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.

It seems like “brand safety” is getting to be like “transparency” in our industry; everyone offers it in one form or another but like transparency, brand safety means different things to different people.  And just like transparency, everyone defines brand safety differently.  There is one thing that separates effective brand safety from all the other forms of impression analysis and delivery verification out there today.  Preemptive.  Is your flavor of brand safety truly preemptive?  Or is the brand safety you are getting from your demand-side platform (DSP) provider post impression analysis?  Is it reactive?  This is another of the industry myths perpetuated by other solutions rushed to market.  Real brand safety, meaning a demonstrably safe environment for a brand advertiser to promote their message online, comes from truly preemptive brand safe filtering.  But in practice pre-impression analysis for applicability and safety is very difficult to do.  Evaluating a billion impressions a day for applicability takes a robust platform and intelligent integration with real-time sources.  But it pays huge dividends in efficiency.  With truly preemptive brand safety the pass back is meaningless.  With truly preemptive brand safety you only buy what is safe and there is no waste.  No wasted targeting, optimization, time, or ad spend.  Make sure your brand safety is preemptive before you put your message out there.

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.