An interesting opinion piece on Minsiders, authored by Accord Media president Marta Wohrle, dovetails off a panel discussion whether behavioral targeting and bigger ads—two buzzwords that have captivated online advertising punditry ever since the market drifted into the doldrums—were the answer to lift online advertising growth. I thought this was an interesting insight:

When I think about old media, it strikes me that it has been very good at relationships with advertisers and rather poor at cultivating relationships with its consumers. The thing about digital media is that it has gone way too far the other way. Audiences are center and front of successful Web sites and, of course, the whole kit and caboodle when it comes to social media. Advertising, on the other hand, has been commoditized.

While it’s true that technology has created some failures in the way it’s been implemented, I don’t think a focus on targeting and exploiting technology is the root of the problem, although I fully agree that publishers’ focus on them at the exclusion of what makes successful advertising work presents an interesting opportunity. But publishers differ.
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Large publishers with direct traffic

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The large portal sites, the ESPNs, Dictionary.coms and Hulus of the online world, stitch together large, agglomerated audiences. Browsing behavior can be aggregated and analyzed to paint a picture of broad interests, but since these sites rely much more on casual browsing than active searching, granular information on what purchasing decisions lie within the realm of possibility of their viewers is generally impossible to come by.

Television’s advertising model has proven broad interests and large audiences rely on novelty, creativity and humor to make the message penetrate viewers’ skulls. With the Web you have the possibility of interactivity, although without exceptional novelty, there usually isn’t the incentive to engage. Non-interactive ads need to inject the interactivity of gaming (like Innovid does) to make it compelling. And any novelty that becomes a hit will not last that way for long–today’s hot is tomorrow’s boring. Effective advertising for large publishers will always be a moving target. In this case, IAB’s call for the unleashing of the creative spirit and the OPA’s new large-format ads, are attempts by these bodies for their large publisher members to stay a step ahead of the game.
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Medium- and Small-Publishers with Search Traffic

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Although not strictly exclusive of the largest publishers (think About.com and the well-SEOed New York Times) the SMEs of the online world are often less equipped at amassing large audiences as they are at delivering content to a large number of individual searchers. Instead of a huge audience of people you know share a love of football but you don’t know much else about them, search publishers identify 1,000 microaudiences with niche interests and deliver each of them a piece of content that provides advertisers with precise information about what they want to buy and maybe even when.

With the lack of scale at delivering jaw-dropping creative for people interested in hummingbird feeders, publishers have relied on contextual advertising’s ability to mate niche advertisers with niche content. What’s been missing here is not necessarily more engaging advertising (although that can’t hurt), but better targeting. When niche publishers identify visitors with an intense interest in gas masks, then serving up ads for Halloween masks represents a huge missed opportunity. Likewise, it’s a failure of behavioral targeting to not know that someone looking at an article on interest rates after spending several months reading about cars online is probably a pretty good candidate to close a deal with.

So where does that leave the agencies and ad networks? What do they have to focus on: targeting technology or creativity? Depending on the breadth of publishers they’re hoping to work with, advertisers are going to learn quickly that they shouldn’t be picking one.

Google’s AdSense is finding more inventory, now on mobile devices, tapping into the healthy proliferation of applications (apps).

AdSense for Mobile Applications launches today and supports both iPhone- and Android-based applications. IAC’s Urban Spoon, music discovery app Shazam, and radio app FlyCast are among the first using the new ads.  Google claims the service gives developers control over the placement and appearance of ads, presumably similar to standard AdSense for content.

On the advertising side, the process by which advertisers select their audiences and bid for placement is largely similar to the Web-based version of AdSense. “Placement targeting” (choosing which app to advertise on), keyword and broad geo targeting are carried over, although placement targeting is still in the experimental phase.

Google began testing mobile app ads on Urban Spoon three months ago. Its biggest competitor is AdMob, already entrenched on dozens of popular apps.

Since February, AdSense publishers have been able to choose from among three font styles (Times, Arial and Verdana) for their ad units. Now, publishers have some control over font size, as well.

