Targeting seems like a big differentiator to those new to the demand-side platform (DSP) or online advertising marketplace. However, unless an ad management platform has their own server-side cookie database or proprietary technology (and some do), pretty much everyone has the access to the same data.  But what data is that exactly? What’s available? What can data not do? And most importantly, what works?

In this article, we‘re going to break down different types of targeting and tell a little bit of truth about each type.

Third party user data

There are an ever-profilerating number of companies in the marketplace collecting and segmenting user data. Some of the big names in this space are BlueKai, eXelate, AlmondNet, Bizo and TargusInfo. To use this data, an ad network or a DSP forms a partnership with one or more of these companies and then sells that data through their platform to their customers in the form of audience segments.

Recent hysteria to the contrary, none of this data contains information that makes any one user personally identifiable to the data provider, DSP, ad network or, further downstream, agency or advertiser/client. In fact, if it did, it really wouldn’t be of tremendous value. The main benefit of this kind of data is in the volume of users in any particular segment. If a segment doesn’t contain enough users, the network or DSP isn’t going to see enough impressions to achieve whatever back-end goals the agency or advertiser may have. One perfect user isn’t equal to one million sort of perfect users. The power of digital media is in its ability to scale to achieve reach. If you want one perfect user, send them a letter.

Retargeting

When a user visits a web page, cookies can be used to “tag” that browser. That tag allows an advertiser to them show ads on other sites for that advertiser’s products after that user has left the advertiser’s page. In combination with a big push in other marketing and advertising channels, it is possible to get a lot of browsers “tagged” in a short period of time.

This is not technically complicated and nearly any online advertising management platform can do it. Particularly if an advertiser has not implemented retargeting before, it can provide a tremendous boost to traffic and, ultimately, conversions. The trick is not to implement it clumsily, which is where a good agency or ad operations team will be an asset. Retargeting is one of those display advertising tactics that can come off as “creepy” to an individual user (for example, the pair of pants that followed one user around the internet for weeks, even after the person had made a purchase).  However, done correctly, retargeting is both effective and appreciated by users, who like seeing ads that are relevant to them better than ads that have nothing to do with their interests.

Targeting typically costs a little extra than just serving as many impressions as many places as possible for as little cost as possible, but it’s also more effective when implemented by a talented ad operations team or competent interactive agency. Have you used third party data? What do you think about recent conversations about restricting the use of targeting?

LucidMedia announced two strategic personnel milestones last week which will take the company to the next level as a media platform. We hired Natalie Mazer as Vice President of Optimization to maximize the performance of the LucidMedia demand-side platform. We also announced that Paul Rostkowski, formerly Vice President of Sales, has been promoted to Chief Revenue Officer (CRO).

We sat down with them to discuss the future of both LucidMedia and the digital advertising landscape.

LucidMedia: What do you think is the biggest challenge facing the interactive advertising industry?

Natalie:  The fragmentation of audience across media has been challenging for agencies and their clients. Where once direct-from-publisher inventory was sufficient to achieve performance, web audiences have become increasingly diffuse, particularly with the advent of mobile and video advertising. It takes sophisticated technology to be able to reach the right users at the right time and at the right price.

Paul:  The privacy debate continues to be a hot issue for the digital advertising industry.  Media companies need to support our industry groups in their efforts to educate the public. LucidMedia was one of the first DSPs to offer a real-time network opt-out on our homepage.  We work closely with the industry groups like IAB, NAI and Privacy Choice to ensure we are employing the industry’s best practices when it comes to privacy.

LM:  What problem is LucidMedia solving today with its online advertising management platform?

Natalie:  In a competitive economic climate, advertisers are looking to improve efficiency. With universal frequency capping and a powerful optimization engine, the LucidMedia platform produces goal-driven results within budget.

Paul:  Brand safety is a major concern for brand advertisers. Agencies and advertisers come to us for protection that preemptively identifies unsafe impressions and ensures that ads appear only on pages with appropriate content.

LM: You’ve both been involved in start-ups for years. What is your number one tip for entrepreneurs in the technology sector?

Natalie:  Hire a team with complementary skills and the right attitude. It may be tempting to hire all super-stars, but that strategy is expensive and doesn’t guarantee the creation of a functional corporate culture.

Paul:  Focus on getting your product to market and getting revenue in the door when you’re first starting.  The more you have coming in, the better off you’ll be in the long-run.

LM:  Please discuss the recent partnerships LucidMedia has formed and what impact that has had on the business.

