AdBrite's PPC Model Eliminates "Premium" Inventory

Sharvanboskirk [Posted by Shar VanBoskirk]

Just before the Christmas holiday, I spoke to Iggy Fanlo, CEO of AdBrite -- an ad network specializing in helping advertisers access niche content.  A few constant signatures of AdBrite:

1) It aggregates volumes of niche and user-generated content.  It has 114 million impressions daily across thousands of sites including some branded publishers (Boston.com, ellegirl.com, eBay) as well as a lot of blogs, images, trade pubs.
2) It functions as a marketplace.  Advertisers set a bid for the type of impression they want, AdBrite finds the highest yielding ad that matches the parameters of an advertiser's bid and charges the advertiser one penny more than the highest current bid.
3) Advertisers have transparency into where their ads run.  Advertisers can either select certain publishers at the time of the buy, or they can set up their buy and then de-select any publishers whom they don't want to advertise with.
4) It is self service.  Any advertiser, regardless of size can set up a buy through adbrite.com

On top of these fundamentals, AdBrite is trialing a new pay-for-performance option where advertisers pay only when their ad generates a desired return (clicks, sales, conversions).  PPC is not new, so I suppose you are asking what is different about AdBrite's new model.  Well, think about paying for performance that is optimized algorithmically and rolls all targeting factors (like demographics, context, behavior) into a single effor to optimize click through.  The short take away here is that with this approach, you stop worrying about what magic combination of targeting will generate the greatest response, and you let the algorithm find that combination for you.

In my mind this does two primary things for advertising: 1) It normalizes all inventory against one factor: performance.  Today, "premium" publishers charge rate card prices based on the reach and composition of their audience.  But what if that audience doesn't actually convert as well as audiences on a less premier site?  Then premium inventory is actually not worth its asking price; 2) It introduces competition for Google AdSense.  AdBrite's system does the same thing AdSense has been doing for years. Now advertisers have some flexibility: more places to try to convert their audience, more ad formats, and access to PPC on larger sites than typical AdSense publishers; 3) Lastly I think this hastens the need for publishers to become audience-aggregators, not content creators.  Sites that serve advertisers highly converting audiences will end up being more successful than those winning the Pulitzer.

Comments

re: AdBrite's PPC Model Eliminates "Premium" Inventory

Shar,Nice summary on AdBrite. I like them. As Ted McConnell, GM-interactive marketing and innovation at Procter & Gamble, recently said: "The divergence of fortune for pay-per-click and other performance-based models vs. CPM-based models will only intensify as the economy worsens. ‘Spray and pray' is a little harder to do when you're under economic pressure. "It prompts me to share 10 trends we're seeing as we look head the next few years:1. Media are commodities, but media companies often fail to acknowledge.2. Defenders of “premium” inventory losing because nobody can define it.3. Remnant is the new premium, because optimized remnant delivers. (There's no such thing as a remnant customer.)4. CPMs continue to plummet amidst migration to performance.5. Media supply led demand, but now demand leads supply.6. Advertisers garnering power to dial up or down.7. Advertisers moving from optimizing clicks to optimizing profit.8. In deteriorating economies, tolerance for discovery and latent ROI decline.9. This is all happening fast, and economic volatility accelerates it.10. Fundamentals, purpose and trust matter more than ever.

