I believe if you ask Google and Microsoft what the biggest challenge they have with their advertising businesses, they would say, finding a scalable way to monetize the fastest growing segment of the internet.  Social Media.

CPMs have been dismal at best in the social media space.  However, I believe over time that social networks will evolve.  The communication layer will monetize similarly to hotmail.  But, the apps will become the verticals.  Like Autos, Dating and Movies (Flixster).  Essentially, social networks will become the next generation portal.  The verticals will provide opportunities for premium CPMs to endemic advertisers.

There are many companies working to figure this out.  Today, Appsavvy raised $3.1 million to go after this vertical strategy.  Best of luck to them.

In an effort to expand its reach along the online advertising inventory tail, AOL’s Platform-A, the largest ad network according to ComScore (with 171 billion uniques in July, and 90.4% reach), will be opening up its pool of advertisers to its self-service BidPlace platform, due in the first half of 2009.

With this move, Platform-A extends its display network to a wide swathe of publishers, and runs up against Google AdSense and AdBrite, both of which have given small advertisers the ability to target campaigns on their own. BidPlace will extend the demographic, psychographic, geographic and behavioral targeting platform currently available to Platform-A advertisers to BidPlace. Like with AdSense, BidPlace advertisers will be able to predict volume and spend based on their targeting strategy.

I just got back from attending Adweek’s MIXX Conference, which took place on Monday and Tuesday in New York. MIXX brings together marketers, publishers and agencies to discuss online media.  There was good conversation and some big ideas to chew on.

The first big thing to think about.  Awareness.  If there is a message that anyone cares about, they get it so fast from blogs that spending on building awareness is outdated.  Knowing the ten people to tell is king. The days of having to broadcast your message to all media outlets is gone; you just have to reach the most influential bloggers in your space, the bloggers everyone turns to. The message, if it’s important enough to them, will be disseminated to everyone that matters.

Big idea to chew on, number two (for publishers, ad networks, and just about anyone selling online ads): TV trumps online for ease. It takes too long to buy, run and manage an online campaign compared to TV—it’s much easier to spend a large amount of money on TV.  Google gave some data on the time it takes to spend a dollar on TV vs online.  For big money to move, it needs to be easy to spend the same or more in the same amount of time.  There is a big opportunity for scale and work-flow.

Big idea number three: creative ideas are plenty, but few can execute.  More money is going to high-end production of web content.  The hope is a viral hit with organic traffic.  There’s a big opportunity in ensuring that people show up to the party once it’s built.  

Which leads to big idea number 4: a sophisticated digital strategy has dependency on many platforms.  Take launching the new American Express Green Card (a made-up example).  The agency builds a sophisticated mini site with gorgeous video, and many interactive features. Some media needs to be purchased.  Hope to get the Yahoo home page.  Shit.  It’s sold.  Let’s see if MSN home page is available.  Really?  Damn.  OK, we’ll go with AOL.   PR folks embargo a release with bloggers.  Five secret clues are dropped.  Each one deciphered yields a number.  One person decides to send an SMS message to the number.  They get back a secret URL that expires in 15 minutes.  The bomb starts ticking.  The URL drops them on a video that is all black, with one message: “It’s coming!”, with a subtle American Express hologram in the letters. Someone clicks on the video and the message turns to a single pixel.  With each click a new pixel is added, until every pixel has been clicked.  It looks like…a jumbled puzzle.  Frantically the pieces are arranged.  Yes! Bono from U2.  In his instantly-recognizable Irish accent, he says that you and five friends are invited to a private concert for the first 20,000 people that signup for the American Express Green Business Card.  Everyone is going green.  Then you get three widgets to place anywhere you want with never-before-heard songs from U2—of course, the music videos are tastfully branded with American Express Green Card.  Plus…ringtones! Oh, and you get a limited edition Bono iPhone that plays video.  Sweet.  You show up to the concert and they want you to record the show to spread to all your friends.  But wait.  Steve Jobs walks out on the stage.  He pulls the iPhone from his pocket and types in the 5 numbers. There’s a live streaming feature that the code unlocks as well.  All your friends can go to the Apple site and watch the concert live as well.   And they can get the American Express Green Card which comes with a dollar donated to green causes for every dollar you spend on green products for your business at some of the coolest environmental retailers.  Ah, yes!  But the really cool part is the card is green.  Made from all recycled parts.  It never expires—so you don’t have to get a new card (that’s wasteful).  And your bills are all paperless.  A Facebook green community is launched that helps small businesses do their part.  Brought to you by you know who.  American Express sponsor Green Content Ideas on HubPages that pumps the Facebook app full of useful content.  Your smile widens. You get 2 million people to the website.  15 million people see the music vids.  Your database of SMS addresses has nearly 1 million. Solid gold.  20,000 people signup for the American Express Green Card in under a  minute.  Apple sells a bazillion new iPhones.  Live mobile video streaming takes off.  And the world is a better place.

