ad:tech Takeaways

I recently attended ad:tech, a digital marketing conference and trade show, in San Francisco (April 15-17). My motivation in going for it was to understand what is happening in the world of Internet advertising, and to see what ideas can be applied to the evolving segment of mobile advertising. Here are some thoughts from the event:

Online Advertising is expected to be a $50 billion industry globally in 2008. The industry has two primary segments: Search and Display advertising. Search will account for $30 billion and Display for $20 billion. The US market is about the same in size of the rest of the world put together. Google is the biggest player in the online advertising, with revenues in 2008 expected to be over $17 billion. Compare these figures with the Indian online advertising market of $125 million in 2007 (growing at about 50% per annum, and part of an overall advertising pie of $6 billion). As someone commented, the size of entire Indian online market is probably equivalent to that of just San Francisco!

Online Advertising is now a complex landscape. In the traditional world, between Advertisers and Publishers are Ad Agencies. In the online world, there are many other entities all vying for a piece of the burgeoning pie that Google doesn’t take away. There are ad networks, ad exchanges, ad network optimisers (for publishers), ad Servers, ad optimisers (for advertisers), and a whole slew of analysers. While Ad Networks remains the biggest category (there are over 300 of them), there are many companies all working on the same premise of helping get the right ad in front of the right person at the right time. All this becomes possible in the online world because of the ability to target and measure.

Online Advertising has become a science. There is so much technology now evolved in getting that single ad on a page – all in the hope of either perfect demographic targeting or a click which results in the desired action. The emergence of Search which surfaces user intent, and the process of attaching bids to keywords have also changed the landscape making it much more analytical. Almost everything can now be measured and improved. One of the key drivers is the huge disparities in CPMs that publishers realise when they sell directly and when remnant inventory is sold via ad networks. There is a lot of room for improving efficiency in targeting. Another area discussed was to go beyond just measuring the last click, but go through the consumer action trail and give appropriate credit to all ads and interactions that may have helped in the final click or action.

In the US, there is a big mismatch between time spent online and ad dollars. US Consumers are now estimated to be spending over 20% of their time online, while online ad spend ($20 billion in 2007) is only 7% of the overall ad budgets. This is seen as the big opportunity to dramatically grow the size of the online ad pie. As the US economy slows, there is a feeling that advertisers will move more money to where it can give better RoI. Print and TV are the two media which will feel the impact and pain of this shift.

Display Advertising is emerging as the Next Big Thing. In the early days of online advertising, it was all about Banner ads. And then, along came Google with its Paid Search solution. Now, even as the pay-for-performance industry linked to search continues to grow, Graphical Display advertising is making a comeback. (Google’s purchase of DoubleClick is a reflection of this trend.) Display advertising can do much for brands than the text ads linked to keywords being searched. And the big money is with the brand advertisers. Bringing targeting, measurements and engagement to richer ad units is what is going to drive the growth in Display ads. The mantra going ahead is not Search or Display, but both.

There are many other emerging growth areas for advertising. Video, Social Media, Mobile, Widgets and Games are five new segments which are likely to start pulling in growing ad revenue in the coming years. At the heart of it is the ‘digitisation’ of media and our interactions. And as the quantum of digital in our life grows, so will the ad spends on these new media. Video is seen as a much more near-term opportunity but needs some standardisation of ad units and creation of better engagement opportunities than just the pre-roll (an ad shown before the start of the video). Social networks (built around user-generated content) have got large traffic but very low CPMs because it is not clear still what is the best way to monetise these interactions between people. One opportunity mentioned in the context of social networks was ‘distributed commerce’ where consumers talk about products they like (or don’t). In that sense, Social networks may be better marketing platforms than ad platforms. Mobile has been ‘happening’ for a long time – there is a certain staleness creeping into the discussion on opportunities around the mobile. (My personal thinking is that publishers haven’t succeeded in creating ‘media on mobile’ and that is a prerequisite for generating audience and advertising.) A line of thought mentioned was that the use of mobile in a campaign (for example, sending an SMS to a shortcode) makes other media interactive. Widgets and Gadgets have grown in popularity over the past year, and are creating new monetisation opportunities. Video Games are also being targeted by advertisers because of the time being spent by consumers. In other words, there is still plenty of room for innovation and growth. Many of these new media require new definitions – among the buzzwords heard often were engagement, conversation, buzz and accountability.