Publishers can choose small, medium and large, subject to what can fit within the ad unit’s dimensions, with small being the current default (that will soon be changed to medium). A size default can be set across your entire account, or you can adjust size at the ad unit level.

It’s great that AdSense is giving its publishers greater control over the way text ads are presented. Publishers might have their own aesthetic preferences—such as wanting the font in an ad to match the font used for content on the page, in terms of face and size—or they might want to experiment with the sizes that improve ad performance. Larger fonts are likely to perform better than smaller in most scenarios, but, as we like to say, without testing, you can never be sure.

When it comes to predicting when the macroeconomic recovery is supposed to come, it’s anyone’s guess. Online advertising, though, is widely understood to be weathering but a small setback in its naturally high growth rate, and recent statistics suggest that the first-time drop in online ad growth is fairly modest, all things considered.

None other than the Beast from Redmond (or rather, a representative from one of its European operations) expects that a recovery won’t happen for another 3 years. In the meantime, John Mangelaars, Microsoft VP Consumer and Online for Europe, Middle East and Africa, suggests an industry shakeup is likely with even established players being winnowed away by an increasingly competitive market.

Why? Part of the reason is efficiency: technology has enabled marketers to better understand and target their spend. Implicit in this is the opportunity to grow when spend can be scaled without compromising ROI.

I’m current at OMMA Publish, the association’s annual conference dedicated to the issues confronting publishers, and this morning’s “great debate” was whether publishers should work with ad networks to monetize their remnant inventory, or if they should sell all of their inventory themselves. Panelists Walker Jacobs (Turner Sports) and David Koretz (Adventive) repeated that allowing advertisers a low-cost channel to purchase advertising through an ad network leads you to a “race to the bottom.”

It’s possible then that advertisers are simply becoming more sophisticated, finding the lowest-cost pathway to buy media, often through ad networks. Networks are offering greater control over ad placement (to avoid problems surrounding sensitivity around context), audience targeting and performance analytics, and their ability to scale might be giving advertisers the right combination of features that they’re looking for. Ad networks have certainly grown their share of total ad spend over the last few years. Whether the drop in unsold inventory has come with a concomitant drop in spend is certainly up for debate.

Yesterday I attended DM2’s ad networks and audience targeting mini-conferences, Digiday Networks and Digiday Target (Twitter #digiday), part of Internet Week here in New York. Both conferences consisted of panels delving into the directions ad networks and behavioral targeting are headed in this time of tightened online ad spend and the growing specter of consumer backlashes over privacy.

The biggest question tackled by panelists in Networks was the fate of the 400-600 (?) ad networks that currently serve up a fragmented market today. Cases were made for their consolidation and buyout by agencies and larger networks, as well as their continued proliferation. Mark Zagorski of the behavioral targeting data exchange Exelate argued that a shakeout has been predicted for quite some time, but still hasn’t happened–an increasingly fragmented ad market continues to serve increasingly fragmented media. Because audience behavior continues to be fine-tuned, ad networks that can deliver the specific audiences advertisers are looking to target will command higher prices, while those without granular audience information will earn less. And, increasingly, audiences are meaning specific purchasing behaviors and stages within the buying process rather than conventional demographic slices, although, according to Amanda Kanaga of Time Warner, agencies are still not yet asking for them.

When it comes to bridging the “data gap” between data providers and agencies, the onus is on the data providers to not only deliver data relevant to advertisers, but also provide the means to apply data-driven insights to media buying and campaign analytics and ROI measurement. Unilever’s Jim Keyt said he was interested in “solutions,” not just data.

There was surprisingly little discussion about privacy concerns and the threat of government regulation of data ownership and use outside Stephen Baker’s (BusinessWeek columnist and author of The Numerati) keynote. However, a speaker argued that the issue goes far beyond online advertising, noting that his supermarket loyalty card probably has more private information about his buying behavior than his ISP.

