On Thursday, Google and VivaKi, part of the digital agency Publicis Groupe, will announce a two-year renewal of their 2008 partnership that will incorporate a new platform for buying video and mobile display ads in the United States and Europe. The platform, an extension of the VivaKi Nerve Center trading desk, or the Audience on Demand product, would allow companies to bid on mobile and video display advertising space in real time on ad exchanges, including Google’s DoubleClick exchange.

“Marketers have seen the power of addressable advertising; the logical progression is to do this in video and in mobile advertising,” said Curt Hecht, chief executive of VivaKi Nerve Center. “Finding the right person at the right time on any screen or any device is the future of marketing,” Mr. Hecht said.

The vision for the product that Google will co-develop with VivaKi involves building on the existing technology of Invite Media, the ad-buying platform Google bought in June, and the automated display advertising technology of Teracent, the San Mateo start-up Google acquired in 2009, said Neal Mohan, the vice president for product management responsible for Google’s display-advertising products. “It’s a large market today; we believe that it can be substantially larger,” said Mr. Mohan, echoing one of the predictions he made for the future of Google’s display-advertising model at the Interactive Advertising Bureau’s Mixx conference in New York in September.

Mr. Mohan described the feedback from publishers as “extremely positive,” adding that display advertising has so far represented a $2.5 billion business for the company, and mobile advertising a $1 billion yearly run-rate. Mr. Hecht predicts that video and mobile advertising will make up a bigger market than graphical display advertising and that the impact will be seen on the creative side. “The notion of dynamic messaging and advertising is going to be critical,” he said. “The real-time buying aspect of this is going to turn into real-time creative as well.”

Google’s acquisitions of YouTube and AdMob, the mobile advertising start-up, also represent vast inventory pools for advertisers, added Mr. Hecht.

Realtime ad bidding network AppNexus today announced that it raised $50 million in a Series C financing. Investors include Microsoft, Venrock, Kodiak Venture Partners and First Round Capital. The round brings the total capital raised by AppNexus since its founding to $65.5 million. The company first raised an angel round in 2007 from Ron Conway, Marc Andreesen, Ben Horowitz, Khosla Ventures, and First Round Capital. AppNexus is based in New York City, and was founded by Brian O’Kelley, who was also a co-founder of Right Media. (Yahoo purchased Right Media in 2007 for about $700 million). AppNexus calls itself a realtime bidding platform for advertisers. It allows advertisers to bid for display ad spots across the Internet through 15 different ad networks. Advertisers can optimize for cost-per-clicks, cost-per-impressions, and other metrics.

Companies Advance Brand Safety in the Industry

NEW YORK, NY (August 18, 2010) — Responding to marketers' call for better brand safety and enhanced transparency online, the Interactive Advertising Bureau (IAB) today announced that 16 member companies are the first to commit to comprehensive self-certification against the IAB "Networks & Exchanges Quality Assurance Guidelines." Released in June of this year, the guidelines are part of a far-reaching industry initiative lead by the IAB to increase buyer control over the placement and context of advertising on ad networks and exchanges. The announcement was made at ClickZ Connected Marketing Week in San Francisco, where the IAB Networks & Exchanges Committee programmed a one-day forum on ad networks and exchanges.

The first 16 IAB member companies that will self-certify in early 2011 are

24/7 Real Media Adify AOL/Advertising.com AudienceScience Burst Media Casale Media ContextWeb, Inc. / ADSDAQ Exchange CPX Interactive

Fox Audience Network Google ScanScout Specific Media Traffic Marketplace Tremor Media Yahoo! ValueClick Media

"We applaud the efforts of these ad networks and exchanges to be the first to commit to the standards and practices covered by 'Networks & Exchanges Quality Assurance Guidelines,'" said Randall Rothenberg, President and CEO, IAB. "It is no small task to undergo the self-certification process and, once compliant, these organizations will provide marketers the highest level of brand safety. Every agency and marketer should consider compliance with these guidelines as a buying standard and we invite additional ad networks and exchanges to join the program."

"The IAB Quality Assurance Guidelines demonstrate to marketers and agencies that we put brand safety first," said Jay Sears, General Manager of ContextWeb, Inc.'s ADSDAQ Exchange, and Co-Chair of the IAB Networks & Exchanges Committee. "These 16 companies that have raised their hand must now engage in a full-scale implementation that will require extensive training and investment—it shows a true commitment to control, transparency and simplifying the buying of digital media." "The certification program we designed is a way to provide marketers and agencies a standardized approach that will make buying advertising easier and give increased control over where ads are placed," said David Jacobs, Senior Vice President, Advertising.com, and Co-Chair of the IAB N&E Ad Certification Working Group. "We anticipate broad adoption of these guidelines by parties participating in the self certification process."

The rigorous self-certification process requires the participating companies to:

• Attend IAB training sessions developed to guide compliance officers through the proper implementations of the guidelines
• Conduct quarterly internal audits to test compliance with the guidelines
• Submit forms to the IAB from both the compliance officer and business unit leader attesting to adherence to the guidelines

"Networks & Exchanges Quality Assurance Guidelines" can be found on the IAB website at:
http://www.iab.net/ne_guidelines

About the IAB's Networks & Exchanges Committee
The IAB Networks and Exchanges Committee is comprised of senior leaders of ad networks and ad exchanges that are general member companies. The committee is dedicated to furthering the interests of ad networks and ad exchanges in today's complex ad marketplace. Committee objectives are to foster the highest standards of professionalism and accountability in relationships with publishers, advertisers and the agency community, to develop programs that enable revenue growth, and to create best practices that protect consumers and the industry. A full list of Committee member companies can be found at:
http://www.iab.net/networks_and_exchanges_committee

Andy Atherton

Amid the current all-consuming obsession with real-time bidding, hyper-targeting and other buzzwords, it may seem something of an anachronism to pause and reflect on what lessons we in online advertising might learn from TV's upfront marketplace. But there is a reason it works for TV. And those same reasons could help brand dollars flow online.