Mobile Advertising needs to combine Search, Location, Permission and Push. Search provides intent, and is natural given that it has worked so well on the Internet. Location provides great spatial context – something that is not necessarily available on the Internet. Permission is important so that consumers do not feel that their private space (on their very personal device) is being violated. Push creates the opportunity for repeated touchpoints. Mobile also has a wide variety of channels that can be targeted by marketers: voice, SMS, MMS, applications, widgets, WAP (mobile internet), Bluetooth-based proximity marketing, and using QR or 2D codes. The US has been slow to move on the mobile front, and it is likely that some of the pathbreaking ideas will come from countries like China and India where the mobile is at the centre of people’s lives. The iPhone is seen as an interesting new platform because it breaks the barrier between the PC-centric Web and the mobiles as we have known them. The last seven years have all been ‘the year of the mobile’; it is not clear how many more such years will need to elapse!

Advertising Agencies are evolving. Two key points that came out were that unbundling (creating separate digital units) does not necessarily work well, and that ad agencies of tomorrow will need to look more like financial firms of today by combining portfolio managers (who strategise and plan given the multitude of options available) and traders (“button pushers”).

Vertical Ad Networks are starting to emerge. Two examples mentioned were Glam.com (which focuses on women by content aggregation across blogs) and ad networks targeting Hispanics in the US. In addition, many US sites have international audiences and many international sites have US audiences – both categories are poorly monetised as of now.

The 2008 Beijing Olympics will likely be a watershed moment for Digital. NBC, which has the broadcasting rights on the Olympics, is pushing the idea of ‘Your Olympics’, giving consumers the control of seeing the content on any device of their choice. Given the nature of the event, the Olympics will drive a lot of global viewership and it will be across multiple media channels. It will become a testing ground for many new digital advertising initiatives also.

Letter to a Three-Year-Old

Dear Abhishek,

Happy Birthday! You are now three years old. I am not there today for your birthday — am in the US for work.

I am continuing the tradition of writing letters to you on your birthday. To refresh your memory, here are the first three letters (2005, 2006, 2007).

This has been a fascinating year. You’ve grown so much. You have your own mind – at times, much to the consternation of your mom! You understand enough of the world now to interpret it and make your own choices. From making decisions for you, we now have to guide you to differentiate between what’s right and wrong. This is perhaps, for me, the best part about being with you.

Of course, it doesn’t mean you don’t act like a baby. Like that Sunday morning, when we had to take you for a haircut. It was almost as if you had made a clear link between haircut and grumbling. For a change, you didn’t yell while the hair was being cut, even though that grim face was a clear reminder that you’d rather be anywhere else. That’s what’s so endearing about you at this age – you are both a little grown-up and a baby at the same time!

Memories are many of the year gone by. And as one of your favourite songs from “The Sound of Music” says, let’s start at the very beginning.

The maximum time I get to spend with you is when we travel. This past year we’ve done a fair bit of that. We went to Dubai last April, then to the US in August, to Rajasthan and Pune in October and to Surat in December. The US trip was great fun. We took the non-stop Air-India flight to and back from New York. You slept through most of the two flights, but when you were awake, you were jumping all around. We went to Central Park and did some rock climbing the day after we arrived. At Macy’s you insisted on buying some toys which I figured you’d never use again. We also went to Washington to meet Anne and Henry and of course, Fifi, whom you still remember. Then, on to Atlanta to spend time with Ram, Nirmala and Vaishali. You really came into your own at the swimming pool when we went to meet Anand, Shivani and Nisha. For the first time, the water was not something you wanted to stay away from. You played in the pool with those rubber ducks. We strolled through New York with you in your pram, watching the street signs change. The last day, you had a roaring time at the Children’s Museum. And of course, who can forget the three dinners at Vatan – you gorged on the puris, and roamed around the restaurant as if it was your own! Somewhere, we bonded.

