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.

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.

Nearly every online marketer is concerned with transparency and brand safety.  These seem to be the biggest roadblocks to brands embracing display.  A quick search on AdExchanger reveals a dozen articles on both subjects in the last few months.  We’ve all talked about it yet there still seems to be more misconceptions than fact surrounding what is possible when it comes to real brand safety.

In April of 2010 Winterberry Group LLC reported that “transparency and brand safety have conspired to inhibit billions in potential online display ad spending.”  Brand safety continues to undermine a broad investment in display advertising by brand advertisers despite the obvious efficiencies being delivered by today’s ad networks.  This is because truly preemptive brand safety is difficult so most have settled for simple post impression verification and are therefore not getting a truly brand safe environment for their message.  But the DSP trend changes all that.

With the advent of contextual display advertising, a host of new advertising opportunities opened up for marketers across every industry.  Whether contextualization is done at the site level (i.e. ESPN.com is about sports) or at the page level (i.e. automotive content on CNN.com), the ability to target ads around content—in addition to demographic and behavioral profiles—is pretty powerful stuff.  But with these big opportunities comes an equal amount of risk.  Imagine an automotive ad next to a news story about a horrific car crash or an ad for a vacation package next to tsunami news coverage of the same destination.  We see it in contextual search as well as display.  It’s enough to make any brand marketer anxious about any sort of online advertising.

The good news is that advances in targeting technologies and demand-side platforms (DSP) with real-time bidding (RTB) are creating truly brand safe environments for brand advertiser.  But like transparency, everyone defines brand safety differently.  There is one feature that separates effective brand safety from all the other forms of impression analysis and delivery verification out there today.  It‘s preemptive brand safety.  Is your trusted flavor of brand safety truly preemptive?  Or is the brand safety you rely on from your DSP really just post impression analysis disguised as safe filtering?  This is another great myth in our industry often perpetuated on purpose only because preemptive is difficult to pull off.

Real brand safety, meaning a demonstrably safe environment for brand advertisers to promote their message online, comes from sanitizing the ad space before the ad is served.  Of course pre-impression analysis for relevance, performance and safety is very difficult to do so it’s the least prevalent form out there.  Evaluating billions of impressions a day for relevance takes a robust platform and deep integration with all of the real-time bid aggregation points.  But it pays huge dividends in both safety and efficiency by guaranteeing quality impressions and eliminating the need for pass-backs.  With truly preemptive brand safety you only buy what is safe with no waste in the equation.

But when pages are not categorized for meaning in advance, ads get served next to inappropriate content and the advertiser simply gets a report indicating that it has happened again.  That isn’t preemptive brand safety, that’s reactive reporting.  It’s the equivalent of closing the gate after the cows get out (and wander down the middle of the highway disrupting traffic and endangering your brand investment).

Everyone knew it would take third-party providers to deliver real brand safety.  Back in March, Jonathan Margulies at Winterberry Group acknowledged as much right here on AdExchanger.  It isn’t in the publisher’s best interest to exclude their own content from advertising—for a publisher the more bidders the better.  The interest in such technology falls on the demand side but most advertisers lack the engineering infrastructure to build such a solution.  In the display advertising landscape, providing preemptive brand safety is the responsibility of the demand-side platforms.  Various platforms provide this ability in varying degrees – from zero to truly preemptive.  Ask the question.  Make sure you are getting the truly preemptive kind that boosts efficiency and return on spend.

Reprinted from AdExchnager.com Data-Driven Thinking column, a media community blog containing fresh ideas on the digital revolution in media. Follow LucidMedia on Twitter @lucidmediaVIP and follow AdExchanger.com @adexchanger.com.

This weekend while many of you were sitting down to a quiet meal, LucidMedia was celebrating an historic milestone. One year ago LucidMedia processed our first real-time bid (RTB) impression. At precisely 6:45PM Eastern Time February 21st 2009 LucidMedia turned on the RTB engine in our demand-side platform (DSP) and began acquiring impressions in real-time. We have since processed tens of billions of impressions and the scale continues to grow. We are quite proud to be one of the pioneering companies behind the current real-time bid inventory acquisition wave that is sweeping our industry. And although we are a relatively new company, we are one of the first demand-side platforms operating today in what is rapidly becoming a crowded space. We saw very early, late in 2007 in fact, that advertisers needed more control and the DSP model was the future. Back then we did not call it a DSP though. It was simply a better kind of ad network where inter-mediation was streamlined, transparency was paramount, and brand safety was the dominant capability. Now it is the future of the ad network.

