aQuantive Straddles Publisher/Advertiser Gap

  |  March 24, 2004   |  Comments

The online advertising company puts together a team to try a new model.

Online advertising firm aQuantive is testing a new under-the-radar initiative to liaise between publishers and advertisers, positioning it somewhere between an agency and a rep firm.

The newly formed team, called Drive Performance Media, consists of employees from different parts of aQuantive, which comprises agencies Avenue A and iFrontier, along with the technology unit, Atlas DMT. The company spun Drive off as a separate group because some of its clients might compete with the company's agency clients.

Drive is partnering with a rotating subset of top-200 publishers as defined by comScore Media Metrix -- buying low-cost media on a CPM basis in some cases and sharing revenue in others. It then sells the audience for that media to advertisers on either a cost-per-acquisition or a cost-per-thousand impressions basis.

The bulk of advertisers are participating in the cost-per-acquisition auction model, called the Performance Program. Advertisers determine the goal and determine what they're willing to pay, and Drive's team ranks those bids by price and relevance. Currently the bidding process is manual, but the company hopes to develop a system similar to that used by search marketing sites.

"Inventory is awarded to those clients that both place highest value on the inventory as well as which creative actually converts," said Scott Howe, who is heading up the new initiative and formerly was general manager of aQuantive's Avenue A.

Drive adds value to the inventory by precisely targeting ads -- using data on Web surfers' behavior on partner publishers' sites, purchase data, demographic data, geo-targeting information, connection speeds, and contextual information. Some of the data is gathered through the third-party ad server, but Drive also appends other, non-personally-identifiable information.

"We feel that the combination of those variables is most powerful," said Howe. "We can help them unlock the value, not just on unsold or undersold inventory, but across the entire range of inventory."

The news comes as other players, including interactive marketing and technology company 24/7 Real Media, try to address the same problem by making forays into the growing behavioral targeting space. More established figures in the area include Tacoda and Revenue Science.

"Behavioral targeting is the thing for 2004," said Gary Stein, analyst for Jupiter Research, which is owned by the parent company of this publication. According to a report hot off the presses from Jupiter, only 10 percent of marketers are currently using behavioral targeting, but 40 to 50 percent say they are optimistic about it.

Behavioral targeting is based on the idea that users' actions suggest what type of advertising they might be receptive to. For instance, a user who visits the automotive section might be a good target for ads from car dealers -- even after leaving the car area. Like search and desktop marketing, two fast-growing sectors of online marketing, behavioral targeting focuses on "hand-raising" behavior that indicates an interest on a user's part and serves ads accordingly.

aQuantive's Drive served its first ad four months ago and now has more than 50 clients.

The second arm of the initiative, the Selector Program, uses the same data but caters to advertisers who already have strict audience segments in mind, such as traditional direct marketers. Inventory is sold on a CPM basis to these clients, because of the greater risk for Drive.

"Some clients have a really tight segmentation scheme. They have a real niche group of users," said Howe, explaining that these clients wouldn't be able to use the Internet cost-effectively without the degree of targeting Drive offers.

Advertisers are given a list of potential publishers and can opt out of any one. Publishers, too, are able to refuse advertisers.

This is essentially the first time aQuantive, an ad technology and services company, has worked on the publishers' side of the business, Howe said.

"We do see ourselves as a liaison between advertisers and publishers and if we can make introductions between them, everyone wins. Advertisers win because they get better results, publishers win because they get better dollar value for their content and consumers win because they get a better Web surfing experience," Howe said.

If the Drive experiment works out, Howe says aQuantive hopes to launch it officially as an operating unit of the parent company.

"In some respects I feel like we are fulfilling the vision that all of us had of online as one-to-one marketing mechanism," said Howe. "The truth is that it's been a broadcast medium. Even if we don't do it perfectly yet, that's ok because there is so much waste. Small improvements unlock a lot of value for advertisers."

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