I still remember sitting at Atlanta airport watching the planes land and take-off. For you, it was a delight because of your fascination then for anything and everything to do with “transportation” and vehicles. We collected dozens of cars and trucks of all sorts during the US visit – now you don’t even touch them. But for that phase of your life, you only wanted to buy cars and taxis and buses and autos and garbage trucks and dump trucks. And trains. Trains! That’s something we have in common. So, now we have these wooden train tracks from the Thomas collection which we put together every two or three days. When I come home, either you (or your cousins, Siddharth and Maya) have broken them and you want me to help you put them back again. That’s one of our early morning activities between you waking up and going to play school.

Play School…! You started it in September, and after a few days of going happily, you went through a few weeks when you just would not want to go. In school, you were fine. It was just the act of going to school which depressed you. And as quickly as that had started, it ended. Now, you happily go to the school, which is all of three minutes walk from home. The three hours that you spend there everyday are compressed into a couple sentences when I ask you what you did. All you seem to want to remember is what you ate there!

Thanks to school, you’ve now started with these Nursery Rhymes. Every evening when I come back from office, you ask me to make a “half-tent” with a blanket, and you will sit there with your old, non-functional Casio piano and we will sing a “thousand” songs. Songs, did I say? You will promptly correct me, “Papa, they are not songs. They are nursery rhymes.” Indeed.

There are two interesting events that you participated in school – the Christmas concert and the Sports Day. You were so smartly dressed in white and black for your concert! We were right at the back – worried that if we came close and you saw us, you’d come running to us! For the sports day, you ran your two races well – nice to see you follow some instructions!

As I look back at the year, it has been about Phases. You seem to migrate from one Phase to another. Like there was also this Phase recently about buying and reading the Topsy-Tim story books. Everytime we went to a bookshop, you’d go looking for one to buy. You knew exactly which ones you had. And if you found two new ones, you’d remember to keep the second title in mind for the next time. Then, we would come home and read that new book many times a day. And before I realised it, you had memorised the entire book. And then, it was time for the next book. If Boowa Kwala (from UpToTen.com) made you sit in one place and listen to songs, it was Topsy and Tim who made you develop a fondness for being read to.

Another Phase was when you wanted to go for bus-train-taxi rides. Given that you’d wake up quite early (just after 6 am), we had plenty of time in the morning to do this. We would take a bus from Kemp’s Corner to Churchgate, then take a train to Grant Road station, and finally take a taxi to come home. This was on the days when you didn’t want to go on the swings in Tata Garden. This ended when your mom figured that all of this activity was quite draining for you as you went to school. I mean, kids barely can get their eyes open in the morning and there you were having done a full tour of South Mumbai in three different transportation vehicles! Of course, we still do this every once in a while but only on holidays now. And when we go the suburbs, you want the auto rides. It’s fun because I guess you get to see a lot more of the world and its people than sitting in a car!

On school days, you wake up sometime between 6:30 and 7 am now. On most days, I give you a bath. Every second day, we have to create a new game to convince you to get into the bath! And then, you growl as the soap comes on to your face. But I am now sensing that this is yet another fun activity that you’ve created. After the bath, you have the standard discussion with your mom on what clothes to wear to school. Given that she’s made decisions even for me most of the time we’ve been together, it is quite something for her to find you refusing to wear the clothes she’s picked for you! Anyways, that’s for you and her to sort out.

You come back from school around noon, and are hungry for your lunch. On most days, you will sleep for a couple hours. Unless you decide to play through the afternoon. In the evening, your Mummy will take you down to the building compound where you play some more. I come home around 7:15 pm on most days – and it is such a joy to see your happy, welcoming face. You almost sense that I’ll be coming around that time of the evening. On the days you haven’t slept in the afternoon, you’ll end up going to bed before 8. Else, we then end up chatting and playing till you sleep around 9:30 pm.

Sleeping remains a big challenge for you. You need your three blankets (“biyas” as you call them), and the ‘toy of the day.’ You also need your mummy to keep patting you till you fall asleep. Anything more than fifteen minutes, and she loses patience! I think you better start learning how to sleep on your own. And while we are on that, please start drinking milk on your own also – it is a strange sight to see you now being fed milk through a straw from your cup everyday. You are a Big Boy!