(Reprinted from ADOTAS) 2010 is already shaping up to be the year of real-time bidding (RTB) technologies and demand-side platforms (DSP). The availability of real-time bid access into the major ad exchanges is converging with an industry-wide preference for agency-administered ad-buying and ad-trafficking platforms.

The traditional ad network model achieved many things but has yet to deliver on the promise of truly cost-effective scale. The rules of engagement changed when downward-spiraling CPM prices forced publishers grudgingly onto the emerging exchanges to improve their yield and back-fill diminishing ad revenues. The networks had to follow their publishers and a new aggregated sourcing model emerged.

Real-time bidding is the hot feature this year and a staple of the effective DSP. Now the combined capabilities of RTB-enabled DSPs built on the exchange model are replacing traditional ad networks with a new buy-side network paradigm that is more nimble, more economical and more in touch with advertiser goals.

Control is subsequently moving closer to the advertiser, intermediation is being reduced and prices are arriving at a true market-driven equilibrium. Not only do advertisers have more control over targeting, performance and safety, but buying has become more centralized and access to inventory become more streamlined.

It is no secret that LucidMedia has one of the most robust contextual targeting engines in the marketplace, but what we have achieved in the DSP space over the last year has not been widely publicized. Late in 2008 we began engaging all of the large aggregators to co-develop RTB solutions. Next we developed an advanced, proprietary ad server to give us one of the most nimble systems available for trafficking campaigns.

We also built a unified inventory management system that could dispense with the complexity of hard-wiring campaigns to inventory sources. We included an automated optimization engine that can evaluate thousands of campaign facets in real-time, project performance trends, and govern campaign targeting based on advertiser goals.

In January 2009 we deployed the platform internally, effectively making it the industry’s  first production RTB-enabled demand-side platform. Named ADvisor DSP, LucidMedia has since executed hundreds of successful campaigns on the platform and is currently processing up to 45 billion impressions each month. This pioneering experience makes us uniquely qualified to access the necessary features of a successful RTB-enabled DSP initiative.

There are certain universal features that agencies need for any successful DSP initiative. All buy-side platforms must offer multisource RTB integration and scale, an advanced ad server, page-level contextual analysis for targeting and brand-safe filtering, audience profiling for retargeting, universal frequency capping, detailed performance roll-up reporting with discrepancy management and reconciliation, flexible and intelligent bidding strategies, the ability to leverage third-party targeting data and a managed service deployment approach.

Advanced Ad Server: A good DSP starts with an advanced ad server. Core ad serving capabilities like frequency capping, day parting and targeting are minimum requirements. The savvy agency should also look for full-featured holistic campaign management features like cross-aggregator universal frequency capping, pre- and post- impression auditing, preemptive brand-safe filtering, page-level impression verification and hyper-segmented targeting based on content, demographics, behaviors, site, location, and time of day. Discrepancy management and reconciliation are also critical aspects of the built-in ad server.

Integrated RTB: Properly integrated real-time bidding is not standardized or modularized. There is still a great deal of heavy lifting development needed to bring on each inventory source, scale and balance the volume, and bid effectively. A good DSP needs to have these problems already solved.

Intelligent Bidding: Smart bidding strategies are also critical to an agency’s bottom line. The DSP model promises that agencies can claim a larger slice of the ad spend dollar, moving it further and further away from the networks. But without intelligent and flexible bidding, that slice can be lost. Look for detailed graphing of bid price and win ratios and the tools to quickly adjust bidding per source. Look for RTB solutions efficient enough to drive bid costs below the $0.001 threshold.

Retargeting: Another aspect of the successful DSP is the ability to roll up audience and link users to performance for retargeting purposes. Reaching the right audience with the right message at the right time is a core tenet of advertising and although this applies to all mediums, display always reaches its users through a proxy device.

The right platform goes beyond simply rolling up interpolated audience facets and instead segments users into actionable profiles using third party data based on their propensity toward a desired action.

