Unleashing The AOL Display Ad Beast: Ad Desk And Display Strategy With AOL's Fellows, Jacobs and Kennedy

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Ad DeskLast week, AOL, owners of the Advertising.com ad network, announced Ad Desk, the company's new, self-service platform for ad buying across the Advertising.com network and AOL properties. Read the release.

AdExchanger.com interviewed AOL execs Dave Jacobs (SVP, Publisher Services), Don Kennedy (SVP, Network Sales) and Jamie Fellows (VP, Product Management, AOL Advertising) in regards to the Ad Desk launch and AOL's display ad strategy.

On AOL’s New Ad Desk

AdExchanger.com: Should we think of the new Ad Desk as a demand‑side platform?

Dave Jacobs:  The way I would think about it is, this is really the on‑ramp to AOL Advertising and accessing that inventory in a new way.  We talk a lot about the demand‑side platform, as others do, but what we don't want to do is sort of characterize it or limit it in any way, around a particular business model.

We're viewing this as the way for advertisers, mid‑size advertisers and agencies, to have the access and control if we're buying on AOL, and the Advertising.com Network, that they never had before - leverage targeting, retargeting,  behaviors, and do things that we've not provided, from an access standpoint, across the Advertising.com and the AOL businesses, previously.

We think this is a great starting point to do a lot more in the platform space. We're really looking closely at everything that's happening out there right now. Mostly we're listening to our advertising and agency partners, to help drive the requirements.

Don Kennedy:   All three of us have been on the ad.com business for around 10 years now. If you look at it over the years, one of the knocks on the networks was always the black box or blind network, if you will –“we're not getting a lot of insight from you guys.” It was a one‑way communication in many cases.

Where we really want to go is to be able to put a little bit more control into a subset of advertisers' hands to manage their business, to grow their business, to have access to a lot of the same, down the road, a lot of the same reporting and insights that we use on a day‑to‑day basis to drive our business. We really want to start to externalize that quite a bit. And Ad Desk is a step in that direction, a pretty big step at that.

On Ad Desk Differentation

AdExchanger.com: What is the true differentiation here? Beyond access to AOL inventory and the ad network.

Don Kennedy:  Jamie, do you want to touch on that from a product perspective? -And then we can also touch on what this version is versus where we want to go in 12 to 18 months or so.

Jamie Fellows:  Right, I think that last bit is the key that we want to touch on at the end.

We feel we're bringing a broader set of solutions to the table, just because we've been in the business for a longer period of time. And so, at its onset, we look to externalize a broader set of capabilities. This first beta launch really is focused around providing advertisers and agencies access to AOL media properties and also the Advertising.com Network as well as our core capabilities from AOL Advertising: direct access and control. It's about finding audiences that scale across the largest network. And it's about creating a tool which is simple for advertisers to understand and providing a base platform for us to grow from.

We’ve worked with advertisers on this, built it from the ground up, and we're focusing just on the display ad market. We're looking to get feedback from more advertisers and agencies, as we build it going forward.

AdExchanger.com:  So, in terms of plans for the roll‑out, when is this going to be live?

Jamie Fellows: It's live currently. The announcement that we put out [last Monday – 4/19] was, we were live ‑ actually, well, before that ‑ and bringing on new advertisers and new agencies for us to work with. So, that was a focus around the release around ad:tech San Francisco. So, we can develop more advertiser relationships and start to get more feedback from an additional set of advertisers.

AdExchanger.com:  How does one sign up?

Jamie Fellows: It's simple, as you go to addesk.com, or addesk.advertising.com and there's a Sign Up Now link. It's a self‑registration site with credit card capabilities to buy advertising across AOL Advertising.

Don Kennedy: What we're trying to do is provide services that scale to a new portion of the market. Last year, we worked with 91 of the top 100 Ad Age advertisers. That's a big number. We're very proud to have those relationships as well as our agency relationships.

But, if you look at that next set of advertisers down the list in terms of spend, it typically was not an area where Advertising.com focused its time. And a lot of that was just resource‑based. It was how we went to market, a very "direct sales"-type approach versus having a high-level of external automation. This is an opportunity for us to be able to provide those services to a new market.

On The Decoupling Of Data And Media

AdExchanger.com:  Stepping back a little bit, what's your view on the emergence of this platform‑based buying world and the idea of decoupling data from media? For example, companies like BlueKai and eXelate now exist and are providing value outside of media.

