The SEM Arrives: Efficient Frontier CEO Karnstedt Discusses His Company’s Move To Display

David Karnstedt is President and CEO of Efficient Frontier, a performance marketing company.

AdExchanger.com: What are some of the key drivers for Efficient Frontier recently announcing expansion of its product line into display advertising?

Our goal is to unify optimization across both search and display. There were several developments that led us to launch our display product to our current client base.  First, the growth of ad exchanges and our ability to access quality inventory with auction-based pricing at massive scale.   Recent enhancements by the exchanges also have allowed us to integrate display management into our core platform, which was critical factor.

Secondly, we have the ability to purchase and optimize targeting data that is unbundled from media and isolates specific audiences relevant to our client’s products and services.  Lastly, our clients have reached out to us proactively asking us to provide insights and optimization across both search and display.

In general, do you think we are at or near a tipping point where search engine marketing encompasses display advertising?  Why or why not?

I believe performance marketers care most about results.  If marketers could be channel agnostic and invest only where the returns are most favorable in a truly dynamic fashion, they would. Across many of our clients in search, day-to-day budgets are limited only by an ability to hit return on investment targets.  By the nature of negotiated CPMs and static placements, display could not be managed in the same way.  Additionally, ceding optimization control to publishers or ad networks with open-ended insertion orders is not something most marketers trust to be in their best interest.  Ad exchanges provide access to inventory, bidding control, and visibility into performance in a similar fashion to search.  They trust that their technology and agency partners will manage optimization on their behalf and with their best interest in mind.

Platforms like Efficient Frontier’s have been managing hundreds of millions of dollars in search spend and optimization while at the same time delivering strong performance at massive scale. While display introduces new variables, our clients trust that our algorithm and engineering teams are well positioned to address the challenge of biddable display optimization.

We do believe that we’re at the tipping point where search marketing encompasses non-premium, biddable display.  To be clear, Efficient Frontier is focused on managing auction-based display.  We are not set-up to manage traditional media buying.  Search marketing, both technology and people, will quickly take a primary position in non-premium display optimization.

What are some of the challenges you see in transitioning your clients to the new opportunities that display affords? And, how will EF meet these challenges?

One of the challenges we see is that some of the big advertisers that we work with still look at search and display in silos. With Efficient Frontier’s cross channel platform, we intend to bridge that gap by not just providing insights across search and display but also optimize across channels.

Another challenge is educating clients on the new opportunities in display and its potential for strong return on ad spend at significant scale.  Some clients have still lingering doubts about display that we need to overcome through education.

Site retargeting is typically an easy entry-point for clients and often produces strong ROI but is limited in scale potential.  Leveraging a combination of unique targeting data with algorithmic inventory optimization to add scale while maintaining ROI is a challenge that we are meeting for our clients.  Additionally, transparency in success attribution and the resulting loop back to optimization is critical for our clients to understand that the next dollar they spend is in the most impactful source.

A final challenge is that historically identifying latent dimensions of user intent and subsequent creation of consumer segments, along with the revenue imputation, fell to the advertiser. With our display offering, Efficient Frontier leverages our modeling expertise to solve customer segmentation problems for the advertiser on a huge number of latent intent dimensions, spanning both search and display.

Where will the brand marketer fit in with Efficient Frontier’s move to display?

We are a performance marketing company.  Our optimization operates on data.  I believe brand marketers are just as data hungry as direct marketers.  The key for us is to partner with our clients in developing the right metrics for success.  These metrics can be more brand oriented using metrics such as engagement or purely transactional.  At the end of the day, both brand marketers and direct marketers want to pay the right price for their target audiences and inventory that deliver results.  And both brand marketers and direct marketers trust Efficient Frontier to optimize across search and display for maximum return on investment and scale.

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