DG Reports Earnings, Discusses Digital Future; Video Next For Adchemy?; IAB Issues Ad Verification Guidelines

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DG’s MediaMind Future

Convergence is coming – or is it just plain ol’ digital? HD ad prices have dropped a lot more than many have expected according to Wall Street analysts on DG’s earnings call yesterday. HD ads are a key part of DG’s TV business. Also, DG CEO Neil Nguyen says trends with his company’s financials indicate brand budgets are moving away from spot TV which is resulting in guiding DG’s strategy towards online led by its MediaMind unit. TV revenues will increase only in the “single digits” in 2012 stated the company – where digital will experience “double-digit” growth. DG also offered a quick anecdote that a soft December was reflected by others in ad tech with whom DG had done a “channel check.” The $44 million of DG’s Q4 online revenue was flat when compared to 2010 as MediaMind grew and Eyewonder was a drag on a revenue basis. (Eyewonder and Unicast are now under the MediaMind brand.) TV revenues slipped from 69 to 64 million in Q4. The company has roughly $400 million in debt which it used to fuel its recent acquisition spree. Read the earnings release. MediaMind GM and Chief Digital Officer of DG Gal Trifon made an appearance on the earnings call. Among highlights Trifon offered is emphasis, not surprisingly, on MediaMind’s video ad serving business. When the analysts took over on the call (the call lasted over an hour!), questions ranged on why the TV business is lagging to what can be expected by digital down the road in the next 3 or 4 years. Trifon talked up the data-driven future for DG, too, saying that DG’s business will eventually not be so much about delivering ads to businesses (HD and TV distribution hubs) but direct to the consumer. Also announced – CFO Omar Choucair is leaving the company.

AOR Morphing

The Wall Street Journal’s Suzanne Vranica reports on the acquisition of an agency by a PR firm – independent NYC agency Strawberry Frog by Washington D.C.-based APCO Worldwide. Vranica writes, “Increasingly being charged with helping marketers manage their social media marketing, PR firms are now finding themselves having to make creative content for marketers.” Read it. Could the agency business that current ad tech companies manage lead to agency-of-record opportunities? GSI Commerce’s interactive agency (which became GSI/eBay’s True Action Network) became digital AOR for Toys’R;Us and Dick’s Sporting Goods” a couple of years ago. No doubt some ad tech firms are avoiding the AOR moniker for now in fear of hurting valuations with the perception of being an agency. How long can that last until pouring business through increasingly undifferentiated technology overwhelms the public tech positioning?

Video Next For Adchemy?

Adchemy announced that it has added former Delve Networks CEO Alex Castro as its VP of Product Strategy and Management. Delve Networks was acquired by Limelight Networks in 2010. Given that Castro’s Delve experience was about “focusing on online video hosting and ‘search inside’ video technology” (according to a 2009 interview), it may follow that Adchemy CEO Murthy Nukala will extend his company’s IntentMap search targeting solution to video. The Adchemy press release goes on to say that the company is making hiring a top priority in 2012. Read it.

Stop Nesting iFrames

The IAB released its ad verification guidelines as the industry org aims to get its arms, and the industry’s, around how ad verification should be properly implemented. A sample guideline: “Ad verification vendors have procedures to classify and report whether advertising served into iFrames from other domains has been appropriately executed. In addition, the general nature of the verification tools used to view iFrame content should be disclosed. Moreover, it is recommended that the industry minimize the use of nested iFrames.” Read the release. And download the guidelines.

Measuring Ad Value

Jarvis Mak, who is ad network Rocket Fuel’s VP of analytics, tells readers on iMedia connection that a single ad interaction metric is no reason to not work with a vendor. He supports a more holistic view using several metrics including LTV – the lifetime value of acquired customers. Mak writes, “For direct response advertisers, especially in finance and retail, customers acquired cheaply are often low-value customers, especially when promotions are involved. The value of more expensive leads (as measured by account balances or subsequent basket size and purchase frequency) ends up much higher than cheaper direct response leads. An agency that is maniacally focused on low CPA without regard to LTV is doing their advertiser a disservice.” Read more.

Earnings Rating Point

Yesterday, comScore reported earnings showing a slight lost for Q4 2011. See the release (PDF). ThinkEquity analyst Robert Coolbrith took note, “[comScore] reported a generally in-line 4Q11 but guided slightly below consensus and well below our forecast for FY12 as investments in growth will continue and revenue growth will be more muted in 1H12, to be followed by a back-half growth acceleration.” Even though comScore was below some of his estimates, Coolbrith thinks comScore is a “core holding.” comScore CEO Dr. Magid Abraham stated in the release that new products hold the key to growth, “On a quarterly basis, we anticipate that growing adoption of newer products such as Digital Analytix, and validated Campaign Essentials will drive accelerating year‐over‐year growth as we progress through the year.”

You’re Hired!

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By John Ebbert

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