Buying and Selling Ads Based on Performance

When Right Media tries to describe its Yield Manager ad platform, it has a tough time. Forget trying to explain it to the layperson. Even to someone in the business (like me), it can sound like a Ginsu knife: it sells ads! It serves ads! But wait, there’s more!

Right Media likes to explain Yield Manager as akin to an auction marketplace, like eBay or Nasdaq, except instead of electronically facilitating the sale of merchandise or stocks, Yield Manager facilitates the sale of online advertising. In real time, Yield Manager allows the online advertising marketplace to compete for every ad impression based on the unique value of that impression to the buyer and seller. It moves the online ad marketplace from static, fixed pricing to dynamic, fluid pricing.

My reaction was, “Huh? How am I supposed to build a media plan using this system? Sounds next to impossible.”

To make sense of it all, I had several lengthy calls with Right Media’s CEO, Mike Walrath, who assured me his system really improves buying efficiencies. Yield Manager, he explained, gives the agency much more in-house control over centralizing a campaign and managing its ultimate ROI (define). Currently, media buying outside Yield Manager looks something like this: The media buyer puts forth an RFP (define) to which the publishers and ad networks respond. Buys are negotiated, and campaigns are launched.

Using data from the ad server, the campaign manager can attempt to manually optimize the campaign, but she’s also relying on the network or publisher to automatically optimize it. As these optimizations take place within silos, where one network can’t see how the campaign is performing on another network or with another publisher, teachings from the total campaign can’t be universally applied. This leads to a lot of wasted ad serves. It also may mean the advertiser will pay a lot more for undesirable ads than she should have. If she had known a different placement, site, or user was more valuable at the moment the ad was served, she may have be willing to pay far more.

Yield Manager makes this possible. The platform’s global access to all transactions in its marketplace eliminates siloed optimization. Instead, by defining the campaign’s metric objectives (e.g., target and not to exceed pricing) within the system, it can adjust and make the buy on the fly to maximize the transaction for all parties.

With a new campaign, of course, the buyer can’t necessarily know what maximum/minimum CPMs (define) will achieve her objectives. Yield Manager takes into account “learning impressions,” for which it charges the average market rate but which the buyer controls by defining upfront some benchmark of learning, such as a quantity of conversions, clicks, or views. Once that benchmark is reached, Yield Manager can implement dynamic pricing for the campaign.

Yield Manager can also improve workflow efficiencies. Like other ad servers, it monitors and maximizes the advertiser’s campaign objectives through tracking pixels. In typical online media campaigns, a tracking tag for each piece of creative must also be trafficked to the publisher. But, advertisers buying through Yield Manager from publishers and networks that also use it needn’t exchange tags. All impressions are handled centrally. That means ads serve faster, too.

Yield Manager has a campaign management interface like other ad servers. Campaign reporting is still available in granular detail (campaign, creative, placement, click, conversion, ROI, etc.). Using the system costs an agency no more than other ad servers. Media buying is essentially still executed in the same way. But with both sides participating, the system’s optimization and dynamic pricing lets an advertiser get more ad effectiveness for its dollar.

When an advertiser users Yield Manager to buy from a network or publisher not using it, tags must be generated and sent to the seller, as with any third-party ad-management system. But creative and optimization are still centralized and automated by the system.

As Yield Manager’s marketplace grows, so grows its value to all involved. For publishers, it means more advertisers buy their ads; for advertisers, there are more impressions to buy. Currently, Yield Manager handles one billion ad impressions per day, with its marketplace growing at about 15-20 percent per month.

I’ll be interested to see what this Ginsu can do.

Meet Hollis at Search Engine Strategies in Chicago, December 5-8, 2005.

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