CEO Jalichandra Discusses Guaranteed Display Ad Sales And Technorati's Integrated Stack Strategy

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TechnoratiCEO Richard Jalichandra recently discussed his digital publisher strategy for Technorati with AdExchanger.com. The company announced the launch of its Technorati Media Exchange on the AppNexus platform in April. Read the release.

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AdExchanger.com: What were the triggers that led you to use an exchange model and sell Technorati inventory?

RJ: We needed actually more than an exchange, and hence this was the reason we chose AppNexus. We have a hybrid network model in that we're running a site representation network as well as an audience targeting network. And, we have a lot of inventory because we're in social media. So as such we needed on the supply side some of the characteristics of a supply-side platform (SSP).

Also, because of our site representation model, we needed an enterprise ad server. Finally, we needed a DSP for our audience targeting campaigns.

The ideal solution for us was the proverbial integrated stack.

Let’s step back and look at your sales strategy and guaranteed versus non‑guaranteed display ad inventory.  How does that work?

Again, because we're doing a hybrid model, we have advertisers that want to be in a bright, well‑lit place with guaranteed placement with large format, bigger impact ads. That's what we have our site network for.

At the same time, we have our own social media ads that include social content, branding elements and contextual targeting. They're essentially ads that look like content and distributed microsites delivered through an ad server

We take our own social, rich media products and toss in audience targeting to use buy‑side capabilities and buy the right audience for that content at the right time.

What would you say is Technorati’s direct advertiser today? Brand‑focused, DR‑focused, etc.?

We do a lot of upper-funnel targeting on behalf of our advertisers, particularly with the conversational media ads. Those are definitely more about brand awareness. Within verticals, we do a lot of CPG, auto and wireless as well.

Because we represent social publishers we have a tremendous amount of traffic and inventory and that's where the exchange also becomes important to allow other demand sources to access that inventory. Half of our revenue's being direct sold and half is through demand sources.

Just so I'm clear on the demand sources part, you consider “direct” people-to-people relationships, deals that you have to close?

No, those are coming in through an exchange mechanism. Previously it was Right Media. Moving forward it will probably be AppNexus.

In terms of the team you have in place, what does it look like?

We have a dozen direct sellers in the field calling on agencies. And then we have what I think of as the product/network team, which includes another half a dozen people that manage third-party demand sources as well as the network and the operation expansions.

How long did the process take to understand what you wanted next in terms of the integrated stack services?

Well, frankly. it took a couple of years. We started looking at our whole model and all the different components. As I said, we needed the SSP, the DSP enterprise ad server in an exchange environment. We knew that probably as long ago as 18 months ago. We had been using multiple third-party technologies to deliver what we need and we kind of wrote a spec to build it all-in-one. That's when the discussions with AppNexus started as well. They were thinking about building something similar and over time our specs merged.

Is Technorati Media Exchange interested in agency trading desk business?

Yes. We've been talking in detail with the trading desks, because we think they're going to be really important partners for us. Hence, this is part of why we're launching the exchange is because we want to work much closer with them, off of both RTB and non‑RTB access to the trading desk. And in general I think the trading desks are going to be important in either RTB or non‑RTB environments. I suspect that a huge proportion of all online media over the next couple off years will be traded through a trading desk - including upper funnel.

Are you feeling this merger yet of guaranteed and non‑guaranteed where you have a better understanding of how to maybe allocate inventory to the guaranteed side versus the non‑guaranteed side?

I think we're in early days in that, but you are hearing that discussed. In my conversations with trading desks, they are all planning for that. And it really depends on who the partner is.

Some trading desks’ goal is to have all standard display, even upper‑funnel display, purchased through a trading desk. Now, like I said, that doesn't necessarily mean it's going to be RTB-enabled. It could be non‑RTB buy as well. However, I think it's still very early days, and I suspect that, particularly on the upper funnel side, you're going to continue to see a large proportion of the upper funnel buys happening direct through our sales force, just because there's so many custom elements attached to a forward buy.

That almost answers my next question, which is what are some of the key sales tactics within those strategies that you're using on the guaranteed side -so it's custom elements?

Yes. It has probably been one of the huge dividing lines between upper-funnel and lower-funnel media. There's this gray area between them in that a lot of the upper-funnel side is custom. And it could be anything from some sort of custom integration sponsorship to a much larger format ad.  Or, a dynamic rich creative that requires guaranteed placement and timing in comparison to the other side - the lower funnel - which is simply, “Give me the right audience at the right time.”

There is a middle ground between those two where I think a lot of brands are starting to experiment with RTB and exchange‑based audience buys. So it's some of the characteristics of lower funnel but none with the intent of a brand objective.

And on the guaranteed side, how much data is being used for targeting?

I don't see data used in the same manner as you see it on the non‑guaranteed side. But generally, when you're buying guaranteed placement on specific sites, you have a pretty good idea of who the audience is that's visiting those sites. So there is some level of targeting, and that's what I would call the second‑party data, the publisher data.

From your publisher perspective, what are your observations about creative given its impact on performance?

In fact, we're making a huge bet on this. Our whole differentiation has been with a higher value ad unit. If we positioned ourselves as an audience targeting network people would laugh at us, because there are incumbents that already do it very well and they've done it for five years or so.

One thing I'd add is that I think dynamic creative has already been proven to be very, very successful for lower funnel DR ads. We're trying to do the same thing, but more for upper funnel.

It's a much more customized ad unit, though. It's not as simple as an e‑commerce company handing over 50,000 SKUs and having it machine‑generated.

Any thoughts about how the publisher can help with attribution - any trends you see in that area from your perspective?

First off I'd say there's a lot of people thinking about attribution and it's about time. It's about time that we really looked at the whole stream of influence that occurs to help people react to something or to convert to something. That said, I think there's probably going to be a lot of different constituencies within the ecosystem that participate in it. On our side, one of the things we're working on with our database and platform is just being able to making sure that we have complete visibility of our audience across our entire network of thousands of sites.

What does your network of publisher sites look like today and how do you plan to grow it?

Today it's about 1,300 sites in the site representation network. Overall our ads appear on about 2,000 websites a month when you consider the audience targeting we do. So I think you'll see it expand just from a sheer number standpoint. But you'll also see it improve in terms of the quality of publishers that we work with.

Any thoughts on the next biddable format you’d like in your exchange that isn't there today?

I’ll answer in a slightly self‑serving way. In my recent meetings with trading desks over the last couple of weeks I hear one continual request for expandable inventory.

And you know we're all good with that. We want as much expandable inventory as possible with our publishers. However, we offer probably one of the greatest independent sources outside of the portals of large format, 300x600 inventory.  My retort back to the trading desk is why would you want an expandable when you can have something that's already open?

Finally, what are some milestones you would like Technorati to have accomplished say a year from now?

The ultimate primary milestone is to keep growing the business at a healthy clip and remain profitable. But the sub‑milestones - I think two key things for us is going to be building out our data management platform capability and creating a more robust social rich media offering that is easier for advertisers to purchase and manage.

By John Ebbert

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