Nick Ehle

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The Market Doesn’t Understand Ad Tech

November 14th, 2013 · No Comments

One of these companies does not look like the other.

Tremor (TRMR) had a massive selloff last Friday, losing half of its value. The selloff was triggered by a missed earnings report that revealed slowing growth and widening losses. A double whammy. I won’t opine on the fair valuation of TRMR, but the collapse of that stock also triggered selloffs in other recently IPO’ed ad tech companies, including Rocket Fuel (FUEL), Criteo (CRTO), and Yume (YUME). To the outside observer, this intuitively makes sense, but the reality is a bit different.

Tremor is a traditional advertising network, a business model that has been in place since in the earliest days of of Internet advertising. Essentially, they bundle advertising inventory from a variety of publishers and resell it to advertisers. Tremor happens to be an ad network that specializes in video, but it’s a business model that has been disrupted by a new generation of programmatic ad tech companies that buy advertising in exchanges.

Rocket Fuel, Criteo, and Yume all belong to this next generation of ad tech, and they are the reason that Tremor is having such a hard time meeting the market’s growth and profitability expectations. Tremor is feeling the heat from the newer entrants.

The market came back to its senses this week, and FUEL, CRTO, and YUME have all recovered from last week’s selloff. This appears to be a sign that the market is starting to understand the wrinkles of the industry, but in an ecosystem of hundreds of small companies, investors have their work cut out for them.

→ No CommentsTags: advertising · finance · technology

Revisiting Digital Content Distribution

December 14th, 2012 · No Comments

By a wide margin, my Netflix commentary is the most read post on the blog. In the nearly three years since I wrote that post, Over-The-Top (OTT) content providers such as Netflix, Hulu, and Amazon have thrived and become even more pervasive and readily accessible. In addition to standalone boxes like the Roku, these OTT services are available on tablets, phones, gaming systems, blu ray players, and even some TVs. So, it comes as no surprise that more and more cable subscribers and cutting the cord and turning off their cable television service.

As MediaPost articulates:

2012 is the ninth consecutive year of decline in cable video subscribers, going back to 2004. But at the same time, cable operators have also seen a trend of rising business from voice and data revenues.

The trend is inescapable: the era of content being controlled by its distributors is coming to an end.

The WSJ reports that cable companies are trying to fight against the tide by offering great bundle deals for triple play offerings (tv, internet, phone). Cable companies are offering these loss-leader bundles in the hopes that these customers will keep the bundled service offerings even after their rates rise dramatically in 12 months. Of course, these tactics are just an attempt to stem the rising tide. The availability and popularity of digital content distribution channels is going to increase in the coming years, and as a result, content creators will have more power in the industry than ever before. The time of video distribution monopolies is coming to an end.

→ No CommentsTags: entertainment · media

Tribal Brand Index

March 15th, 2011 · No Comments

Disclaimer: I updated this post on January 27, 2015. The article that follows is a reblog of my first post on the Media6Degrees blog in March 2011. Since then, the company has rebranded to Dstillery and removed this entry from its blog; however, the original article can still be found in the WayBack Machine. One of my responsibilities at Media6Degrees was as the product manager for Orbit, their client-facing reporting tool. This post announced the 1.0 launch of the product.

Today, Media6Degrees is launching Orbit, our client-facing reporting tool. Orbit contains basic campaign reporting metrics (including impressions, site-visits, clicks, conversions) and a set of unique tools for audience measurement that we call Social Brand Metrics (SBM). The SBM portfolio includes Tribal Brand Index, Social Media Profile, and Audience Validation. In today’s post, I will explain some of the insights that Tribal Brand Index provides to our customers.

Tribal Brand Index (TBI) measures how densely clustered a marketer’s existing customers are relative to a random sample of Internet users, where clusters are formed around commonly visited content on the web. We have found that TBI generally correlates with campaign performance, and can be a leading indicator of how well our Social Targeting™ technology can be deployed.

A high TBI indicates that we have derived a unique targeting signature from a marketer’s existing customers. The higher the TBI, the stronger this unique signal. A strong signal generally enables better Social Targeting™, because the audience is more distinctly identifiable, which enables scalable advertising campaigns and correlates positively with high performance.

Tribal Brand Index alone does not tell us anything about the size of the audience. In the TBI report, we include site visitor data and plot TBI vs. size of audience for each marketer or marketer segment.

The plotted data falls into four quadrants, each associated with a unique marketing insight:

    Tribal Nations are marketers that have high TBIs and high site traffic. When you combine a strong targeting signal with a high level of site traffic, the conditions are primed for a Social Targeting™ campaign that can perform well and at scale.

    Tight Bands are marketers that have high TBIs and relatively low traffic. These marketers have a strong, distinct targeting signal but a smaller base of customers to expand upon. They present a good opportunity to use Social Targeting™ to scale site traffic through advertising.

    Mass Brands are marketers that have high site traffic and low TBIs. In order to reach their extended audience effectively, Mass Brands should look at ways to segment users into groups that establish stronger signals, either through targeting customers in areas of their site associated with distinct product segments or perhaps through the use of social media strategies.

    Loose Links are marketers with low TBIs and low site traffic. Marketers should revisit their customer targeting strategy to cover areas of their site that have higher traffic. Alternative data sources may be needed as seed data to kick-start campaigns.

Rather than using TBI as a metric to necessarily be optimized, we believe that marketers can use this report to better understand their audiences and determine how Social Targeting™ can help them achieve their marketing objectives.

→ No CommentsTags: advertising · media · technology