Dave Jacobs: If you look back over three, four years of what Ad.com did, we had the ability to buy inventory in a lot of different ways. But, we were one of the few people who could actually bulk buy our way through the industry and buy a lot of volume at scale. And as the industry changed, over the last four years, what we've done is shifted our model more around looking at three segments of inventory.

  1. We have AOL inventory that sits in our network.
  2. We have purchased inventory that we buy through proprietary partnerships or through direct partnerships.
  3. And then we have real‑time bided or real‑time acquired inventory.

We're playing across all those access points. Our real objective is to be as good or better than the industry in all those access points to inventory so that we can continue to provide advertisers with broad solutions.

And then when you think about it from a decoupling standpoint, I think the objective is to allow advertisers to bring their own data, if they want to, and still be able to service that. But, I think what we have a great opportunity to focus on the data and insights that we do provide, that are proprietary, and really add value - not just the value that you can get from BlueKai, or by plugging into somebody else.

We're happy to take that data and leverage it on behalf of an advertiser. Those are good solutions, and we're going to do that as well as anybody. But, if all anybody wants to do is access inventory through those types of data layers, we can absolutely do that. I think one of the things ‑ and I'll let Don touch on it ‑ that we do a really good job of is laying the proprietary data and insights on top of that.

Don Kennedy: We try to be really open and flexible. I did a talk on our data strategy a week and a half ago or so at a partner summit that we had in New York, and that was one of the things, thematically, we really wanted to get across was, look, we are very flexible.

I think, to your point, you bring up BlueKai, those folks. There's been a lot of good innovation in the space. And so we'd be foolish not to make sure that we maintain a level of flexibility with our agencies and advertisers, to say, hey, here's what we've got. We've got 60 million addressable households that we've got data on. We've got this set of data, that set of data, but if you want to bring in a third party, because you think there's something cool that somebody's bringing to the table, then let's do it. And let's try and make it additive to the overall campaign that we're running with you guys.

We are aggressively on the lookout for new stuff. And making sure we can integrate quickly and properly with these folks.

Jamie Fellows: The decoupling of media and data has provided us opportunity for some new and interesting partnerships. At the same time (and from the product perspective), I really want to focus and make sure it brings value to the advertiser and show them through our own data insights what we can provide them on top of the individual buy they're doing. That will be a core focus for our future iterations of Ad Desk: provide a lot more information to the advertisers about their buy, and then tying that back to what they can actually buy off the site.

On Appending Data In Ad Desk

AdExchanger.com:  Are you allowing buyers today to append data, such as some BlueKai or eXelate data, to do their buy across AOL and the ad network through Ad Desk?

Jamie Fellows: We currently actually do it external to Ad Desk. Through Ad Desk right now, it's not necessarily directly through the interface. You can buy ‑ it could be aggregated data from one of those sources, but it's not necessarily picking and choosing directly BlueKai or eXelate as a partner.

Dave Jacobs: Jamie, I believe that's on the roadmap, right, from a plug‑in standpoint.

Jamie Fellows: It is. I think one of the biggest challenges, too, is making it really understandable and usable to the advertisers so they understand what exactly they're getting and what the value is. But, that's obviously something that's a core fundamental on the roadmap. We have a lot of those partnerships already. It's a matter of how do I really expose it in a way that makes sense through the UI.

Fundamentally, too, I would say we've really tried to make the UI simple and easy to understand. We have a much larger team here than we've had in the past of UI developers. We also have a bunch of designers focused on the site.

On Ad Desk’s Target Market and Targeting Capabilities

AdExchanger.com:  Who is an ideal client right now for Ad Desk?

Dave Jacobs: Where we're going after is smaller to mid‑size agencies right now and advertisers. Right now it's CPM and CPC buyers. The next version - or the version after - of Ad Desk will have CPA capabilities as well.

We want to open it up to a lot of folks, but at the same time we want to still maintain the same consultative sales relationship that we have with the top 10 advertisers.

There will be elements of Ad Desk that they can use as well, but right now it's more set up for that next level down. The minimums are much smaller, so we're talking about a minimum of $100 a day, or $3000 a month.

AdExchanger.com:  Do you provide above-the-fold targeting through Ad Desk yet?