One of the most interesting startups I heard of was MetricMesh. I spoke with its CEO, Shah Ullah, who explained how the company is aggregating cross-device audiences in order to plan campaigns across media as different, but complementary, as online, mobile and television. Agencies and advertisers can target MetricMesh publishers who can serve ads to audiences that have displayed the sort of behavior across TV viewing, Web site and mobile usage patterns. Interesting stuff!

Just like Anton Chigurh chasing Llewelyn Moss, Google is following you, and similar to the No Country for Old Men hitman, they’re after the cash.

Well, maybe it’s not quite that sinister. A new study published by graduate students at Cal shows that Google, through a combination of its Analytics and advertising (AdSense and Doubleclick) services, manages to drop its pixel on 92 of the top 100 Web sites, and about 88% of the top 400,000 domains (video).

Google maintains that, as a matter of policy as well as technology, tracking individual users is not something they do. If you believe their motto, you might be inclined to believe them. But with such comprehensive reach across the Web, even aggregate traffic behavior statistics give the company something very valuable: the means to properly price inventory.

To do this, Google must integrate its analytics and advertising data, something it also claims that it is contractually obligated with its advertisers not to do. That might be the response to privacy advocates, who are concerned with behavior tracked to individuals. But if that data is anonymized and aggregated? The Google Toolbar captures it, and I suspect if you dig through the Analytics and AdSense TOS, you might find that it’s not prohibited with these services, either.

Advertisers picking placements in traditional media, such as magazines and television, often have a lot of control over where their ads are placed. They typically have access to the editorial calendar or a synopsis of the episode to be aired, and also often know who (some of) the other advertisers are.

In contrast, advertising online usually affords advertisers relatively little control and transparency into the environment their ads are being placed in. Although they can often cherry-pick the sites where their ads appear, they can’t usually pick what content is running adjacent to their ads. Transaction-oriented advertisers might not really care, but this is the sort of thing that drives big brand advertisers and agencies nuts.

Social media ad network BuzzLogic has launched what it calls its “Conversational Advertising Dashboard” to allay exactly these types of anxieties. Information about the type and tone of the ad-adjacent content, the scope and nature of the conversations, author credibility, content freshness and ad performance by conversation are provided, across the 3,000+ “influential” blogs in its publisher base. Along with insight comes control: advertisers can yank placements if they don’t like what they see.

BuzzLogic’s dashboard is an addition to its Conversational Advertising platform, which it launched last year. The network reaches 33.3 million unique monthly visitors and serves approximately 2 billion impressions in concert with networks such as AdSense, BlogAds and Adify.

Ren and I are attending WordCamp in San Francisco, the Automattic-sponsored one-day event dedicated to WordPress, the popular blogging platform (and the one we use here at YieldBuild). This is the fourth anniversary of the SF-based WordCamp—the event has spread to more than a couple dozen around the world in 2009.

Forgive the choppy style - I’m semi-liveblogging. It’s also a bit geekier than your usual YieldBuild blog post, but hey, this is a blog platform conference.

Highlights so far:

• 730 registered attendees, and 2900 blogs (double the number of attendees in 2008)
• Tim Ferriss offered tips on blogging: how long posts should be (both long- and short-form can work), how much time you should spend on a post (as much time as you enjoy) and how to outsource your dating (can have bugs–beware!)
• Google’s Matt Cutts offered his SEO advice: modifying your default and specific blog entry URLs, doing some decent keyword research (esp via the Google keyword tool), using Google Webmaster tools, writing backlink-worthy posts, whether you should post videos or podcasts (HotOrNot score <6? Podcast) etc.
• Social media PR whiz Tara Hunt, doing a conference junket for her book The Whuffie Factor, talked about social capital. (see slides here) Establish connections and build reputation/credibiity. #1. Turn the bullhorn around (listen instead of shout to your customers). Direct2Dell example. #2. become part of the community you serve. #3. create amazing customer experiences (”automagicness”-seamless experience; “throwing sheep”-fun social frivolousness that makes customers comfortable to do more; “lighten up” - defuses business seriousness) #4. embrace the chaos (benefits of openness, transparency and daring) #5. find your higher purpose (gift-giving to build social capital)
• WordPress creator Matt Mullenweg - about 3.5 million WordPress blogs, 11 million downloads, 22 billion pageviews, 4.9 billion spam comments killed by Akismet; history of WordPress from its b2 beginnings, through the various versions and updates. Announced GPL-compliant Theme Developers Page. GPL-compliant business models - Alex King founder Crowd Favorite. Ajaxy Twitter-like P2. Facebook-like BuddyPress. New cool plugin overview. 42% WordPress downloads outside the US - dotSUB for subtitling WordPress.tv videos. Localization/translation of plugins. Blackberry application coming, along with an iPhone app update. Announced that WPMU and WordPress.org code bases are merging. WordPress.org profiles coming (integrating BuddyPress functionality), including WordPress service provider marketplace.

