SVP Jacobs Discusses Advertising.com, Huffington Post And Aol Ad Strategy

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AolAt ad:tech in San Francisco, Aol svp of publisher services, Dave Jacobs, discussed Advertising.com and Aol's ad strategy with AdExchanger.com.  At the show, Aol's ADTECH unit announced ADTECH Lite "an ad management platform now available to small publishers and advertisers at no cost, reaffirming ADTECH's commitment to help start-up and small businesses compete and grow in a global marketplace." Read the release.

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AdExchanger.com: Last year I asked you about real‑time bidding on AOL inventory, and it was something you were discussing with your advertising partners. How has that evolved?

DJ: It's not available yet. We are looking at a number of different options in terms of how we'd surface that from a targeting basis, whether it's true RTB or bundled with other targeting options for an advertiser in terms of price controls and price‑bidding options that a particular buyer can choose. At this point we're looking hard at options to allow us to more smartly surface our inventory to drive value out of a real‑time type of buying situation.

Can you talk a little bit how Project Devil and AOL's view on its non‑guaranteed inventory come together?

From an AOL perspective, we've looked at the experience from a consumer‑first lens and how do we make sure we provide the best consumer experience. That doesn't necessarily mean reserved over non‑reserved. It really is about making sure we're being smart about the ads that we're placing on pages. That ranges the spectrum from the Devil‑type units, which really allows page‑level exclusivity, to various performance and outcome‑based advertisers.

What's interesting is that continuum has found a lot of buying opportunities along the way. So we've acquired Pictela, and they're going to be fully powering our Devil units from a tools and technology standpoint.

That's an offering that we'll now be able to run on our network as well.

We'll be able to have our advertisers choose to run brand‑type advertising on our network, whether it's targeted to certain users, whether it's on our content channels -what we call the advertising.com Super Channels, which are very much aligned with AOL content areas as well.

How does Project Devil work in terms of the way you sell it to clients? Is it all guaranteed? Is there a biddable aspect to it?

As it stands today, this is a guaranteed, pre‑sold reserved offering. We're looking at in the future ways to roll this out to the marketplace, both on AOL properties as well as the network as a whole, that could treat that unit, which is a 300x1050 unit, as almost like a super‑version of the 300 by 600. With content management systems today, many of them can handle a 300x250 and a 300x600 being served into a single placement. It's really about how we will, in a scalable way, be able to solve for that without an even larger unit and be able to do that in a non‑reserved way that really is focused on brand advertising.

I don't think our goal here is to have this be focused on pure DR in any capacity. It's really mostly about high‑value consumer experiences, which is probably some brand or some brand extension running in a non‑reserved way.

You're a very experienced in this space. What do you think about "the paywall" as a strategy? When does it work? When doesn't it work?

I think it can work. If you look at the examples where it has worked such as "The Wall Street Journal" where you have people who have been in the habit of accessing that content - it's differentiated content clearly in the eyes of the purchaser. So, "The Wall Street Journal" being one model, "The New York Times" as another model of limited access seems to be where some others are following. I think our perspective is you can provide quality content for free with an ad experience that's also a quality experience for the consumer.

I think that's where ultimately we think there's the biggest scale, and the biggest opportunity to interact with consumers at scale from an advertiser's standpoint is to be in front of the most users and leverage the best‑of‑breed technology and broadest access to inventory.

What's the AOL play with Huffington Post from that ad network/ad technology perspective?

First, if you start with AOL overall, ADTECH powers AOL. During the acquisition [of Huffington Post] we realized that DoubleClick has been powering Huffington Post, and they continue to. We're looking at the appropriate timeline in transition so we can have a common set of media planning tools from a reserved premium sales standpoint. From a network perspective, what Ad.com has historically done is we've been the principle monetization source for AOL inventory.

And what we're starting to do is transition segments of the Huffington Post inventory that's been monetized to a certain extent by us in the past. And looking at the appropriate and the significant way to derive the most value on a non‑reserved basis.