Jamie Fellows: As an explicit targeting, we do not. Dave, do you want to talk about maybe from a publisher services side what we're going to purchase?

Dave Jacobs: A lot of the buying that we do, to be honest, we do a lot of work just very focused on scrubbing the placements, really making sure that if things are in line with content and in line with articles. Nothing below the folds is really core to our network. That's not to say that things don't get through, but we're very focused on having this above‑the‑fold placement experience for our advertisers.

AdExchanger.com:  Is Ad Desk now wrapping in BidPlace and LeadBack? Those two are gone, right?

Jamie Fellows: Correct. Before we had BidPlace, and I know you've covered them pretty extensively, so BidPlace Pro and BidPlace SB. Ad Desk is the one solution for purchasing AOL advertising.

On Real-Time Bidding

AdExchanger.com:  Do you have any plans for enabling real‑time bidding through the Ad Desk?

Dave Jacobs: I think a lot of what we're doing right now, and Jamie, feel free to jump in, but we're really talking to our advertisers and agencies to figure out what they're looking for in the next generation of solutions. We have a lot of the real‑time bidding capabilities that we think we do as good as anybody in history. It's just a question of how that evolves from a business relationship standpoint with our own advertisers.

We've been pretty tactical over the last two years about focusing on being able to execute real‑time bidding. We actually haven't done a lot of talking about real‑time bidding in the marketplace because we've really viewed it as a means to an end, to get inventory effectively for our advertisers. We've been at the very forefront and probably doing as much of this at scale as anybody. We've been early‑stage implementers with all the major exchanges, and we've put a tremendous amount of resources...

AdExchanger.com:  That's buying, though, right?

Dave Jacobs: On the buy side, yes. In terms of enablement of buyers coming into AOL, that's part of what we're talking to our clients about which will help drive the future roadmap based on collective feedback from our advertiser and agency clients.

AdExchanger.com:  Would you say real‑time bidding will happen at some point, or it's just still under discussion?

Jamie Fellows: I would say direct bidding on AOL advertising will happen at some point. It's a matter of understanding when. We've heard and seen more demand probably in the beginning of this year than what we saw at all last year, and really understand ourselves to be one of the bigger buyers in this space, or more active ones. We've heard of more people asking for it than early on in 2010, so it will happen. It's a matter of figuring out when is it appropriate within the overall roadmap from a technology‑product standpoint.

AdExchanger.com:  What about margins? Are you going to be transparent about margins in the Ad Desk?  I'm just thinking from a buyer's perspective. Given the exchange model today, people understand 20 percent margins, five percent, whatever the exchange is.

Dave Jacobs: On the Ad Desk today, what you get is you get information on what it will cost you as a buyer to access the inventory. There is no information disclosed about margins.

On Demand-Side Platforms And Technical Challenges

AdExchanger.com:  Where do demand‑side platforms fit into AOL inventory today? How do they buy from AOL and Ad.com today? Is the Ad Desk a solution for a DSP today, or will it be?

Don Kennedy: The short answer is that for the most part they're not accessing that inventory at all right now. There have been some tests that we have run in certain cases where some of the DSPs have come to us through agencies or through advertisers. We're talking to all those folks. We have some strong ideas on where the next iteration of this network and of our offering goes. Currently, they're not accessing that through anything really or through an Ad Desk.

At this point, Jamie, we've pretty much said that we're not going to work with them through that right now. But, those conversations are going on on how we work together or whether we work together.

AdExchanger.com:   So, one of the complaints I've heard out there about working more with BidPlace than AOL is just about the complexity and the difficulty of it. Maybe a two part question, does Ad Desk in part help solve this, address this problem? Then, what are you doing maybe in more full‑service aspects to address that problem, if you agree it's a problem?

Jamie Fellows: Obviously, we want it to be a simple solution, if you will, for people to work with. So, what we've done with Ad Desk addresses any concerns people may have had because it was built from the ground up. Basically, we completely rebuilt the user experience. We want to partner with advertisers and agencies at our side rebuilding the capabilities and think Ad Desk should address any concerns - if there were concerns - associated with BidPlace. That's really what we're looking for it to provide.

This is where fundamentally advertising.com is not just a network, but it's really the technology platform for AOL moving forward. Ad Desk is one of the first external elements that we're showing where we're building the core fundamental technologies for the organization.