Managed Services: The concept of an agency-side buying and management platform relies heavily on managed services at the inception of any in-house DSP program. The current transitional period is favoring the managed service approach to demand-side platforms as agencies step into the traditional ad network role. Managed services allow the transition and knowledge transfer to happen in the most effective manner.

Optimization: Automated optimization is a differentiator for the demand-side platforms. Historically optimization was the mystical secret sauce of the more technical ad networks but it has become a required attribute of the full-featured DSP. Look for optimization that can juggle thousands of campaign targeting facets, project outcomes, and model performance scenarios prior to launch.

Inventory Sources: Sources and scalability are key factors for every agency to consider. The right platform needs to plug into all the large repositories as well as the more niche aggregators plus the all supply-side optimizers. This kind unprecedented impression potential, scale and broad reach are requirements for large direct response campaigns, major corporate branding promotions and scaled niche segments of very specific demographic traits.

These are the major features as well as ad network staples like brand-safe filtering, transparent reporting down to the page level and flexible targeting to content, demographics, and behaviors that an agency should look for when selecting a DSP.

The right demand-side platform allows agencies to easily audit the networks and exchanges on their media plans, efficiently acquire page-level contextually and demographically targeted inventory, ensure brand safety across all sources and most importantly enforce a universal frequency cap. The new breed of DSP with integrated RTB gives agencies pre-impression filtering, post-impression auditing, and allows agencies to cherry-pick the most effective impressions in real time and then feed their campaigns with an optimization engine that automatically maximizes return on spend.

The new TNS Media Intelligence Report is out and Adotas has jumped on it with their Display Advertising Shows Signs of Life e-newsletter today. The reports indicates that for the first quarter of 2009, the total measured advertising expenditures they track dropped 14.2% versus a year ago, down to $30.18B. This follows a 9.2 percent decline in Q4 2008 as the advertising recession accelerated in the new year. While that may not seem like good news, consider they indicate that internet display-specific advertising spend is actually up 8.2% over the same time period last year which I believe is better than expected considering all the frozen budgets, wait and see attitudes, and narrowed lines of sight. Although it is lower than the original double-digit growth predicted last year, it is still growth–and very healthy growth at that. Wipe away all the historical (and semi-hysterical) predictions of double digit growth ad infinitum and look at 8.2% growth on its own–among a sea of declining numbers–and you have a very clear sign. So why is display standing out like a shining star pointing the way ahead in our rocky sector of space? A lot of the growth they are reporting is being driven by the new free market exchange models that are moving onto the plateau of productivity and at the same time relegating the old ad network models to the trough of disillusionment. From this emergence, not only is publisher yield inching back upwards, advertisers are finally smelling the real meat of return on their spend. That alone has been happening for almost a year now and is not the whole story behind this successful metric. The promise of data has recently begun to materialize through all kinds of platforms with their new insights and relevant analytics. It is this confluence of forces, the emergence of the exchange model and the promise of data being realized through the platforms that is drawing advertisers to invest in display at a healthy clip. And when the exchange playing field congeals a bit further, and at the same time a few of the platform players begin to dominate inside the agencies, we will see a whole new display advertising sector. Gone will be banners and CPMs and premium and remnant. We will have a truly value priced free market exchange of media in real time that rewards the publisher and empowers the advertiser. We’ll have less layers and less middlemen and less latency. We’ll have more return, more clarity, more accountability, and real transparency. If one thing is certain, it will be nothing like the display business of last year.

