STOP VIEWING AD SERVERS AS A COMMODITY

By Geoffrey Katz Vice President, Client Operations Mediaplex

ValueClick, Inc. (NASDAQ: VCLK)

PG. 01 INTRODUCTION PG. 01 PG. 02 PG. 03

A RAPIDLY CHANGING AD SERVING MARKET RETHINKING WHAT AN AD SERVER DOES THE CONDUIT OF USER DATA

PG. 03 WHAT MATTERS IN AN AD SERVER PG. 03 PG. 04 PG. 05 PG. 06 PG. 06 PG. 06 PG. 07 PG. 08
1. THE BASICS 2. MULTICHANNEL CAPABILITIES 3. PLATFORM INTEGRATION 4. CUSTOMIZABILITY 5. INDEPENDENCE 6. CORPORATE COMMITMENT 7. COMPANY STABILITY 8. TRACK RECORD AND PEOPLE

PG. 09 CONCLUSION PG. 09 ABOUT THE AUTHOR PG. 10 ABOUT MEDIAPLEX

STOP VIEWING AD SERVERS AS A COMMODITY COPYRIGHT 2012 MEDIAPLEX. ALL RIGHTS RESERVED. MEDIAPLEX AND MOJO ARE REGISTERED TRADEMARKS OF VALUECLICK, INC.

INTRODUCTION
Many people think of the ad serving business as a relatively sleepy, commoditized space. Agencies and brands alike review their ad serving relationships periodically, playing one vendor against another with a focus on getting the best possible financial terms. I understand the need to push for great rates. As a long-time veteran of the agency-side, I worked with virtually every major ad serving company at one point or another. Getting the best value on ad serving services is clearly a fiduciary responsibility for agency teams and brand teams alike. But I do think there is a big difference between negotiating the cheapest price and identifying the best value for your brand.

While some may think

the third party ad serving business is pretty staid, the reality is just the opposite.

A RAPIDLY CHANGING AD SERVING MARKET

While some may think the third party ad serving business is pretty staid, the reality is just the opposite. Lately, theres been more press interest in our sector because so many of the leading companies are in flux. There has been a great deal of change in the category, much of which needs to be considered when assessing goodness of fit with the various ad server partners out there. Microsoft is reportedly in the process of selling off Atlas Solutions in a bid to get out of ad tech and focus on other categories. DG, parent of MediaMind, says they are exploring numerous going forward financial strategies, which may include partnerships, strategic business model alternatives, a sale or other transaction. In connection therewith, [they] engaged Goldman Sachs to assist them in exploring strategic alternatives.i A variety of small start-ups have entered the business, with varying levels of funding. Many are primarily focused on ad serving within a specific channel like Mobile. Google continues to integrate DoubleClick more completely into its advertising stack, giving them more and more comprehensive visibility into brand and agency data. Given all of these developments, it makes sense to reexamine the ad serving category with an eye toward what really matters to ensure you get all of the value possible out of these important digital platforms.

DG Press Release: DG Reports Third Quarter 2012 Results

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RETHINKING WHAT AN AD SERVER DOES

To find out just what people think an ad server does, I asked about a dozen people to explain to me what they thought were its essential functions. The answers I got were remarkably consistent, but only told about a third of the story. Most peoples answers concentrated on the act of literally serving ads answering ad calls from a variety of publishers and networks. Many also pointed to the idea that using a cetralized ad server is far less complex than relying on site serving, and that the simplicity of using an ad server helped reduce costs and errors.

As the central tracking

hub of your marketing efforts, the ad server is vital in todays world of data-driven marketing.

But an ad server is about so much more than that. Ultimately it meets three core needs:
1. Storing ad creative and serving it on an ad call according to business rules 2. Collecting data about marketing activity impressions, clicks, interactions, conversions, etc. 3. Reporting and auditing on marketing performance in order to facilitate optimization As you can see, the respondents of my informal poll were absolutely correct that managing and serving creative is a very important role of the ad server. But the other core functions of an ad server are perhaps even more critical to a modern advertisers success. As the central tracking hub of your integrated marketing efforts, the ad server is vital in todays world of data-driven marketing.

