As part of its "State of..." series of articles with industry executives, AdExchanger.com sat down with Norris to discuss his company, his views on the space, and the state of BlueCava today.
Click below or scroll down for more:
- Privacy and Misconceptions
- Apple's UDID Strategy
- BlueCava Device ID Penetration
- Real-Time Bidding
- Mobile Ad Serving Today
DN: I don't really hear a lot about misconceptions around our technology. From a consumer standpoint there is a big misconception that consumers have in general across the industry regarding cookies, and that is the general conception that if they clear their cookies that they are opting out. That's the biggest misconception that continues to hurt the industry because it doesn't help when consumers think they're doing one thing and actually something else happens.
For BlueCava, our solution offers a privacy benefit to the consumers which is better than what cookies offer, because in our case, when you make a choice regarding privacy, it doesn't change after you make that choice.
With cookies, you choose to opt out, and then if you clear your cookies you get opted back in, even if you didn't want to.
Yes, but the idea of a device ID being tracked by a company, a device ID that's connected to a consumer - I think that's raised some red flags with some folks. I'm just wondering how you overcome that?
Over the last 12 to 18 months, we've done a lot of work out in the industry, talking with groups on the privacy side and talking with the various industry groups to educate people on device ID. So I'd say right now I don't see a lot of misconceptions by consumers. I think if you look at what we do relative to what has traditionally been done with cookies, it's really very similar in the way that it works. You can opt-out. You can opt-in.
Perhaps 18 months ago there was some newness to the device ID and people didn't necessarily understand it. I think now through a fairly significant effort we've helped bring the education level up on what device ID is.
We don't get a lot of resistance like back in the beginning. There was much more questioning about what is device ID - people just didn't know.
It is an interesting decision that Apple made, and they're obviously trying to protect their own business. It has caused quite a challenge for the advertising industry. For BlueCava, it's actually helped us. I think the benefit that we get is that our technology can help identify a device independent of the UDID. So when many businesses out there, mobile ad networks for example, had been using just the UDID as a way to do their targeting, when that went away then they were in trouble. With BlueCava, we don't use one identifier for that purpose. Our solution works whether the UDID is there or not.
So I believe that [UDID deprecation with Apple] has caused a significant amount of interest in our technology and our offering. From that point of view, it’s helped us.
Our technology is being used across a broad set of companies. If you look at it from our perspective, we think of the devices that we're seeing - and we are on track to identify a large number of devices. Our goal is a billion devices by the middle of 2012. We're on track to do that. The scope of our technology goes from the advertiser on one end and the publisher on the other end through the players in the middle that make ads happen - the ad networks, ad exchanges and DSPs. Penetration has been above and beyond our expectations.
That's correct. We focus our time and energy on Internet‑connected devices that are relatively smart, if you will. So we work on gaming consoles, all of the typical mobile devices, tablets and phones, and obviously desktops. But we've been embedded into all kinds of applications. So our primary ambition is to go after the platforms that have the biggest market share. Right now feature phones just don't represent a significant opportunity to us, and we think over the next couple of years they're going to, volume‑wise, die off in favor of the Androids and the iPhones of the world. So it's just not an area we invest much time in right now.
We fully support RTB and think it is the future, for sure. It seems obvious. The capability of being able to pass a device ID from the front end side, from the publisher, all the way back to the demand side, we believe will be the way real‑time bidding really increases in its usage. There are some limitations today on real‑time bidding, being able to do certain things with cookies - that just doesn't work so well. And with device ID, we can provide the next generation of targeting technology that's needed to help RTB reach its full potential.
The idea of a device ID is to be a universal identifier for the device so that it can be shared across the various players to first, bid on an ad, and then actually to serve the ad. Our strategy is very much a long‑term one where we start off helping businesses to identify devices on the front end - so the publishers and advertisers as an example. And then we integrate with the players that help make the overall bidding process work.
If you watch what we're going to be doing over the next 12 months, you'll see BlueCava's technology integrated across the entire ecosystem in a way that we think will really make a big difference.
At some point or right now, ad networks can basically buy the IDs? That's why you're saying it's real‑time biddable – as in a third party network can come in and buy the users and buy the placements on the publisher's site? Is that how it works?
That's right. You can think of it long‑term similar to how people will buy audiences today - by buying cookies, buying audience represented by cookies. You can do the same thing with device IDs. We can aggregate audiences that are much more detailed and specific than you can with cookies. And you can buy entire audiences based on device IDs. And of course, we can map device IDs to cookies. So for those companies that want to use the cookie‑based infrastructure today, they can use that no problem and still use device ID.
Downstream, we think more and more businesses will eventually move towards using just device ID simply because it offers a much greater set of features and capabilities, and the need for cookies will eventually be less and less.
