Quantcast: Defining Audience Analytics

The best things in life are free. Quantcast is a free media measurement service that enables advertisers to view audience reports for millions of sites and services. Recently I chatted with CMO Adam Gerber about the methodology behind his company’s success.

Shane Atchison: Quantcast is doing a fantastic job building its product and brand. What do you attribute your success to?

Adam Gerber: Our success is a function of delivering a solution the marketplace lacks and which it craves. We’re trying to help publishers who sell audiences and advertisers/agencies who buy them have improved and more sophisticated ways of understanding, segmenting, and establishing value based on the characteristics of those audiences. Search advertising, which is effectively a hyper-addressable marketplace, works because it has transparency and liquidity. But search is about consumers finding advertisers; they’re already in an active mode. Brand advertising, the upper funnel, is about marketers finding their consumers. Better targeting and eventually addressability in the upper funnel require definition around segmentation and real-time decisions, the equivalent of the keyword. But for brands, it’s about the “who” — demographically, contextually, behaviorally, etcetera. Our focus is on enabling that evolution so that buyers and sellers can drive better business results.

SA: Your open syndicated ratings service appears to be one of a kind. How does it work?

AG: It is one of a kind. We’re actually doing a number of things that are revolutionary. We believe in an addressable media economy and to get there, the market needs a new way of thinking about audience data and measurement. As an industry, sellers and buyers of media need transparency and depth tied to the data they work with. But more importantly, we need measurement approaches that are built for a digital world, that provide both census-level capabilities to drive real-time advertising integration and the audience-based measures that will be used to drive targeting and allocation decisions.

Unlike any other measurement service, we enable a couple of key things. Most importantly, participation and control. Any publisher can have directly measured audience data generated via our Quantcast Publisher service — and it’s free. Publishers participate in that service, they have control over how they organize their audiences, and they decide what data is offered for public view. And I’d point out, we’ve had terrific adoption of our Publisher service. Over 10 million Web properties are now directly measured: sites, blogs, video channels, etcetera. Many of the largest publishers on the Web are now participating in the service.

The result is a unique solution that marries the benefits of direct measurement (cookies) with those of panel-based reference points (people/audience). Our model is based on inference. We don’t just intersect our pixel data with our panel, do a simple extrapolation, and call it a day (e.g., for a property, if we see 100 directly measured cookies and see 10 of them across our panel, we don’t just ascribe the characteristics of the people we saw in the panel to the full, directly measured audience). We are literally collecting billions of new directly measured data points every day and building a model that continually improves.

SA: Can you share some examples of how ROI (define) is measured?

AG: We’re helping publishers today create actionable inventory packages that have directly measured audience data tied to them. That’s a pretty powerful thing for a seller, and a really unique offering for buyers. They simply haven’t had real audience data tied to the actual allocation of media they are buying in the online space. And I want to re-enforce [that] I’m not talking about impression counts. Obviously, we’ve been able to predict and account for impressions for over a decade. I’m talking about demographics and affinities for actual traffic. That’s something unique. Marketers are also taking advantage of our solution to better understand who is buying. This helps them optimize their media buys.

SA: The Web analytics space has been incredibly hot the past year. How do you differentiate from the other players in your space?

AG: It’s pretty simple. We don’t put ourselves in the Web analytics space. Web analytics has been about understanding your own site traffic characteristics. Notice I used the term “traffic,” which to me is about the “what,” not audience, which is much more about the “who.” Web analytics solutions are terrific because they give you a directly measured view of traffic flow, metrics tied to abandonment, content trends, merchandizing performance, etcetera. Analytics services up until now have been internal solutions. They are generally silo implementations that don’t allow for Internet-wide models to be built (in aggregate form). We are about audience measurement and activation.

Quantcast is focused on enabling publishers and marketers to understand the characteristics of audiences as they flow through digital media. The limitation of analytics solutions as they exist today is they tell you what is happening, but they don’t give you any insight into why from an audience-dimension perspective. More importantly, they don’t enable easy marketplace consideration and implementation of the data. They aren’t consistent, scalable third-party data providers. That last point may seem confusing, so let me put it a different way.