AD SERVING AT A GLANCE
Core Benefits Reduced labor costs through central campaign management Better campaign performance through optimization Better measurement and reporting through central data collection

Core Features Central creative management Automated creative optimization Universal creative retargeting

Central frequency control Impression /click count verification Cross-channel data collection

Universal measurement and reporting Central user data management for targeting and bid optimization

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THE CONDUIT OF USER DATA

Certainly the act of serving ads is key to what an ad server does. But what often gets far less attention is that an ad server is (or should be) the centralized conduit of user data into your organization. An ad server collects critical information on how consumers are viewing and interacting with your brand messages. It amasses the data that enable a detailed view into your customers, their needs, and their actions. Thats why we need to take a broader view of what best value means in this category. In the course of my career and experience, I developed a set of the criteria that are critical to selecting the ad server that delivers the best value. Developing a broader understanding of the critical role ad servers play in a brands marketing success will help you make a more informed choice when selecting a vendor for your business.

We need to take a
broader view of what best value means.

WHAT MATTERS IN AN AD SERVER

In my view there are 8 things that matter when choosing an ad server. Each warrants your serious attention.

1. THE BASICS
A traditional ad server hosts advertising creative and delivers it to web browsers for display when visitors arrive on publisher webpages. Ad servers also collect data about campaign execution, counting impressions, clicks and other measures relevant to a brand and its marketing programs. On the most basic level, the ad server you choose needs to deliver on these basic tasks. To do so effectively, it must be: Certified by all leading web publishers Able to store and deliver a wide variety of creative types Accurate and timely in collecting and reporting data Highly secure and reliable Simple to configure and use

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Many ad servers meet these baseline hurdles, but you might be surprised to hear that some do not. In particular, some of the leading ad servers are rather problematic to deploy, exposing clients to long delays and the very real possibility that they will lose critical marketing data.

2. MULTICHANNEL CAPABILITIES
Related to integration is the need for a multichannel approach to collect, report, and analyze consumer data. We all rail against silos in marketing the idea that Display, Search and the rest should be managed separately. Picking the right ad server is the first, and perhaps most important step in DOING something to break down silos. Multichannel is about more than just Display, Search, Video, Mobile, and Social. Many vendors can address these 5 channels, at least in some way. Without a doubt, a combined measurement system for 5 channels is better than 5 separate systems. However, this does not go far enough to achieve the greater goal of moving beyond channels to a usercentric approach to marketing. In addition to collecting data, you need to be able to correlate multichannel data at a user level. This type of user-level data correlation is critical for precision targeting and advanced attribution tactics.

User-level data
correlation is critical for precision targeting and advanced attribution tactics.

Collecting data is far less difficult than associating it across channels with particular web users. When you choose an ad server that can actually connect someones PC browsing data with their tablet browsing data and their smartphone browsing data, you gain a startling competitive advantage. Consumers dont think about or compartmentalize personal experiences in channels or devices. Our understanding of them should not be limited in that way either. I cant stress how important it is to get this right. This user-centric data strategy forms the foundation off all your data-driven marketing efforts. If this data is compromised, it can negatively impact the effectiveness of all of your data-driven programs. To do it right you really need expert guidance from your ad serving vendor on how to implement proper data collection and management. This is a key place where hands-on support and service can help ensure you get the maximum benefit from your technology.

Consumers dont
think about personal experience in channels. Our understanding of them shouldnt either.

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3. PLATFORM INTEGRATION
Many vendors in the ad server space, especially new players, are focused on providing point products for particular types of ads, like Mobile, Rich Media, or Video. When companies begin to advertise in new media types or channels, such specialized systems can be simpler to implement. For example, deploying a mobile-specific ad server may appear to be the path of least resistance for ramping mobile efforts.

Short term time

savings are far overshadowed by the inevitable challenges that multiple vendor platforms create.

But those short-term time savings are far overshadowed by the inevitable challenges that multiple vendor platforms create in realizing a userbased data strategy. When information is difficult to get from one platform to another, the likelihood of integrating user data across platforms to build robust user profiles dims. These types of silos make it far more difficult to harness the true value that data can provide. At Mediaplex, our approach is very different. We designed our ad server with integration in mind. With comprehensive data collection and ad execution capabilities, it is truly a foundation for a complete data strategy and action plan. Mobile, Video, Rich Media, and other forms of marketing data all come together in the MOJO Adserver platform. Our ad server includes an integrated Data Management Platform (DMP). The DMP stores a wealth of cross-channel first- and third-party user and campaign data that powers both true algorithmic marketing attribution and bid optimization for managed DSP services. This sort of integration is invaluable as companies recognize the need for more holistic and user-centric approaches to data management, performance analysis, and data-driven execution. With a less integrated solution, you ultimately raise your cost AND risk due to less accurate data collection and application. Whether you choose our ad server or another, make sure that platform integration is a real strength for the vendor you choose.

