… or do Publishers actually think outside of the box and start paddling the ad exchanges to become a large data aggregator/ or audience extender themselves?

Now that would be a sweet spot for the smart large publishers – to see the fear of the mid-sized publishers and to round them up and start buying/selling and data trading amongst them while at the same time with the ad exchanges. This way those ad dollars will still roll in and maybe just maybe the large publishers will still have a strong enough publishing power….