It is early in mobile and there are a lot of players that have emerged that say they can serve in a way that's better than everybody else. There's a high amount of fragmentation across the mobile ad serving space. And there's a lot of innovation that's going on there. But there's still a fair amount of confusion from the advertiser's point-of-view as to how they can really get the maximum value for their dollar. I think the one challenge in mobile that continues to be a bit difficult is the ROI. Businesses that advertise are still putting a relatively small percentage of their budget into mobile because they aren't able to evaluate whether it's working well or not. So the new ad serving companies on the mobile side, their challenge is to demonstrate, with some level of accuracy and confidence, a good ROI.
That's probably the one biggest challenge because people don't always take a proactive step on a mobile device. Sometimes they go to a larger device to be able to go out and check out the product or service.
So there remains a need for more robust mobile analytics that lead to this better understanding of ROI? Is that maybe a good way to paraphrase it?
Absolutely. It's where the rubber meets the road, as they say. You have to be able to show that you invested in something that delivered good results. It's really hard to convince somebody to spend more money doing it.
Why hasn't Google dominated this?
I don't think they've focused a lot of their energy on it. I think that they certainly are going to be big in mobile. But, there are a bunch of different players that are going to jump into this space. Over the next, five to 10 years, mobile will be a very large percentage of advertisers' budgets, in my opinion.
And when you say "people jumping in," do you mean solutions providers, whether it's Apple or Google, or you're just saying advertisers jumping in with ad spend?
More of the big infrastructure players - I would expect Facebook, Google and Apple all to be doing things in this area that are much more significant five years from now than they are today.
Where do the telecommunications players fit in? What happens to them?
Well, they're all in one way or another and investing in this space. Some due to the fact they have a good vision of where they think it will go, others because they think they have to just not be left behind. It's going to be pretty difficult for some of the large telecommunication and wireless providers because this is an area that moves so fast and is so innovative that it's more likely that a Google, Facebook or Apple will dominate it.
Certainly the wireless providers will have a role to play. We'll have to see how that role pans out. This is not a business that they're used to.
And it feels like they're obviously being commoditized and that the devices are starting to own them. Sprint that just made what sounded like a very bad deal because they felt like they had no choice. They’re giving away profits for a few years, which I think didn't make sense to their shareholders. But they feel like they need this device to survive.
I think that's the situation. They didn't have any choice. In the end, if you're a wireless provider and you don't carry Apple's products, you just lost a fairly large chunk of the market. Kudos to AT&T back when they made that deal when nobody else would do the deal, and they got a huge benefit out of it. The people that are at the end of the train, as they say, are in trouble now, and Sprint had no choice.
I am curious about cross‑channel media buying – will everything going to a device ID type of technology for effective cross channel media buying in your estimation?
The industry is moving toward a model where they look at the end consumer more holistically, and they don't separate each channel out. They've learned over time that just doing independent channels of communication to the end consumer ends up creating a real challenge for the end consumer. BlueCava is definitely planning to be a significant part of the solution to that problem. Through all the different digital means that you can get to an end consumer, BlueCava wants to be part of that management of the targeting of that consumer so that in the end the consumer gets the biggest benefit and the advertisers get the most return for their investment.
I think it is so obvious today. You simply have to go online and just look at the ads that you get pummeled with. Many times, for products or services, you've already bought and you can't buy again.
For the advertisers it's costing them hundreds of millions of dollars. And for the end consumer, it's just making them unhappy.
BlueCava's technology has been built from the ground up to work in the real‑time bidding and online advertising environments. We built it to scale to the volumes necessary and to be easy to implement. So as an example, our service is a hosted service that customers can very quickly and easily implement, and have it up and running on their site in a few minutes. Many of the other vendors that are traditionally rooted in the fraud space have not had to work in the more complex and high volume transaction models that the advertising world is used to. And there typically are more licensing models rather than hosted models.
So, if a customer wants to have to go get their IT department and provision a bunch of servers and go buy a bunch of equipment just to be able to do device ID, we think that will be a significant barrier to adoption. With BlueCava you don't have to do that. I think that's two reasons why I think we're substantially better off in this industry, because we were designed to work in this industry.
The other guys would say that, "Well, the fact that our solution is hosted by the ad network, that they overcome concerns around data ownership that marketers might have and that sort of thing." I would guess you're not buying that argument?
Obviously the hosted model is a well‑proven model. BlueCava offers a number of choices. We host the services and allow our clients to use it. We also offer a co-location model where we can put our servers in their data center and we manage and do a fully managed hosted service. So we can do it either. There are reasonably small numbers of businesses that have the very high speed requirements necessary to take advantage of co-location, but for those particular clients we absolutely do it.
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