Dave Jacobs: Holistically, and talking from a full‑service perspective, I think you look at that, as I referenced earlier, that black box sort of mentality over the years. If you're perceived as being guarded with data and services, are you perceived as being easy to work with? That's one of those things that we want to continue to externalize - a lot of what we've continue to work on internally over the years is to make it incredibly efficient and easy to work with us.

On Bidding And Ad.com’s Network

AdExchanger.com:  Are Ad Desk users bidding on the same inventory as ad.com is bidding on?

Dave Jacobs: Yes and effectively these are just additional advertisers in the inventory ecosystem.

AdExchanger.com:  In terms of ad.com's ability to bid on non‑guaranteed inventory versus the Ad Desk buyer, how do you manage that?

Dave Jacobs: If you think about AdLearn and our scheduling approach, we're really looking at trying to line up the highest in value opportunities. So, if you as a buyer are buying a particular channel of AOL on a non‑reserved basis, the criteria that you are setting for that buy will be valued appropriately in line with any other buys that have the opportunity to schedule in that same intersection, whether it's inventory plus user inventory plus user plus geo, whatever that combination is, you as the buyer are competing on the same field as any other buyer. So, we almost don't view ad.com as separate from Ad Desk buyers. They're really just different campaigns that are sitting in the non‑reserved space. Some of that happens to be AOL-only inventory, some of its across our hundreds and hundreds of sites.

On The Future For Ad Desk

AdExchanger.com:   What can you tell me about the next 18 months? –such as mobile inventory, video inventory, addressing the agency buying desks, etc.

Dave Jacobs: Jamie, why don't you touch on the product roadmap side of things, as far as the 18 months kind of thing goes, and then I'll talk about the trading desks and more.

Jamie Fellows: A big focus for us is providing data insights for reporting into the tool and providing a lot more information, so to really open ourselves up to the advertiser. We have a really valuable commodity for the advertiser from that standpoint. As we expose that, we really feel that we can broaden the use of the tool to all our advertisers versus just the people that are coming through from a self‑registration model or a self‑service model. It becomes a very valid tool for all the advertisers that we have within AOL Advertising. That's a huge focus for us.

The other side that we really will build out tremendously through here will be performance and going back so that becomes core toAd Desk from a performance standpoint. Those are probably two of the biggest areas.

The last one is really we're opening ourselves up to get more feedback from advertisers, and we have set aside development time on the product roadmap to really incorporate that feedback and build the tool up for advertisers.

Dave Jacobs: As it pertains to the holding companies in general, and the trading desks in particular, I gave a presentation at our partner summit conference recently about data. We're starting to show some of the examples of the types of reporting that we are providing the advertisers on a limited basis right now, but it's the kind of stuff that over the years we've used internally to map our business out from day one.

The response from some of the trading desk and holding company folks was great. They came up that night and said, "We would love to be able to automate this and be able to incorporate it into what we're doing."

We're constantly talking to the agency buying desk and we're trying to make sure that we find the best fit to work together. We work with all of them and we're working with 99 out of the top 100 advertisers.

Now, it's just a question of technology, and integration and what do we want to do. We historically haven't been a licensing business, so that's a little bit of a shift in the model. The short answer is that we will be working with the agency buying desks in some fashion or another.

AdExchanger.com:   How does Ad Desk fit within AOL's new strategy as a content provider? Really, given the content provider/publisher strategy, why not just make AOL inventory available on exchanges versus building something proprietary?

Jamie Fellows: The answer is that we're focused on content and monetizing that content. We need to be responsible for the monetization of the content that we're providing and not just open it up to another party to have control over that. But, fundamentally, we need to develop a profitable content business. We need to build and partner, where appropriate, to monetize AOL as best we can.

AdExchanger.com:  Is this something all publishers need to do – maybe the largest web publishers? If these publishers want to effectively understand their inventory, and monetize it properly, they're going to need to build their own tools.

Dave Jacobs: There's an economic question of scale, certainly, such as the costs: can you plug into a tool that you own versus leveraging an exchange? There are many different strategies that publishers are doing every single day right now. This is really just a question of scale. AOL is in this position because of its size and the scale, and the vision of continuing to grow to drive more page views, to continue to drive more and engage users.   The opportunity from a monetization standpoint is integral to our long-term strategy.

By John Ebbert

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