Ideas to Income BLOG

A look at the business end of Web 2.0: on the ground at AdTech San Francisco

I just flew back from AdTech San Francisco and boy are my arms tired... seriously. I almost hit the overweight baggage charge for all the collateral I brought back. Anyone who's been to this event can attest to the crazy high school science fair-like atmosphere on the exhibitor floor as hundreds of online companies vie for attention from clients, media and investors. Close to 9,000 people were registered, coming in from all over the globe, making it one of the most important shows on the interactive circuit.

It's been a few years since I've attended this show. In some ways it felt like the go-go (pre-bubble) days all over again. In other ways it didn't. Here are some of the themes that stuck out as I talked to an assortment of media moguls, industry pundits and booth barkers over a few days and nights at AdTech.

Online Advertising: More important than ever
It's ad-supported business models that are powering much of the online innovation we're seeing across a spectrum of players, from Toronto-based b5 media, all the way to the big players such as Google. How ads get created, bought, sold and served to consumers is big business. And I'm astounded by the industry's innovations to make the advertising business more efficiently deliver more ROI to advertisers and [inventory] yield to publishers. Particularly notable is the size and complexity of the industry, fueled by the proliferation of technologies as well as variations on business models. I'm reminded of a rather poignant comment made by Malcolm Forbes only a few months ago about his online publishing property, Forbes.com. In an obvious reference to rich media and video technologies that are allowing him to create a new viewer experience that mimics many of the properties of television, Forbes commented, I'm a broadcaster without a license. Video will undoubtedly shape the way we consume and monetize content on the web. Witness the recent move to ads inserted in YouTube videos. Nuff said. Social Networking: Three major camps scramble to stay relevant and differentiated

In just a few short years, social networking has fundamentally redefined media - how it gets created, consumed and monetized. The latest research is showing around 50% of teens in America using social networking sites every day. We have officially entered the era of personal publishing. According to one of the panels, "62 per cent of media consumed by high school kids is produced by someone they know." With these kinds of numbers being thrown out, it's no wonder that the sessions and the crowded tradeshow floor were buzzing about the three major camps at AdTech:
1. the technology/services companies looking to disrupt the current mass media models;
2. big brands looking to stay relevant in the emerging media channels; and
3. the agencies who are scrambling to stay on top of their clients needs amidst a sea of new technologies and user-generated content.


Media Measurement Methods: Still evolving
It's obvious that no one has cracked the code on how to accurately measure online behaviour. One particular interesting trend is tracking word of mouth (WOM) performance of their brands via blogs through new sets of metrics. For instance, online dialogue is measured for the percentage of customers identified as 'promoters' versus 'detractors.' This goes deeper in defining real customer engagement when you consider not just the mentions but the level of comments on a blog post and over what period of time. As people talk about a brand or topic, they become more involved which shows a deeper psychological commitment than passively experiencing ads - something that many brands are searching for these days especially with the sub-26 year old IM generation.

The Hottest Thing This Year: Advertising exchanges
Next to the obvious buzz around the burgeoning market of social networking sites like Facebook, the concept of bringing web publishers and advertising buyers closer together is the big focus this year. This is the year of the 'ad exchange' an online site where publishers, agencies, ad networks and advertisers can participate in an auction-based market and bid for ad space.
DoubleClick (a happy Riverdale client) announced its Advertising Exchange product at AdTech, touting it as a mix of eBay and Sabre (the airline reservations system used by travel agents). This service lets advertisers see what competitors bid for particular ads, in the same way that eBay shows visitors past bids. And it ensures publishers sell their ad spots at the highest possible price, the way that airlines try to do with their seats. It's evident that this exchange is a major coup for DoubleClick as it prepares to link its huge installed base of large publishers and buyers together.
The potential growth of exchanges was certainly a factor in the recent move by Google to acquire DoubleClick for $3.1 Billion. This, by the way, sets a new high for Google's M&A team. Another ad auction marketplace, Right Media, was bought by Yahoo for $680 million earlier this week. A major driving force behind all this activity goes beyond the inefficiency of the current market setup and the lack of transparency that ad networks have created. Think about the opportunities that now abound for advertisers to more efficiently tap into non-premium ad inventory - much of it created through an ever-expanding long-tail world of social media sites.

The Next Big Thing: Look to the East
While some of the hottest new media startups have come out of American VC-backed companies, many of the people I talked to, including some of the big AdTech speakers, pointed to international markets as the place to watch for the next big thing. Europe and Asia are being watched closely by all players, particularly in the mobile industry, given the carrier infrastructure and consumer habits that are fueling growth in these markets. Canadian entrepreneurs attempting technology start-ups focused on courting North American mobile carriers: ignore this at your peril! Global marketing was a major topic at a number of the sessions particularly regarding the proliferation of social networks around the world. And a huge number of AdTech attendees were not from North America, attracted to the conference as the web continues to scale in key markets, powered by a surge in mobile technologies. This is the next big market and where we'll find the innovative companies responding to this dramatic force.

Add comment 2007-05-04 Peter Evans


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