Natalie: Getting all the major data providers on-platform has been a huge step for LucidMedia. Our engineering team has been focused on these efforts for some time and now that’s up and running, the potential is enormous.

Paul:  On-platform video and mobile buying is the next frontier for display advertising.  It has been a real growth area for us and our partners, particularly [mobile advertising network] MobClix and [rich media pioneer] Oggi Finogi.

LM:  What is next in advertising business management? How do you see this evolving in the next two to three years?

Paul:  As the big exchanges and agency holding companies choose their partners, there will be another technical revolution. Right now everyone is focused on building out platforms, but soon the push will shift to integrating those solutions. That’s where a company like LucidMedia, with the combined expertise of eight technology-side experts, will excel.

Natalie:  I agree with Paul. White label solutions are becoming the norm. Platforms that exist with purchased technology, but that don’t have the back-end engineering support will experience difficulties when it comes to complex integrations.

LM:  What major trends do you see affecting LucidMedia the most recently?

Paul:  Agency trading desks have been adopting technology like crazy, trying to keep up with DSPs and all the data providers rolling out user interfaces. In some cases, it may be easier to acquire than to build.

Natalie:  There continues to be confusion surrounding RTB and what it means for online advertising.  Everyone bids in real-time now; it’s how the platform decides what to bid that’s the real differentiator.

Protecting the privacy of online users when it comes to digital advertising is fast becoming the hot topic.  Digital advertising associations, privacy watchdog organizations, and even Capitol Hill are all wading deeply into the privacy waters.  With all this change going on around us it is a good time to reiterate LucidMedia’s strong stance on protecting the privacy of online users who receive advertisements through our digital ad management platform.

Early last year the Federal Trade Commission (FTC) began issuing revised guidelines for behavioral advertising.  And the Direct Marketing Association (DMA) and the Interactive Advertising Bureau (IAB) recently launched a new program that calls for labeling online ads that their members serve based on the habits of online consumers.  You can check out AboutAds.info for more information on the new labeling guidelines.  Our Congress has even been exploring online privacy legislation that would set new boundaries for the collection of personal data by online advertisers.

Amidst all this change and heightened awareness, LucidMedia continues to take privacy seriously.  In fact, we were one of the very first demand-side platforms (DSP) to offer a real-time network opt-out on our homepage.  We are working with all of the leading privacy authorities to ensure we are employing the industry’s best practices when it comes to privacy.

When it comes to privacy, LucidMedia does not use any personally identifiable information (PII) and we do not work with partners who do employ PII.  We do not track or target specific or individual users online nor do we acquire data from providers who do track specific or individual users online.  We do not employ regenerating or FLASH tracking cookies.  Any cookie we do place is set to expire at no more than 90 days.  We use anonymous and general demographic data only, acquired through 3rd party providers or interpreted by our patented contextual engine, to improve the overall effectiveness of our campaigns.

You will find our corporate privacy policies available online at lucidmedia.com/legal.

As soon as Charter Communications voiced concerns about the controversial behavioral targeting issues, two other internet service providers (ISP) immediately distanced themselves from behavioral.  It has become the “hot potato” issue around targeting for internet advertising.  The privacy issues surrounding behavioral targeting are nothing new either and go back as far as 2005 or even earlier.  What I don’t understand is why organizations would even try to tackle this subject when there are great contextual targeting solutions out there that perform as well (or even better) than behavioral when it comes to performance lift for both direct response (DR) and brand advertisers.  Now don’t get me wrong, I am not anti-behavioral–far from it–but if the privacy issues rear their ugly head there is definitely a safe harbor from them in contextual.  Marketing Sherpa’s 2008 Online Advertising Handbook surveyed 577 online advertisers from a range of companies and found that 40.5% of the advertisers surveyed felt that contextual targeting yielded a higher ROI while only 36.7% preferred behavioral.  So while I’d prefer the industry found multiple ways to target for efficiency and performance, including unintrusive behavioral methods, which we certainly are doing, there has long been targeting solutions that completely side-step the subject of privacy.  Contextual is sublimely elegant in this aspect as it draws its relevance directly from the impression in real-time (at least our ClickSense approach does) to match the perfect ad to the user based on what they happen to be reading at the time.  This avoids saving any bits from the user’s historical actions yet serves up an even more relevant ad at a time when they are interested in learning more about the subject and they are most receptive to your message.  So if behavioral is got you down why not check out the contextual advertising solutions on the market today.  You won’t be sorry you did.