I’ve got to say, by the way, that the WordCamp organizers are really spoiling us with the grub and swag. Omnivores enjoyed barbecue, while we veggies got grilled veggies, collards and mashed potatoes and cornbread. Got great swag, including a blue WordCamp American Apparel t-shirt, buttons, pens and decals galore, and a temporary tattoo. Keep in mind the conference registration cost $20!

Q&A with Matt:

• glotpress.org - open-source translation framework, better porting into plugins and themes
• Blogger import feature does exist to pull in Blogger blogs into WordPress (at least for the content)
• which Ajax library are you using? Started with Prototype and Scriptaculous; now using JQuery, very happy with it.
• anti-plagiarism: plugins to detect? Not yet (but report to WordPress and Google to take down or remove from index)
• plugins for WordPress.com blogs: plugin integration across 5 million blogs tricky. WP team does try to develop towards parity between the .org and .com platforms. Some plugins developed for VIP clients like CNN.com might be released to the .com blogs as options.
• Intense Debate: how do you decide what goes into core? Answer: What is fast, secure and what can we commit to update forever?
• PHP5 over 80% now (~20% remaining PHP4, still supported)
• using WP as a CMS for larger purposes: probably won’t scale up to the level of functionality like Drupal or Joomla because want to keep the code base light. Possibly spin off to CMSPress?
• improving search functionality. Sphinx-based technology might be a solution; in the meantime, Google search is even used on Matt’s blog.
• Revision post & versioning: can customize this via config file. Possible future improvement might be more efficient storage, even though text-heavy revision storage is fairly trivial nowadays

paidContent’s David Kaplan shares Bernstein Research’s updated Ad Tracker, which, for the first time since it began in 2003, showed a decline (-4%) in online ad spend in Q1. Just in case you suspected a particular weakness with online relative to its more traditional brethren, the 18.4% drop in non-online advertising should put that to rest.

What many are, no doubt, wondering is if this past quarter’s drop indicates the nadir of online advertising fortunes, or if there’s more room to fall. The Ad Tracker doesn’t have data before 2003, so it misses the dot-com bubble pop and its effect on ad revenue during 2000-2002. Although there are several reasons why the online advertising market is generally better positioned today than it was 9 years ago, the graph to the right suggests online advertising will continue to be dependent on overall ad spend, and for the latter to grow, we’re all still waiting for an economic recovery.

Google has just opened up a substantial swathe of inventory for AdSense, most of which will be filled with local advertising. AdSense has just announced the Maps Ad Unit for mashup developers using the Google Maps API.

The default implementation serves up 2 AdSense text ad units in a box somewhere along the perimeter of the map; tweaking a parameter in the code can serve up only 1 ad unit instead (for smaller maps). You can see an example of the 2-unit at ZipMaps, and a 1-unit at Acme Mapper. In the example to the right, we’ve pinpointed YieldBuild’s ZIP code; the ad served up is to Roy’s, a Hawaiian restaurant not even a block away.

Google Maps mashups are popular—1688 using the API at last count—and are probably a great way to build local advertiser inventory when mobile map advertising, where the real money is, becomes viable.