Targeting is rapidly overtaking inventory quality among ad networks as the one aspect that their value hinges on and the one that truly differentiates them. So much so that targeting has become the new “killer app” of ad networks. According to the E-consultancy 2007 Online Ad Network Buyers Guide, targeting was only 1 percentage point behind inventory quality as the single most important differentiator. That was 2007. Since then inventory quality has normalized with every network offering all the same top quality branded sites. Think comScore 200 and you’ll have the right picture. But the ground war around targeting has raged on. Now the single most important factor left that has not been commoditized and can still differentiate the countless ad networks is their targeting. Inventory quality is still an important factor when evaluating ad networks but it has become more like a commodity. Just a check box to be filled. Great inventory? Got it. Everyone has great sites now, or has potential access to great sites which is becoming the same thing, and can whip up a spectacular site list with all the right logos in all the right places. You’ll see that comScore now calls this “potential reach” and everyone’s got potential reach. But targeting? Good, precise, accurate, performance-driving targeting takes technology which is actually hard to come by among the ad networks. Most ad networks are made up of people and relationships and that’s how they scale. Add more great sites and add more great sales people and the revenue model scales accordingly. So what’s the best targeting solution out there? What kinds of targeting will provide the most performance boost for your campaigns? That of course hinges on what your key performance indicators are going to be. Is it clicks, acquisitions, brand awareness or a combination or something else entirely? In many ways contextual targeting has a leg up on the other forms and here’s why. The behavioral crowd almost always has a contextual component driving their segmentation so contextual tends to be one of the most mature technologies out there. Semantic relevance engines have been around since the early days of Knowledge Management and go back way before the first AT&T banner was sold by Doug Weaver on Wired.com in ’94. And contextual side steps the ugly privacy issues as it derives its relevance from the page content as the ad is being served and does not need to ask probing questions or save little bits of sensitive data behind the scenes. But most importantly, contextual targeting has frequently shown to offer both more click lift and more brand recall than any other targeting solution. A recent Marketing Sherpa study found that contextual targeting was preferred over behavioral by advertisers for the higher return on ad spend it provided. But the best approaches are the new hybrid solutions that combine the strength of both contextual for relevance and behavioral for audience segmentation. So when you are out there shopping for an ad network and everyone is pitching great sites and real transparency at the best price, stop and ask about targeting. Don’t be afraid to ask about technology either. Most likely you will find little behind that curtain besides some basic self declared channels, a little re-targeting after the fact, and a high level report for reconciliation at the end of the month. Take the time to ask for proof and see where that leads you. Can they offer proof as to why they targeted a certain impression with a specific ad? If not then there is probably little technology back there.  And if every answer seems to come back around to great sites, then I’d keep shopping.

I was talking the other day with a colleague, Paul Rostkowski our new Vice President of Sales, and he came up with a term that I thought was very relevant to what we are doing here at LucidMedia. We were discussing what makes LucidMedia uniquely different in the crowded marketplace of ad networks and how we are passionately focused on the advertiser and their agencies. This is almost a 180 degree departure from the norm where the focus has historically been on the publisher and connecting them to advertisers. In that norm, however, real transparency is a pipe-dream that is never realized because the publisher network must be protected at all costs. As we were talking he casually said we are an “un-network.” The idea being that we are doing the opposite of the norm by empowering the advertisers and, unlike the blind networks, we provide transparency down to the page in the name of improved performance. I thought the idea had real legs and the more I thought about it, the more I wanted to take it to the next level. You see, traditional blind ad networks are a community of publishers and advertisers yet LucidMedia is an ecosystem of inventory aggregators built on the most robust contextual targeting engine in the business. You can look at it as almost a meta-network or a network of networks because we tie together and leverage a vast pool of ad networks, ad exchanges, vertical networks, publisher networks, and publisher optimizers. Basically we’re cutting a “channelized” swath of relevant, high performing super clusters of inventory across all the aggregated pools of inventory out there. It’s the right inventory anytime, anywhere, any way as long as it works. This is similar to the exchanges model as it’s an ecosystem of advertisers, publishers, ad networks, and advertising technology providers all happily steeping together in a free market broth. So maybe we’re a “nexchange” (pronounced nex-CHANGE); literally a network of exchanges. Isn’t that a meta-network? I like this term, nexchange, not only because it describes us in a single word but also because it is highly likely that our model will be replicated by other companies when the ad network and exchange space reaches equilibrium and has nowhere else to evolve. That day certainly has not yet arrived, as prophesied by Spanfeller in recent comments, especially with the recent explosion of publisher and vertical ad networks like quadrantOne, Healthline, and WPP. The supply of networks and exchanges will grow until they satisfy the existing demand and although they have created a sea of inventory and unprecedented reach, the demand does not seem to be satisfied yet. Advertising has always had an insatiable appetite for an audience and online display advertising, especially with its great ROI and measurable performance in an uncertain bearish economy, shows no signs of slowing. Maybe it is trite to coin a cute little phrase like nexchange for what we are doing but you watch, you will see more and more media companies taking this next logical step (if they can). More and more organizations will start cooking with the fresh ingredients of inventory across multiple networks and seasoning it with their own performance enhancing flavors. A dash of behavioral here, a sprinkling of contextual there, a smidgen of optimization, two cups of targeting, and a stick of demographic–and presto, a nexchange is born! Just remember who invented the succulent confection before you when it comes time to write the media plan or issue the RFP. When you need reach, an engaged audience, and a clean well-lit relevant ad space, at least you’ll know where to find the master chef in this Hell’s Kitchen. Dinner’s served!

