The ad network head talks about how to make sense of the different kinds of networks, what's coming in 2006 and more.
Gurbaksh Chahal co-founded BlueLithium in 2004. Today, the company is able to deliver over six billion ad impressions to over 60 percent of internet users every month for its growing customer base of Fortune 1000 corporations, direct marketers and advertising agencies. Before BlueLithium, Chahal founded Click Agents, a company he created out of his bedroom in December 1998. Within two years, he took Click Agents into a strategic merger, in a deal valued at up to $70 million with its publicly traded competitor, ValueClick, Inc., to create the largest internet advertising network.
Brad Berens: After the bubble, ad networks had a bad reputation, but lately the stock for this sort of business seems to be rising... why is that?
Gurbaksh Chahal: Ad networks have evolved from what they were in the early 2000s. Then, it was all about reach and cheap CPMs. Today, networks like BlueLithium use advanced targeting and optimization technologies to make campaigns perform better than if the advertiser bought the sites directly.
Add this performance edge on top of the traditional cost savings, scale and ease of use advantages of networks and you'll see why ad network buys are becoming the strategic core of so many campaigns for agencies.
Berens: Relatedly, 2005 seemed like a terrific year for Ad Networks-- with a new ad network seeming to appear on the landscape every few days. Why do you think this happened in 2005? And what do you predict for ad networks in 2006?
Chahal: Today, some of the best performing inventory for advertisers is out on the fringes on social networking sites, user-generated content sites, video, multi-media and photo community sites and other places that didn't exist two years ago. Ad networks like BlueLithium give agencies and advertisers a safe, efficient way to access this content for their campaigns. Networks are the best way for advertisers to get at the juiciest, fastest growing parts of the internet. Of course, all ad networks are not created equal. Advertisers want to look for networks that invest in their own ad server, together with sophisticated optimization technology and targeting tools such as behavioral and semantic. I predict that as the web continues to expand and fragment, the ad networks that provide these capabilities will become increasingly strategic to agencies and advertisers.
Berens: Let's talk about differentiating factors among different networks, and this is something that we've been following closely here at iMedia for a while-- as you might have noticed with our Ad Networks Crib Sheet . Without it being too much of a commercial for BlueLithium, what are the three factors that you recommend advertisers think about when trying to choose an ad network?
Chahal: The three factors I'd recommend advertisers look for in selecting an ad network are innovation, innovation and innovation.
Seriously, many of the technologies that ad networks are buzzing about today can be leased, purchased from a vendor or developed in a matter of days by an engineering team. Even among the largest ad networks there's parity among most products and capabilities. What truly sets a next generation network like BlueLithium apart is our commitment to innovate. For example, instead of just providing behavioral targeting, our AdPath solution offers both segment targeting and retargeting. Depending on the advertiser, this can make a significant difference in bottom-line campaign results and overall ROI. We're about to introduce the first predictive semantic targeting solution. This goes well beyond the natural language semantic targeting that Google and other search engines are talking about, and will push campaign performance to a new level. Innovations such as these help an advertiser see which networks are investing in the best people and technology and, therefore, are likely to bring the most to the table as a media partner.
Berens: Let's try again with that differentiation question: sure, it's always great to work with innovative technology partners, but pretend that you're talking with a brand marketer who is dipping a cautious first toe into the internet waters. His media team has been making publisher-by-publisher buys because he got scared out of the network space sometime in 2001. He's confused by the state of the playing field and needs your help: not just to sell BlueLithium but to make sense of the different kinds of networks. What, to your way of thinking, are they?
Chahal: The main distinction between networks is whether they use a rep model or an arbitrage model. In the rep model, the network is simply selling inventory on behalf of the publisher, as an alternative to the publisher employing their own sales force. In the arbitrage model, the network is buying inventory from publishers, re-assembling it into packages that match the audience requirements of the advertiser, then using advanced targeting and optimization technologies to further enhance the performance of the inventory. This is BlueLithium's model. A lot has been written about the relative strengths of each model, but it boils down to this: rep networks provide the convenience of buying a fully-disclosed portfolio of sites with a single IO. Arbitrage networks integrate new capabilities such as behavioral targeting/remarketing, semantic analysis, on-the-fly optimization and audience-centric buys to deliver strong bottom-line performance over and above the name brand value of the sites they run on.
Berens: I recently had the pleasure of speaking with the marketing team at Anheuser-Busch: when I was doing my homework prior to the talk, I reviewed the Beer Institute's Marketing and Advertising Code . It's a fascinating document, and one of the most interesting things about it is that brewers cannot advertise when the audience composition is less that 70 percent of drinking age. Do ad networks -- BlueLithium and otherwise -- have a solution?
Chahal: This is a question we get regularly. The answer is yes. We use data provided by the sites in our network to determine which ones have audiences that would be appropriate for sellers of alcoholic beverages. This data comes from comScore as well as their own reporting tools and user registrations. We carve these sites out into channels that adult beverage manufacturers can target.
Berens: What's in store for BlueLithium in 2006?
Chahal: This year, we're expanding both in the U.S. and abroad. We recently opened a U.K. office, headed by Tim Brown who formerly ran 24/7 in Europe. We're also bringing new technologies to market in 2006, based on investments we've made over the past two years. AdPath, our behavioral targeting solution, is the first to offer both segment targeting and behavioral remarketing. We're also going to be introducing a semantic analysis technology that will redefine contextual targeting.