The formula is simple, and yet complex.  Integrate a website, video, widgets, mobile, social apps and content into an immersive experience.  Collect emails, mobile numbers. Give as many exclusive items away as possible.  Creativity is easy.  Execution is priceless.

This last week several publishers were reporting that their AdSense channels weren’t reporting accurate data.  Google was a little quiet about it, but today on the AdSense blog, they said that all is well again.  We’ve experimented with channels a lot, so we understand how important this data is to publishers.  Glad it’s fixed.

I want to thank everyone that has applied to the beta.  We hired a temporary designer to help with the comping process and today we are sending the first batch of people code to run the YieldBuild service.

Next week, we should be much faster at turning around the requests and we are working hard on a self-service tool.  Thanks again for applying to the beta and your patience as we improve our processes to serve you more quickly.

This has been a busy week for all of us working on YieldBuild. We’ve had over 600 publishers apply to the beta program and applications are still coming in more quickly than we can respond.

While we are hammering away on a self service solution, we are looking for some temporary design help to create mock-ups for all the new beta customers.

We need someone that will work from our office in San Francisco and who has their own computer and graphics software.  If you’re interested, please send an email to James@Hubpages.com.

The folks at Google understand the importance of formatting and placing ads.  Google is getting close to making a new tool for changing formatting options without having to go into pages and update the javascript.  This is a good idea and something we developed at YieldBuild.   We go much further, by just requiring a maximum height and width with the rest of the formatting optimization done from our custom algorithms. YieldBuild also supports placing many ad zones in the page so many more spots can be tested in combination to find the best performing layouts.

Sign up for the YieldBuild Beta.

Over the weekend Techcrunch wrote a piece on YieldBuild.  The response has been fantastic.  We are quickly working to get back to all the publishers that applied to our beta.

I had a little trouble responding to comments on the Techcrunch article because of Akismet flagging them as spam.  Mike dug a few of them out, but there was one more question I wanted to answer.

What stops the publisher for using YB for training and figuring out the optimal layout and quitting YB after that?

YieldBuild is a service that is constantly working to find better layouts.  After the initial training phase, YieldBuild will run several high yielding layouts that outperform the one best layout over time.  Also, different types of users respond to ads differently.  For example, someone that comes to a website in the morning from a search engine will have a different optimal layout than a person that directly navigates to a site in the afternoon.  YieldBuild automatically performs these types of optimizations.

Venture Beat reported a new network for AdSense ads on Facebook today. They claim the ads can be purchased to only target Facebook. AdSense has had site targeted ads for some time, so we aren’t sure what’s different about these ads, since they appear contextually relevant to each application. Maybe Google is gearing up inventory for advertisers and will sell it soon.

But, we agree with Eric Schmidt’s comments about the number of pageviews generated by social networks. Therefore, it makes a ton of sense for AdSense to help publishers monetize their Facebook applications as well as other social networking sites.

The real problem facing social networking sites is monetization. Effective CPMs need to increase significantly. If AdSense can do this for Facebook apps, then it will be a big story.

Text ads, served by Microsoft were spotted on Digg yesterday.  JenSense did a nice job of getting under the covers and pulling out the code.  We also appreciate her comments about the formatting of the ads .

While we wouldn’t be too critical of the contextual matching, we do think that the formatting of the ads could certainly be improved.  After all, that’s our business.

If you look at the code a little more closely, there appears to be only one formatting setting at this point for the ad size.

<script type=”text/javascript”>

dapMgr.enableACB(”top_ad_msft”, false);

dapMgr.renderAd(”top_ad_msft”, “&PG=DIG728&AP=1390″,

728, 90);

</script >

</div><div class=”permalink-wrap”><div id=”contents”>

<div id=”wrapper”>

<div class=”sidebar-short”><div id=”item_ad_msft”

class=”item_ad_image”>

<script type=”text/javascript”>

dapMgr.enableACB(”item_ad_msft”, false);

dapMgr.renderAd(”item_ad_msft”, “&PG=DIG300&AP=1089″,

300, 250);

</script >

We tried to get the ads to come up on Digg, but didn’t get any.  It’s possible that they’re specifying the formatting server-side during provisioning which is then tied back to each ad via the location naming (”top_ad_msft”, “item_ad_msft”). This leaves the door open to more sophisticated formatting down the road. In some ways this may be a more future-proof approach.

So at this point we’d tentatively agree with the assessment that no formatting is being applied to these ads other than size.