Conversation Targeting

How to refine your targeting without reducing your inventory

Tim Musgrove

Chief Scientist, Federated Media Publishing

©2012 Federated Media Publishing, Inc. All Rights Reserved.

Who is FM?

John Battelle

http://FederatedMedia.net

Founded in 2005 to help hundreds of high-quality independent publishers band together to earn sponsorship and ad revenue Now a top-ten US audience (comScore) and growing fast Historically: have paid out well over $100 million to our authors and publishers

An open secret

• Supply-side advertising players (including content networks like FM) often don’t like targeting to be too good

• Why not?

• Because the math isn’t nice to them

• Let’s see that…

Run-of-network

With no targeting, the advertiser buys every page in my network

The Math: 1 billion impressions @$1 CPM = $1 million ad revenue

Broad targeting

With some broad targeting (“Sports”, or “Finance”), the advertiser buys fewer pages in my network But the CPM goes up So I’m OK

The Math: 400 million impressions @$3 CPM = $1.2 million ad revenue

Narrow Targeting

With narrow targeting, the advertiser buys only select pages in my network Sure, I get the highest CPM But I have a ton of unsold inventory and total revenue is down

The Math: 100 million impressions @$8 CPM = $800k ad revenue

Ssshhhh…….

To sum up:

It looks like narrow targeting represents a sharp decline in revenue

So, it isn’t done much.

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

Run-of-network Broad targeting Narrow targeting

Ways to get around this

• Set conditions on sale of narrow targeting

• Just don’t let ‘em buy it unless they also buy other stuff – use it as frosting on the cake

This model is not so strange…just take a look at the ball park…

A familiar model

• VIP parking spaces are limited and lots of people want them

• But you can only buy one if you have bought luxury box or club seats!

A familiar model

• Every body wants tickets for when the Yankees come into town

• But you can only buy that as part of a four-game ticket pack!

Is there another way, on the implementation side?

• Q: What’s the one case when narrow targeting can have the effect of expanding the inventory purchased by the advertiser, instead of shrinking it?

• A: When it makes the advertiser comfortable going outside their usual content category

• Let’s see that….

Typical buy pattern (without conversation targeting)

Finance Tech Sports

Government & Law

Small Business Lifestyle

$ $ $ $ $ $ $ $ $ $ $ $ $

Suppose: Advertiser comes to FM w/a “cloud computing” campaign. This is what their buy usually looks like:

Modified buy pattern (with conversation targeting)

Finance Tech Sports

Government & Law

Small Business Lifestyle

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

But when the advertiser learns about Conversation Targeting, this is what their buy starts to look like:

Another implementation technique : Target conversations, not topics

• What’s the difference? – Topic = a particular theme of subject matter – Conversation = a cluster of related topics comprised of

various themes

• Results: simplicity for advertiser, and way more inventory!

• Let’s see an example….

The Small Business Conversation (just a subset of the topics)

affiliate marketing facebook marketing series online advertising small business week

better business bureau family business payroll tax social entrepreneurship

business advice family businesses product marketing social media marketing

business succession planning franchise association quickbooks startup catalyst

center for entrepreneurship franchise business review referral engine startup company

chamber of commerce franchise consulting rieva lesonsky startup magazine

customer service franchisee association ryan hanley startup weekend

dell small business franchisee of the year s corporation susan payton

digital marketing global entrepreneurship week sba 504 loan tj mccue

direct-response marketing guy kawasaki search marketing toilet paper entrepreneur

duct tape marketing ivan walsh small biz tech tour twitter marketing

entrepreneur corner linkedin small business book awards u.s. chamber of commerce

entrepreneur of the year marketing management small business expo viral marketing

entrepreneurs marketing strategy small business influencer viral video marketing

entrepreneurs roundtable multi-level marketing small business jobs bill yahoo small business

facebook marketing national small business week small business trends young entrepreneur council

Another implementation tip: Set a threshold for quality!

• FM’s premiere and partner publishers are hand-picked for quality

• Our partner WordPress, will supply hand-picked sites as well

• Publishers represented by our subsidiary Lijit (long-tail RTB-based ad network) will be vetted for quality as well

– Take-away: Don’t expect refined semantics to yield

anything if the content isn’t good!

Does it work?

• Aligned CTR: 49% higher than broad targeted ads

• Global CTR (including non-aligned): still 39% higher than broad targeted ads

– “Aligned” means the subject matter targeted has an obvious connection to the ad campaign. Occasionally this isn’t the case!

Exceptional lift in CTR

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Channel CTR

DFA-IB CTR

CT CTR

This charts the first 50 campaigns we put through Conversation Targeting at FM

RED: the industry standard CTR ORANGE: the typical CTR for the parent category in FM (Sports, Business, etc.) PURPLE: the CTR attained by Conversation Targeting at FM

Exceptional lift in CTR

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0.70%

Channel CTR

DFA-IB CTR

CT CTR

CT frequently outperforms the channel it is in.

The exception that proves the rule

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Channel CTR

DFA-IB CTR

CT CTR

CT rarely underperforms the channel it is in. The few exceptions are unaligned campaigns

An unaligned campaign is, for example, a car ad targeted to art, museums, fashion

Overcoming barriers to clicking

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Channel CTR

DFA-IB CTR

CT CTR

CT can lift up channels where they underperform

Other selling points

• It’s the only way for an advertiser to “buy out a conversation” in a network, against competitors

Other selling points

• It gives back fantastic business knowledge, showing where the ad message resonates, and where it doesn’t

Small Business

Home Improvement

Workplace Security

Auto Travel

How far down will they go?

• Advertisers presently seem to prefer “mid-level ontology” for targeting

• As this market matures, will they keep driving down the tree?

Tech

Bio-tech

Green-Tech

Enterprise Computing

AWS Storage

Cloud SaaS Cloud

Storage

Servers & Net-Ops

Consumer Computing

Cloud PaaS

Computing

Cloud Computing

Google Cloud

Storage Dropbox

AWS Storage

Integrators

AWS Storage Tool Kits

What’s next?

“Better, smarter, deeper”: Improved modeling of blog and news content will enable more ways to target

Ideology (conservative?) Reading level (7th grade?) Attitude (optimistic?) Cultural dimension (youth-hip?) Seriousness (urgent, or whimsical?)

Contact Tim Musgrove E-mail: tmusgrove@federatedmedia.net Twitter: @tmusgrove http://tech.federatedmedia.net/ http://about.me/tmusgrove http://www.slideshare.net/TimAtFM