I was reading Mike On Ads’ multi-part series on Ad Exchanges and I got to wondering what forces came together to create the current ad exchange phenomenon? There’s no denying the emerging ad exchanges are replacing the old yield management solutions out there. They are aggregating the supply to drive new market efficiencies and a new level of transparency in the non-premium marketplace. One of the early factors motivating this was the proliferation of ad networks which have been growing at a staggering rate. ThinkEquity Partners recently reported that there were over 300 ad networks in 2007 which means the number doubled in less than two years. They went on to report that the non-premium market will grow at 28% annually from $2.2B today to $7.6B in 2011 so it’s no wonder the number and the types of ad networks exploded. Vertical, contextual, behavioral, demographic, re-targeting, geographic, site specific, there is no shortage of ad networks out there now. Because of this explosion the mantra of the crowded, long-tail, remnant world of non-premium advertising has become differentiate or die. Why? Because there was (and still is) pressure from all sides to stand out. Pressure from eroding gross margins, strain from publisher recruitment, competition over inventory, negative stigmas about duplication and a lack of transparency, and a fast and furious industry roll-up. The growing revenue base and customer demand needed another solution and the ad exchange was the logical evolutionary path. Ad exchanges are streamlining the process with a whole new level of efficiency that the ad networks tried to deliver but lost along the way. The ad exchange is basically an ad server ecosystem through which advertisers, publishers and networks all manage their advertising business. They do this together and in an open, platform agnostic way that allows market dynamics to work their magic. So now the ad networks are feeling pressure from the exchanges too driving an ever increasing need to differentiate themselves. Think Right Media and the DoubleClick Advertising Exchange as examples. Advertisers and agencies rely on ad networks for the efficiency, reach, and optimization they bring to the table and are willing to give up some editorial control for it. But ad networks tried to control the whole process through proprietary means. This opened the door for exchanges to step in because they simplified and unified the trafficking process on an open platform that was transparent to the process. And there we have it, transparency is the final piece to the puzzle that unlocked the exchange phenomenon. Transparency takes the duplication out and removes the waste. We’ve all heard the timeless advertising adage, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Well transparency addresses that problem. So the ad networks out there will continue to differentiate themselves if they want to survive. The winners will be the exchange-friendly networks who can deliver the same transparency that enabled the exchange phenomenon in the first place.

YieldBuild is in the news raising another $6M capital with a solution to “maximize advertising revenue for web publishers”. It’s an AdSense layer of code that monitors and tunes your ad for you. Nice. I mention this because it’s just another validation of the very real risk from ad blindness eroding the impact of your ad spend in the industry and I applaud it. The online ad industry has grown so huge and so multi-faceted that many advertisers and publishers become complacent with their campaigns because they are so easy to traffic now and that is when your KPIs start to fall off. Just watch the conversion rate of a campaign after a week or so and you will see the creeping effects of ad blindness setting in. Frequency capping and day parting may help but a good campaign is one that is constantly being evaluated and tuned against your KPI. YieldBuild’s whole business model is based on that truism! A good online ad partner should always be talking to you about tuning and optimization. But more importantly, your ad network should be proactively showing you every single impression down to the URL level. If not, what is it they are trying to hide? It’s the reality that your promised impressions are either eluding them or not having the contracted impact and they are farming out your ad to anyone who can get them some numbers so they don’t have to put up the “mea-culpa” make-good at the end. So please, for me, ask your ad network for a report of every impression and every URL where you are running. Ask them what content you are running on and don’t settle for site level or network level themes. Then re-tune constantly for performance where your ads are getting traction. And if your ad network doesn’t have that kind of real transparency and accountability baked into their DNA, then shop your ad network around until you find a partner who is confident enough to open their kimono and show you everything. Only then can you truly keep ad blindness out of the picture and make the most of your ad spend.