re: AdBrite's PPC Model Eliminates "Premium" Inventory

Shar,I forget to mention above...there's one fundamental friction point for AdBrite: it's yet another interface and unique system that advertisers have to learn. That is the biggest point of friction that plagues virtually any media inventory company whose name is not Google. Everyone trusts and knows how to be successful with Google AdWords interface, a few with Yahoo Panama, and very few with Microsoft AdCenter -- and then there's the 300+ other networks. The fact is that it doesn't really matter how good any given media inventory is if the process of buying and succeeding is foreign and painful -- it really is all about user experience. Moreover, the notion of using tools provided by the media owners and auction hosts could fade -- there's just a lot of conflict of interest that advertisers question as they get more sophisticated. Success and meritocracy of ad networks will depend on results and transparency on their side, but also their willingness to work with third-party advertising management solutions which are making great strides in creating simplified, powerful experiences for marketers.Disclosures: I'm with Clickable, an advertising management solution for small and midsize businesses. Our management team is friendly with founders of AdBrite. We've created a scalable API for premium ad networks to gain exposure to our growing base of advertisers managing their investments on our solution. Our ad-network partners today include Google, Yahoo and Microsoft -- with more to come this year.Regards.

re: AdBrite's PPC Model Eliminates "Premium" Inventory

As an experienced web designer and search engine optimization analyst I prefer PAY PER PERFOMANCE compared to PAY PER CLICK.Many novice small online businesses have to go under a long learning curve to understand the semantics behind search engine analytics and algorithms before they can make or turn a profit.Pay per performance will increase their chances of profitability and return on investment.Thanks Shar for this article, it was amazing!Best regards,Mr.Daniel ChegePOPPA PRODUCTIONS WEB DESIGNS .

re: AdBrite's PPC Model Eliminates "Premium" Inventory

As a Forrester analyst that works with publishers, I hear a lot of concern from premium branded publishers about exactly this issue. Publishers struggle to establish the value of their “brand” for advertisers online—why should advertisers pay more to be associated with a premium content site when they can pay less for ads that “perform”?The problem is, as one of my clients put it, “Advertisers are becoming increasingly rational about irrational things.” What does it mean for an ad to “perform”? Isn’t it rational to assume that an ad can still influence someone even if they don’t click or convert or otherwise demonstrate immediate performance? Of course, but that type of indirect influence is more difficult to measure. And advertisers want to buy what they can measure: According to IAB/PricewaterhouseCoopers data, performance-based pricing accounted for 51% of online ad buys in 2007, up from 47% in 2006. As ad networks like AdBrite make it easier to place performance-based ad buys at scale, this trend will continue. And as you note, Shar, this will further erode the value of premium sites, as their inventory is worth only as much as their audience’s behavior is worth to advertisers.But I think ad networks and performance-based pricing are only half the story. A counter-trend will be that indirect influence—brand awareness—will become easier to measure. Tools for measuring brand awareness, like Dynamic Logic, are fast becoming an industry standard. Biometrics—not just eye tracking but also tools that measure skin arousal, heart and respiratory rate, and motion—from vendors like Innerscope Research and NeuroFocus are also gaining traction with publishers like Google as a way to gauge audience engagement with online ads.At the end of the day, advertisers will buy whatever they can prove works. I think we’ll increasingly see two types of online ad buys: 1) the majority will be automated, low-value, pay-for-performance buys through ad networks and ad exchanges, but there will also be budget reserved for 2) high-value, one-off campaigns focused on driving MEASURABLE brand awareness, sold by human salesforces. So publishers, don’t lay off your ad salesforce yet.

re: AdBrite's PPC Model Eliminates "Premium" Inventory

It seems to me that Mr. Fanlo's ad exchange model is adequate but his company's issue is that the inventory remains low grade.As in the past, AdBrite hopes to scale their business by self-service, which means "the little guy," and I'm not quite sure how this will get them to new dimensions of scale and revenue opportunity beyond what they've already done.Sure, there's a ton of social network inventory out there which may feed AdBrite, but some social nets are starting to build and deliver their own PPC solutions. The Clickable guy kind of suggested, open APIs into these tools will help grow their business. AdBrite will surely add one at some point.But, what really differentiates them? Pay for performance? - many exchanges and networks can do that right now (yeah maybe not self serve but...). It's not a panacea.Good for AdBrite to weather the storm thus far. Yet, it appears that either a more powerful layer of targeting technology (contextual, behavioral, etc) or compelling advertisers and publishers will be needed to get them over the hump.