So we're monetizing more of that inventory on a non‑reserved basis and we're looking at continuing to transition some of that over time.

I think it's safe to say that Huff Po has been aggressive in the non‑guaranteed technology space in terms of they've used all the yield optimizers, they've floated their inventory out there ‑ this was before they got to AOL. There's a certain amount of learning there, I would think, that might be interesting. Is there some interesting ad technology side to Huffington Post?

I think what it does is you have a team of folks who are experienced in working with the optimizers from a sell-side perspective. And since Aol has worked principally with Ad.com in that perspective, it's an insight and a perspective that we haven't had. And also, quite frankly, gives us a pretty good baseline to know what we need to do to outperform the yield optimizers. So that's another level of perspective that it gives us. That's been valuable from an inventory assessment standpoint as to how well we do with that, with this placement.

We also are using Huffington Post's inventory for our sponsored listing product now, as we do with the other AOL properties. That transition is actually complete. We've fully transitioned from Google to advertising.com‑sponsored listings.

Ad.com's revenue has steadily declined over the past few years. When do you expect it to turn around?

I'm not going to speak to numbers. I would defer to our finance team and our corp.com and IR folks on that. But I will say that a lot of our comps for the last two years have included businesses that we've exited. We were in an SEM business up until and including Q1 of last year. Pretty sizable SEM business. So we had a large revenue stream at a very low margin that was showing up in out top line, basically.

So one of the things that is somewhat misleading when you look year‑over‑year comps, they're including business that we don't necessarily call discontinued operations, but the do show up in the comps.

The other thing is from the international footprint standpoint, we exited the dot‑com business in certain European markets in early 2010. So those have caused us to be dealing with this environment of challenging comps, if you will.

I would say what we've seen over the last year from a demand perspective is people that have been interested in not just using DSPs, but using quality technology and optimization solutions, and outcome‑based solutions for advertisers.

And we've seen advertisers come back to us that have gone through periods of time where they've tested DSPs and now they're working with us directly. Whereas for some periods of time maybe they weren't. So that's a dynamic that is going to probably ebb and flow some more.

I think we've seen the network space as a vehicle for brand advertising. We rolled out an offering called the advertising.com Super Channels.

We didn't roll it out in a very super‑public way, but we recognized that we had very strong brands in our network. We've had advertisers that want to buy on the end and operate it and also want to extend on the network. It's been a natural extension for that segment of the business.

From the supply standpoint, we've also found that the ecosystem has definitely stabilized a little bit. Last year there was a lot of change where we had a lot of networks buying a lot of Facebook and MySpace inventory.

And Facebook shut all their display inventory down and moved to an entirely internal product. MySpace inventory declined precipitously. The good news is we weren't tremendously reliant on both of those. But the other thing to keep in mind is that an entire of segment of inventory was sucked out of the ecosystem.

So it created a temporary blip in terms of supply access for a lot of people. I think that take a few months to work itself through. And it seems to have worked itself through pretty well.

I think we're still investing in buy-side growth [via] RTB side. We continue to see significant growth in buying inventory on a real‑time basis through our exchanges. That scenario will continue to grow.

Do you feel like Ad.com and AOL's ad technology group has kept up with that buy‑side innovation?

Yeah, absolutely. If you look at the market landscape side, there are certain companies that are focused on being really deep in one area. And there are certain companies that are focused on building out on multiple areas. We do see value in being dispersed in multiple parts of that value chain. We see Pictela as key with that. We see a company like 5Min, who we acquired last year, being a key part of that. Because it's not only inventory but content distribution on a third‑party basis as well as AOL.

And there's also the notion of the buy‑side tools and what do we want to do there long‑term. We just launched ADTECH Lite, for example.

Can a media company be a technology company?

I think the future of media is technology. It's about customized content and a customized ad configuration together. It's very personal.

What's interesting is that we're not trying to just be a media technology company. We're trying to be a media and advertising technology company.

By John Ebbert

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