This type of forward buying of media is so common because it accommodates the way large consumer products companies actually run their businesses, with complex operating structures and supply chains. These same companies spend the majority of total brand advertising dollars -- exactly those elusive brand dollars that have been so relatively slow to come online. So, regardless of our ever-increasing "share of audience time," we in the online ad industry simply won't get that money if we continue our exclusive obsession with capabilities that are exciting, but constantly changing -- and may not actually serve the largest marketers. To get these brand dollars, we must accommodate consumer product companies' need to plan ahead with scalable, predictable forward media-buying capabilities: It's time for an Online Media Futures exchange.

Let me explain.

A streamlined modern supply chain is an amazing thing and, in a "flat" world, a critical thing. Raw material inputs, manufacturing, packaging, distribution, merchandising, replenishment all must work together with clockwork precision. And the financial operation of a well-tuned supply chain is just as well choreographed as the physical operation. Costs, inventory levels, pricing and margins -- all must be carefully planned and managed by finance and procurement teams that are tasked with delivering a predictable stream of earnings from the operating business.

Futures markets have become an essential tool to help procurement and financial management assure the smooth functioning of these complex modern supply chains. For those of you that may be less familiar, futures markets trade standardized contracts for different commodities like financial instruments (indeed some are financial instruments only). Futures contracts exist for a wide variety of different commodities, which are primarily used as raw materials. For example, farmers large and small can sell futures contracts to lock in prices for their crops in advance. The other side of those trades may be a large food company looking to ensure supply and limit price volatility for key ingredients. Similarly, a major airline may buy jet-fuel futures contracts for similar reasons. With these and a variety of other applications, the futures markets have become increasingly important, to the point that futures market activity is often a material factor in quarterly earnings and receives commensurate attention.

One of the key raw materials for most consumer products is media (advertising), which can account for up to 20% of the wholesale price of a product. To use breakfast cereal as an example, that would put media neck and neck with sugar, packaging and vitamins for runner-up to grain on the list of largest ingredients (truly "people eating advertising" as one brand manager put it in an article last summer). So as you might expect then, futures are also very important in the media market. They are just not called "futures."

Futures will gain importance online
The highest profile use of futures in media is in the annual TV upfront, where some $15 billion of media -- more than 10% of annual measured spend across all media -- changes hands between large brand advertisers and TV networks. While these agreements are struck over two weeks, the spending itself occurs over the entire upcoming year -- the essence of a futures transaction. Countless more billions are put to work in forward buys for print and even scatter TV. (The sticklers out there will notice that all of these transactions are more accurately "forwards" and not futures, but this is a technical distinction only and doesn't change the thrust of the argument, i.e. that locking in supply and pricing in advance is as important for media as it is for other key raw materials in the supply chain.)

So, as online media becomes a more material portion of the overall mix (and/or the distinction between online and offline blurs), we should naturally expect to see the futures market become as important online as it is and has been offline. Doubly so as the same procurement teams that rely on futures-based commodity hedging programs get ever more involved in media purchasing.

Why, then, is the infrastructure of the online advertising market today -- including ad exchanges, ad networks and DSPs -- almost exclusively focused on an auction-driven spot market? To be sure, this spot market is vibrant, active and generates tremendous value for many participants, but it does nothing to address the needs of large brand advertisers to plan and manage their supply chains. Brand advertising is (rightly) seen as the next huge growth opportunity for online -- everyone wants the online brand media market to become large and sustainable. But the current online obsession with the spot market is ignoring these advertisers' requirements, and creating runaway complexity as it does so.

Behavioral targeting and other subjective targeting schemes are the currency for this spot-market ecosystem and can be useful tools for some spot-market applications, particularly where online activity can be quickly and precisely tied to online ad exposure. However, they will not support the scale, standardization and delivery predictability a functioning futures market requires.

Fortunately, the objective targeting criteria large brand advertisers have been using for a century offline (e.g., context, demo, geo, quality) are perfectly suited to the task. I say "fortunately" for several reasons. First and foremost, marketing mix models and panel-based studies confirm that effective management of objective targeting criteria and frequency are the fundamental drivers of high ROI sales offline -- where more than 95% of retail commerce still takes place. Objective targeting criteria can also be efficiently and predictably deployed across different media types and providers -- a key enabler in smoothly integrating online media into the broader media mix that is so important in keeping the supply chain humming. Finally, objective targeting criteria also facilitate clearing, which is essential to maintaining the integrity of transactions that are agreed today, but not delivered for months.

Developing an online media futures exchange beside and/or atop the current spot infrastructure is the critical next step for online media. New players have these capabilities and the online media market can no longer afford to ignore the distinction between spot and futures, even as everyone wonders, "Where is all that brand money?"

ABOUT THE AUTHOR

Andy Atherton is cofounder and chief operating officer of Brand.net.