If you’re a publisher/salesperson, you know that if you walk into an agency-buyer meeting and present your internal Web analytics data, it will probably be rejected. Buyers today defer to audience services like comScore and Nielsen for analysis. Agency buyers, especially those focused on brand spending as opposed to direct marketing/performance, don’t have the time or resources to evaluate every publisher’s independent data. It’s based on different methodology than they care about (cookies instead of people), and more importantly it’s not easily digestible. Buyers need scalable, independent services that facilitate easy consumption of trustworthy and transparent audience intelligence. We believe that we’re bringing a fresh perspective to the marketplace: the data that buyers need and the participation, control, and accuracy that publishers expect.

SA: Who are your direct and indirect competitors?

AG: This is always a tough question to answer, because honestly we don’t really see any direct competitors right now. Obviously, there are folks out there trying to do pieces of what we are doing.

When we first launched, we were bucketed in with folks like Alexa and Compete, mainly because we were free and we provided data for millions of domains. As we’ve grown, expanded our services, and focused attention on demographics and audience insights, folks have started to talk about us in relation to comScore and Nielsen. While we offer some similar services, we are focused on completely differently visions. The key difference is one of direct measurement and scale. Panels are great for providing broad visibility and competitive analysis, but they don’t deal well with the fragmentation and distribution of today’s digital media economy. Perhaps most importantly, though, panels will never enable addressable advertising. Direct measurement allows us to capture media consumption data at arbitrary levels of precision, and while other audience measurement vendors are toying with direct measurement, no one else is close to operating at the scale we currently are.

Google is also looking to make inroads into this market. Everyone saw Google’s Ad Planner announcement in June. Ad Planner theoretically competes with one of our offerings: Quantcast Media Planner. There are stark differences between the services, though. We, like many folks in the industry who reacted to the launch, view Ad Planner as a tool aimed more at helping small marketers buy ads on the Google ad network. Google, of course, has the scale and technical expertise to handle lots of data. The market will decide if it has the independence to work directly with all of the top online publishers.

SA: How do you make money?

AG: It’s a great question, and one that we get asked all the time. All of our services to date are free…We plan to maintain these services as open and free offerings. We believe strongly that the marketplace — everyone in the market — needs transparent access to data and ways to actively participate in audience measurement.

Ultimately, we believe the future of advertising rests on better use of audience data to drive addressability. We’ll be introducing services that will allow more effective segmentation and better returns for publishers and advertisers alike. Quantcast will charge for these services. But I want to reinforce [that] our base services will remain free.

SA: In an economic slowdown, why should an organization move forward with your solution as opposed to other marketing solutions?

AG: Our solution is free, and it provides both publishers and marketers with intelligence that can help them drive their bottom line. Publishers can generate much better audience data to empower their sales teams. And that increased audience understanding drives higher value to advertisers. At the end of the day, we are focused on helping buyer and seller transact in more sophisticated ways, a reality that should drive results for both sides of the marketplace. We believe that’s a pretty compelling offering at a time when buyers and sellers are looking for enhanced ROI.

SA: What are the big opportunities for your business, your customers, and the market as a whole in 2008?

AG: Our biggest opportunity is to keep engaging the marketplace and delivering innovative services: educating people about addressability and helping them understand how our collective business is going to change over the next decade. Some of those changes will happen in the short term, some long term. We’re moving from a unit-based media economy to an impression-based world. It’s going to have dramatic impact on how we think about audience activation, segmentation, and ROI.

We have seen a terrific adoption curve by media companies over the past 18 months. Everyone from CBS, NBC, and Fox to major publishing houses like Time Inc. and IDG. And we’ve seen Web-only publishers adopt at very high rates, everyone from PerezHilton.com to Huffington Post, WordPress, Slide, and Digg.

And since we started talking to agencies and marketers earlier this year, [we’ve had] just a fantastic response. While I can’t talk specifics about which agencies and clients, suffice it to say [that] many of the largest digital shops and marketers are using our marketer-focused services.

Our success is a direct function of focusing on a need and delivering a solution for the publishers’ and marketers’ ecosystem. We just have to keep doing that, continuing to drive value for our publisher and marketer user base and maintaining our leadership position.