YieldBuild CEO, Paul Edmondson, spoke at a panel today at the Digital Hollywood Building Blocks conference in San Jose, entitled The Performance-Based Advertising System. Moderated by Short Hills Media Group President Ron Yurman, the panel discussed the technologies, advertiser and consumer receptiveness, and regulatory environment surrounding ad targeting and optimization methodologies.

The panel members included:

• Paul Edmondson, CEO, YieldBuild
• Chris Hansen, VP Performance Marketing, 360i
• Don Mathis, President, Epic Advertising
• Assaf Igell, VP, Syntryx
• Jodie McAfee, Managing Director, Boomerang iTV
• Alex Briele, Sales Director, MediaBank

Yurman opened with an analogy to Ginsu knives, which was at the forefront of performance-based advertising back in the 1970s–continuously refinining both the message and media buying. Don Mathis went on to say that today’s performance-based advertising (PBA) grew out of the offline direct response space, and is still manned by the “data junkies” that track conversion from impressions to purchase/action.

Chris Hansen said CPA is the only important metric; other metrics are ancillary. He said performance-oriented direct marketers have distaste a for anything not tracked, while the challenge is different for brand advertisers: how to convince them that online display advertising will eventually convert to customers.

Paul added that among online publishers, brand advertising through PBA is available at an effective discount, because PBA’s pricing models effectively include impressions-based brand advertising as part of their delivery. Top-end publishers are not having any difficulty selling premium advertising, and filling their top inventory. Medium-sized publishers have experienced some market softness–partly due to economic conditions–while selling performance-based advertising in remnant inventory is common.

The discussion then turned to behavioral targeting, “the holy grail” over the past 2 years, according to Hansen. He mentioned its ability to recognize and target consumers’ purchase intent and place in the purchase cycle. Behavioral targeting is more reliable than registration data because it relies in browsing habits, rather than stated demographic buckets. Recently, we’ve seen innovation in this space, around better data sources and predictive models. Privacy issues & regulation continue to be sussed out. Network Advertising Initiative (industry self-regulation on privacy) might satisfy the FTC.

Paul said that display advertising (banners) typically experience a much smaller clickthrough rate (CTR) compared to contextual advertising, less than 1% for display vs around 5% for contextual advertising, on the same sort of Web page. So display advertising can be the first step in the conversion-oriented sales funnel, although its relatively low rate of engagement means that you have to get a much larger volume of viewers to properly “prime the pump.”

Don said today’s CPA (online) is analogous to the traditional direct response (offline), at least until now, although metrics relating the value of online branding efforts to final conversion are beginning to take shape. The “viewthrough” metric (someone sees an ad, doesn’t actively engage with it at the time, but takes action at a later date) is one such metric being explored. 4A is currently working on a project on it – can we come up with a standard that quantifies how brand awareness spend connects to customer acquisition?

At an audience member’s prompting, the panel concluded with a discussion on consumers’ response to behavioral targeting, which can get creepy. Paul mentioned that the management of user behavior data is forming around the new “social data” space, and solutions are coming about that will likely accommodate users’ concerns, probably by giving users control over the ads and advertisers they’re exposed to, as well as over the profile that advertisers and social networks have assembled about them. Opt-in and user control will be key.

This entry was posted on Thursday, August 7th, 2008 at 1:49 pm and is filed under Online Advertising. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.