Companies recognize
the need for more holistic and usercentered approaches to data management, performance analysis, and data-driven execution.

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4. CUSTOMIZABILITY
Ad servers tend to have standardized approaches to recording and presenting data. For some clients, such approaches are quite beneficial because they make it easy to get up and running quickly. But many companies find a big gap between how their ad server wants to present information and how their company wants to consume it. To address this challenge, Mediaplex has developed a platform that enables its clients to customize every aspect of their instance. This sort of customization has helped a number of our clients save time from not having to reformat, combine, or otherwise manipulate ad server data in order to meet their companys reporting needs. Here youll need to consider whether your business will benefit more from platform flexibility or a templated UI that supports greater ease of use.

This sort of
customization has helped a number of our clients save time.

5. INDEPENDENCE
When Atlas was owned by ad agency Avenue A, there were many agencies that chose an alternative because of a concern that somehow their client data would end up in the wrong hands. While all ad server vendors provide assurances that client data are protected, some people still have understandable concerns. Today, DoubleClick is a part of Google, and Atlas a part of Microsoft. Thats something that may trouble some agencies and brands. Further, some also may have a concern that Googles incredibly broad access to brand data gives them ever more power as a media vendor. After all, they often have access to most or all of a brands SEM activity and (for those brands that use it) Google Analytics data. Mediaplex, by contrast, is part of ValueClick, Inc. It is managed as a separate unit from all other ValueClick divisions and those divisions have absolutely zero access to Mediaplex data. In our view that sort of independence has real value its something that we are very proud of.

6. CORPORATE COMMITMENT
The technology of ad serving is constantly changing as new channels, ad formats, interactions, and placements are devised by brands and publishers interested in attracting more user attention. Staying ahead of those developments requires real commitment from your vendor in the form of technology and people investment. The best ad server for you should be making significant and sustained investment in people and technology to keep you ready for new marketing opportunities and market circumstances.

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Start-up ad server companies are naturally full of commitment, but may lack the resources to keep their products current. By contrast, ad servers that are owned by large companies can get short shrift on investment if ad serving is not core to the companys overall business. At Mediaplex, ad serving is at the center of what we do. Our mission is to help marketers maximize return on their marketing investments. In order to achieve this goal, we need to be able to understand what works for a brand at the user level. Over the past several years, our parent company has made major investments in our ad server platform. Dozens of new people including respected, long-time industry veterans have joined our team. New technology capabilities have been layered onto our core ad server to better meet the needs of todays data-driven marketers. We may not be the only company investing seriously in their ad server businesses. But whichever vendor you choose, make sure that it is making the financial investments necessary to stay ahead of marketing developments.

Our mission is to
help marketers maximize return on their marketing investments.

7. COMPANY STABILITY
Your marketing data are absolutely critical to your future success. Many vendors in this category are new companies bootstrapping or relying heavily on venture capital investment to cover costs. Sweat equity and VC money have done very positive things for digital. Do consider, however, that many startups have an exit strategy focused on getting acquired by a larger company. In a number of cases in the ad serving category, that hasnt been a positive for customers. Sometimes those larger companies lose interest in a platform and reduce investment in its workforce and technology. Make sure that whomever you work with has enough money to get off the ground and sustain themselves while they get market traction. It may well take years for them to sign the clients needed to fully sustain their business. Switching costs are also an important consideration. When you change ad servers you must retag your site and retrain your ad operations and analysis teams in using the new platform. For agencies, an even greater challenge is integrating a new platform with existing work flows and accounting systems. While there are certainly good reasons for changing ad servers reasons that are worth the switching costs youll want to minimize the number of times you switch. Its simply a hassle you dont need year after year. By choosing a stable vendor, you go a long way toward reducing future headaches.

By choosing a stable
vendor, you go a long way toward reducing future headaches.