Last June and early July was a difficult period for both of us. I fell sick for about two weeks (influenza) and so did you. You almost completely stopped eating and drinking milk. You lost a lot of weight. Your mummy was extremely worried. And then, as suddenly as you had fallen sick, you recovered. But those were two difficult weeks for her. In fact, I can make out how well you are by just looking at her.

Your Mom and you are quite a sensation together. The way you open up to her is amazing. I do feel a little envious seeing the relationship between the two of you. For you, she is everything – perhaps, a bit too much. She gets really irritated when you tag along pulling her dress when you are outside! But for these small quirks, the deep love and interplay between the two of you is something which words cannot describe. You seem to have also made her a decade younger! She’s always there for you, and yet gives you the space that you need. She blends the right amount of love and discipline. (You already have figured out that I am the softie.) I know I’ll probably say something which is true for every mother-child relationship, but let me say it anyway. You have the world’s best mother, and she has the world’s best child.

When it comes to talking, you have adopted English as your first language, even though you are quite comfortable conversing in Hindi also. Your English is quite good, and you do pick up the nuances of the language quite quickly. Still, it is fun to see you make these little mistakes here and there which make for fun conversations with others!

The past couple months has seen me away for more than a third of the time — travelling to Barcelona, and within India. Whenever I travel abroad, I try and see what toys I can get for you. You still remember the vehicles I got for you from Vienna and the blocks from Barcelona. You also want sweets whenever I travel within India. Being away from you is not easy – I have become so used to the morning and evening time we spend together. But now work will require me to travel more. For the first three years of your life, I had curtailed my travel drastically. Now as you grow up, I’ll be free to be away a little bit more.

There’s lots of family in your life. We stay with my parents and every so often we go to Santa Cruz to meet your mummy’s parents. You are especially close to both your grandmoms. Then, there are the siblings in your life. Siddharth and Maya, my sister’s kids (who are 3 and 1 year older to you, respectively), live next door and you get to spend lots of time with them. It is good that you have now outgrown that phase when you wanted to get after Maya for every small thing! In Santa Cruz, there is Hriday who is a few months younger to you. You and he have a gala time every time the two of you meet. In Surat, you have Niyati, who is a year older to you. This December, you spent a week with her – and even saw two movies (Welcome and Taare Zameen Par) there which you sat through! In TZP, you were all over the theatre, but then what else could one expect!

One big worry your Mom has always had is about your eating habits. Her nightmare scenario is that you’ll end up like me – saying No to almost everything. It hasn’t been that bad – yet. As long as you get your dal roti, you are quite happy. That you managed quite well in the US was a big thing. You still don’t eat everything, but I think you now can eat more things than I do! We take you out at least once a week. Your favourite restaurants are Soam and Little Italy. In Soam, you like the space that’s there to move around. You eat the pani puri and dosa. In Little Italy, to which we go less often, you love the nachos and pizza. You are starting to develop a fondness for chocolates and ice cream – I will let your Mom deal with that developing situation.

When I got the iPhone from the US, it quickly became your toy also. The ease with which you use it (especially flicking through the photos) is a delight to watch. You’ve also now started scribbling, painting and drawing – so that’s a good sign. You do have a ear for music – definitely not from my side of the family! On the TV front, you do match some programmes – at one time, you liked Cbeebies, the BBC Children’s channel. But it is quite hard to get you to sit still in one place.

So, plenty of memories of a year gone by. You are growing up fast, absorbing the world around, and also giving back in your own small way. Your smile and laughter is a joy to behold, and I hope that always stays with you – irrespective of downs that come your way. As parents, your Mom and I are quite happy to see you grow the way you want – instilling in you a good understanding of what’s right and wrong, and setting the boundaries. Life is full of choices, and you’ve already started making yours. I love the way you look at life – living for the moment, with everything that’s past being “yesterday” and everything in the future being “tomorrow.”Happy Birthday, Abhi. Welcome Year Four of your life.