The Great Decoupling - Part II

Hey, Maybe these data shenanigans aren't the greatest idea...

I had a free night in San Francisco.

It had been a disastrous few months, characterized by the chaos of the times.  A few weeks prior, we had survived Y2K without airplanes falling out of the sky or ATMs getting bricked.  I was repairing my career after taking a chance with a crypto startup that I probably shouldn’t have.  And I was in the middle of my first stint with consulting.

I had successfully lined up three clients in the Bay Area from my apartment on the Upper East Side in New York.  One of them wanted me to attend their sales conference while another wanted me on their board, and I had put together a trip out west to visit them, which had included a weekend.  Most of my trips to San Francisco at that point had consisted of quick in-and-outs where the most I had seen of the city was the client’s office and the inside of SFO.  On a number of occasions, I had wished I had time to just walk around San Francisco and see what it was all about, but I hadn’t gotten a chance until this trip.

And so I wandered around the city, through a lot of the touristy areas, including Haight-Ashbury, where I got angry there were so many Starbucks.  I wandered past the Warfield Theater, where Counting Crows was playing.  They had been a favorite band during my college years, so I scalped a ticket and took in the show.  They were fantastic.

That trip also contained a formative moment for me in how I thought about digital publishing.

Meeting Dave

The client who wanted me in San Francisco for their sales conference was Real Media, an early entrant into the ad network space that was competing with the likes of DoubleClick and 24/7 Media.  I was immediately drawn to their CEO, Dave Morgan, for a few reasons.

Dave seemed to be fluent in all of the things that interested me at the time – ad tech, journalism, law and publishing.  He was a lawyer who had worked for traditional publishers, helping them navigate the new digital world, and he enjoyed tight relationships with publishing groups – especially companies that published newspapers.  At the same time, he knew ad tech.  Not just at a high level, but also enough to be conversant with hands-on-keyboard wonks like me that often spent their Friday nights uploading digital ad campaigns into ad servers.

At the center of Real Media’s offering was a technology called Open AdStream, which Dave and his team had built by keeping the concerns of publishers as a central focus.  It wasn’t just a mere ad server.  The newspaper publishing groups Dave knew well were using it.  So was Weather.com, the Discovery Channel and Fox News.

Pulling in external data

Other ad servers like DoubleClick’s DART and AdForce were now in the catalog marketing game.  They looked to merge or partner with catalog marketing companies that could marry all sorts of external marketing data to their network cookie.  In doing so, those networks had shifted focus away from rewarding publishers for cultivating audiences around content and utility. 

Instead, they were pulling in external data from traditional database marketing companies and boosting their margins by putting together multi-site buys where publishers saw their sales increasingly going to their network partner.  And, by not being party to the data, they really didn’t know why.

Which brings me to the formative meeting.  Actually, to call it a meeting was stretching the definition of “meeting.”

Six drinks in…

We were aboard a party boat in the middle of San Francisco Bay.  Dave was holding court at a table with his CTO, head of marketing and a bunch of other Real Media execs.  The drinks were flowing.  And it was there that I had my views changed about what data meant to digital media.

Other ad network heads I knew – like Kevin O’Connor at DoubleClick and the Steelbergs at AdForce – seemed to believe a marriage between ad networks and direct response database companies was inevitable and good for the industry.  In trade columns I had been writing at the time, I had railed against those mergers and partnerships on consumer privacy grounds.  But talking to Dave enlightened me about what all this meant to the publisher.

With the likes of Abacus and Experian driving the enhancement of digital targeting data, the publisher’s role in cultivating audiences would be diminished.

And Dave was fiercely protective of publisher interests.

The room where it happens

Sitting at that table, I heard about a different direction in which the digital media industry could go.  What if, instead of pulling in external data from outside the publisher’s relationship with the user, we instead focused on helping publishers use more of the data they were generating by creating the content and utility that the user was interested in?

Dave talked about building that structure with publishers.  He talked about how Open AdStream wasn’t just an ad server, but could serve content as well.  User interaction with various bits of that content could help publishers understand more about their audience and help them to build their own data profiles, understanding their audiences and what made them attractive to advertisers a whole lot more.

Cookies: Just trust us

Other ad servers were abusing cookies by using the same cookie for advertiser-side buys that they were to determine which ad to serve on properties they serviced from the publishing side – the very same cookie that was married to the user profiles containing the catalog marketing data.  Dave told me about how a feature of Open AdStream called a privacy proxy could be used to put a stop to that.

Most of all, though, I came to realize through that conversation that the role of the publisher was being diminished by the role of the ad networks and emerging ad tech industry.

Thanks, P&G

Publishers were already in trouble, due to plummeting CPMs for digital display ad inventory.  Marketers had followed the lead of Procter & Gamble and other early investors in digital advertising, chasing ad clicks as a measure of campaign value.  This movement, as well as the problem of little to no controls on the supply of ad inventory, had led to the bottom falling out when it came to digital display CPMs.  When you added in the notion that publishers were going to have to give larger shares of their ad revenue to ad tech and data companies, it looked like it spelled trouble.

Real Media eventually merged with 24/7 Media, and Dave went on to found more companies in the space.  I can draw a direct line between the conversation Dave and I had on that party boat to his next venture – True Audience.  That was the company that eventually became TACODA and sold to AOL for $300 million.

And all of this was happening before programmatic, real-time bidding or anything else that would come along to exacerbate the situation.  Value was being siphoned from the publisher-reader relationship in a big and scalable way.  The responsibility for making audiences valuable to advertisers was being pried away from the publisher and landing at the feet of ad tech, in what I call The Great Decoupling.

Online publishing was in trouble.