In February 2011, Google’s DoubleClick ad exchange did a Real-Time Display Advertising  State of the Industry Survey with Digiday, which found that advertisers and agencies are reporting that they will spend more on digital advertising in 2011 because of the benefits of real-time bid (RTB) inventory acquisition technologies.  To help buyers achieve the benefits they expect from RTB, Google published a new whitepaper that shares their view of real-time bidding for online display advertising.  Based on research and primary interviews with Google’s RTB experts across our product, sales and services organizations, this survey provides a clear definition of what real-time bidding is and how buyers can get involved with it.  Readers will find LucidMedia identified by Google at the forefront of this new technology in the free whitepaper here (PDF).

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.

Now that the “Google Content Network” has been magic-wanded into the “Google Display Network”, there is the potential for a lot more advertisers to come to the display party. But that party is hosted by a whole slew of acronyms. Here’s our quick and dirty guide to what they all mean:

CPM: Cost per thousand. This is your cost per thousand impressions, or the number of times your ad is viewed. A lot of display media is still bought this way.

DSP: Demand-side platform. Software used to purchase media across various ad networks and exchanges, generally with the use of third-party data and some sort of universal frequency cap to the number impressions any given consumer is shown.

RTB: Real-time bidding. Instead of buying a bunch of impressions from publishers and then auctioning them off, impressions are evaluating and purchased as they are generated.

BT: Behavioral targeting. The combination of learning from user behavior and third party data to more effectively target online advertising.

PBS: Preemptive brand safety. Some “brand safety” is really an after-the-impression assessment of potential appropriateness problems with the placement of an ad. Preemptive brand safety offers evaluation of the page prior to placing an ad there.

CPA: Cost per action. An act performed by a consumer in response to an ad, also the type of advertising that is sold on this basis. Also CPL (cost per lead) and CPD (cost per download).

RON: Run of network. Ads shown on all the web properties of any given publisher.

ROS: Run of site. Ads shown on just one specific website, though not on a specific page of that site.

IAB: Interactive Advertising Bureau. Group dedicated to the growth of interactive advertising and that also recommends standards and practices for online advertising.

NAI: Network Advertising Initiative. A group of third party network advertisers who are committed to increasing consumer confidence and contributing to the growth of electronic commerce.

RTA: Real Time Assessment. The ability to evaluate an impression in real-time for content, quality, and performance reasons before you buy or bid to lift efficiency and reduce the need for pass-backs.

ROI: Return on Investment. The calculation of revenue derived from spending on online advertisements. Also ROS (Return on Spend) and ROAS (Return on Ad Spend).

So what did we miss? Define other acronyms in the comment section below!

There are all sorts of DSPs out there now. In fact, another company announced last week that it would be bringing a new DSP to market and there are already half a dozen major players in the space. So when it comes to choosing the right one for your business, how do you make a decision? If the three options below are important to you, you might be interested to know that no one besides LucidMedia has the capacity. And if you’re a current client, you might review this list anyway just to make sure you’re taking full advantage of our features.

Preemptive brand safety

So few DSPs can provide preemptive brand safety that skepticism about the possibility of it is rampant. The fact is that it is possible. In fact, it’s been done, but it requires a DSP with more than a UI and a handful of relationships with aggregators. In fact, it requires a robust, search engine like crawler partnered with proprietary semantic technology that not only identifies the true “about-ness” of every available impression, it also identifies potentially objectionable content. Preemptive brand safety isn’t simple and it isn’t easy and chances are, your DSP doesn’t have it.

Custom data integrations

Every reputable DSP has relationships with the big data suppliers like BlueKai, eXelate and AlmondNet. So do we. For most advertisers, buying data through our platform from one of these suppliers will be sufficient. But one advantage of starting out as a technology company is that we have brilliant engineers on staff. And our brilliant engineers do more than just build new features into our DSP. For large agencies and advertisers, we can also build custom data integrations so you can use your data within our DSP. You worked hard to collect and categorize, now we can help you put it to work.

Impression avails insight in real time

Real-time bidding has proven to be a powerful tool for many advertisers and most DSPs have access to real-time sources. The key to effective real-time bid management though is not only being able to buy in real time, but being able to make decisions about the value of impressions in real time before you buy. So when it comes to using data, either behavioral or contextual, our clients find our graphs of real time inventory availability for those segments exceptionally helpful. By turning different segments on and off, you can see what the impact to impressions, clicks and conversions could be. It’s an incredibly powerful forecasting tool that you just don’t see in other platforms.

These features won’t be important to every advertiser, but with the number of DSPs on the market now, it’s always nice to see what features are out there that your legacy DSP might be missing. Or if you haven’t selected a provider yet, the benefits you could be leaving on the table by continuing exclusively to work with networks or buy inventory directly from publishers. As you can see, a DSP is not just a new variation on an ad network or exchange, it’s a way to manage your display buying more efficiently.

digiday:DAILY is a regular content hub and e-newsletter that features the top stories in digital media and marketing with a focus on digital content, advertising, and emerging platforms.   John Gaffney, the award-winning journalists, recently wrote a great review of our self-service launch.  Here’s what he had to say.

DSPs are going DIY. Demand-side platform LucidMedia announced the launch of a self-service version of its formerly managed service software yesterday, hoping to enable agencies and their clients to gain full-control over their targeted digital campaigns.

Ajay Sravanapudi, LucidMedia Founder and CEO, says the self-service switch will give agencies accessing an in-house, “white labeled” solution with a proprietary base of more than 14,000 targeted categories, page-level transparency, and multiple layers of filtering to protect branded advertisers from inappropriate content.  He also says the DSP has not overlooked the publishing side of the business.

“The industry trend of self service DSPs also impacts publishers positively.  Many immediately discount the notion that what is good for the demand side can also be good for the supply side of the equation. But the trend is actually good for the whole display industry,” he says. “Early on, publishers heard that the advent of mega-exchanges would only drive down display media prices.  The story was that premium inventory would be treated as interchangeable across the big networks and traded like commodities.  But the self service DSPs have actually done the opposite.  They have allowed publishers to differentiate their inventory in ways never before thought possible.  What we really faced were insufficient tools for buyers and sellers to truly value impressions properly and that is what the DSPs, and the readily available self service front ends, are doing for publishers.”

Sravanapudi also believes publishers that are creating real value and results for advertisers can now be compensated for this service through the agency self service platforms like LucidMediaDSP.  Agencies will have a new level of unified, actionable optics and insights, he says. Tools like billing and reconciliation are integrated making proper attribution a reality, allowing for true differentiation and proper valuation of the publisher’s impressions.

Among the features:

* Real-time Assessment (RTA): LucidMedia’s RTA provides immediate insights into real-time bidding availability covering up to 95% reach potential in the US;

* Real-time bid (RTB) inventory availability:  Agencies and advertisers can get real-time insights by channel and by demographics, delivering the most flexible optimization available;

* Dynamic inventory allocation:Inventory from all real-time bid sources, as well as spot buys, is automatically allocated to campaigns, enabling more efficient ad operations teams and higher returns;

* Page-level semantic transparency: Provides deep insights into what drives the desired campaign outcomes and maximum campaign performance;

* Proprietary content and audience targeting technologies: A universal frequency cap (UFC) and server-side database provide maximum control and leverage.

LucidMedia just announced the availability of ADvisor DSP, our mature demand-side platform designed to help interactive agencies transition into buy-side networks. The solution was deployed internally in January of 2009 effectively making it the industry’s first production RTB-enabled demand-side platform. We have since processed more than 100B impressions and delivered hundreds of successful campaigns with the platform. Here’s a permalink to the big news.