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The most stable companies in our category, in my view, are DoubleClick and Mediaplex. DoubleClick is part of Google. Nuff said, no chance of them running out of money any time soon. Mediaplex has been in business for more than 15 years, and is a division of ValueClick Inc., a large, profitable, publicly-traded company focused entirely on digital marketing.

8. TRACK RECORD AND PEOPLE

As Ive outlined, the ad server is a critical source of valuable marketing data, and your brands marketing data is a critical driver of modern marketing tactics. As such it is important to select an ad serving vendor with a strong track record of service, support, and reliability. One of the leading companies in the category owes much of its success to an extremely appealing dashboard. But when it comes time for implementing its technology, they frequently fall far short of client expectations. Integrations tend to be slow, incomplete, and filled with small points of aggravation. A great UI can be seductive, but make sure you take into account the broader role an ad server will play in your brands success. All of the dashboard bells and whistles in the world wont help you make sense of incorrect or incomplete data. And the process of implementing a new ad server isnt something you want to move forward with only to find that the vendor cannot provide the correct information and level of service you require. In ad serving, incorrect or incomplete data means huge problems in campaign management, budgeting, auditing, data collection, and reporting. It also prevents you from deriving the data insights needed to optimize your marketing investments. Mediaplex has always believed that flawless execution and strong customer service are the keystones of any business, but this is particularly true in ad serving. We offer many referenceable clients who will attest to our strong onboarding and ongoing service and support. Other large players in the category tend to offer their best service for very large customers only. It stands to reason, of course: big advertiser = big revenue. But for advertisers that arent as gigantic, service levels can be spotty. I believe that you should ask a prospective vendor for references from advertisers of your size; not their three biggest advertisers, unless thats what you will be. But if, for example, you spend $10-$15million in advertising annually, ask for a list of clients that do the same, and then quiz those references on the service level they get.

All of the dashboard

bells and whistles in the world wont help you make sense of incorrect or incomplete data.

Flawless execution
and strong customer service should be the keystones of any ad technology vendors business.

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CONCLUSION
I dont claim to be an unbiased observer of the ad server category. I joined Mediaplex because I believe in its vision, its model, its products, and its level of client service. There are other good ad serving products besides Mediaplex. Its when we move beyond thinking solely in terms of the serving of ads that the rubber meets the road. Every company has strengths and weaknesses, and your choice of an ad server should be made in consideration of those. Whether you choose us or someone else, do it because what we (or they) offer really addresses your brands unique needs. Ultimately your choice of ad server is an extremely important business decision; one that should be based upon more than how low will they go on serving costs. Whether or not you agree with all of the points contained in this paper, I urge you to dig into this choice deeply and consider your options in a broader context. By carefully considering alternatives and asking the right questions, you can truly make a choice that represents the best value for your brand and company. I welcome your comments on this paper and on the ad serving category. Please write me at GeoffreyKatz@mediaplex.com.

Ultimately your choice

of ad server is an extremely important business decision.

ABOUT THE AUTHOR

Geoffrey Katz is Vice President, Client Operations at Mediaplex. He began his career as a software developer, and in 2000 transitioned to the digital marketing field when he joined Mediaplex as Product Manager for the MOJO Adserver. In this role he was responsible for developing and leading the development roadmap for this flagship Mediaplex service. In 2008, he joined Razorfish, where he was the New York office lead for campaign management and ad operations. He was later promoted to a national role for Razorfish as Director of Tools and Technology. In this post he was focused on finding and influencing the best solutions for ad serving, ad verification, OBA compliance, tag management, dynamic creative and rich media. He rejoined Mediaplex in 2011.

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ABOUT MEDIAPLEX
Mediaplex, a division of ValueClick, Inc. (NASDAQ: VCLK), is the technology-empowered analytics and optimization provider that scientifically identifies the best way for brands to invest marketing resources and then executes against those insights with a suite of advanced campaign management tools. Its unique software with service model delivers industry-leading technology coupled with the deep analytics expertise necessary to answer Marketings most mission-critical question: how to maximize ROI from marketing investments. With all the essential software and services needed to correctly collect, manage, interpret, and action data, Mediaplexs end-to-end solution is the first to make genuine data-driven marketing a reality. For more information visit Mediaplex.com or contact us at 1.877.402.PLEX (7539).

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