Publisher Ad Serving and Advertiser Ad Serving are different products.

Harrison then goes on to say that advertiser ad serving is core to Microsoft’s advertising platform, and points to the Atlas Technology Partner Alliance, a factor that was also communicated to me by others at Microsoft. (He doesn’t comment on the publisher side.)

While it’s undeniably true that these are different products, they share core functionality in common, and, perhaps more important, have both been historically marketed side-by-side under the same umbrella brands (Atlas and DART) for some time. In the blog medium one is often challenged to compress things to the point where certain distinctions are omitted, but perhaps in this case the distinction is important, because it’s plausible that Microsoft could exit the publisher (or “sell-“) side of the server business, yet still reinforce its commitment to the buy-side.

While such a strategy would not completely eliminate conflicts (advertisers and agencies still need assurances that their tools will give them neutral access to all available sources of inventory), the conflicts are less prominent than on the sell side where many online publishers consider MSN a direct competitor.

Moreover, as Harrison also points out, Microsoft has invested in “engagement mapping,” a strategy to shift the attribution of conversions from the “last click” (which is usually from a search results page) to ad exposures within a certain time period (more often display ads). This is widely seen as an attempt to reclaim some of the credit that Google, as the dominant player in search, has by convention been awarded by advertisers and move it into the display channel where Microsoft has more to gain. This strategy does require Microsoft to keep its hand in buy-side tools.

Microsoft also has a strong record of working with agencies on tools, where there is arguably more upside than on the publishing side. For example, Microsoft has worked extensively with Mediabrands, Interpublic’s media agency holding company, on what they’ve dubbed “the first holistic advertising platform, the Media Operations Management System (M.O.M.S)” (announced here). So, while Google/DoubleClick appears to currently have a wider lead on the buy-side than the sell-side, it’s very possible that Microsoft could continue to press on this front even if they reconsider their sell-side positioning.

So, mea culpa for omitting this distinction in my post. However, an even more critical distinction that I believe is too frequently glossed-over by the marketers of these products is the distinction between an ad server and an ad network. I’ve heard analyst claims that this distinction is fading, that the ad server will eventually be replaced by the network. This is a dangerous idea. Both publishers and agencies will continue to need tools which allow them to book and manage their own directly negotiated transactions without intermediaries and with a minimum of pricing friction. And both sides are increasingly recognizing that when tools are bundled with inventory from the same vendor, their position is weakened.

In 2008 Microsoft doubled down on ad management tools with its purchase of Rapt, the leading pricing and yield management solution for publishers, which it quickly integrated into the Atlas Publishing Suite. Now sources tell me that Microsoft is no longer taking new customers for Rapt, and its biggest customer, Yahoo!, recently informed analysts that it will be discontinuing its use of the product in favor of internally-developed solutions. Meanwhile, ad operations providers such as Operative, Solbright, and FatTail have closed ranks on pricing and yield management in their ad product suites.

A few weeks ago, Microsoft announced a partnership with open source ad server provider OpenX, an Atlas competitor. The announcement describes an arrangement where OpenX provides a “distribution channel for Microsoft monetization products” (read: ads) and, in return, gains “access to a new base of potential customers – via referrals from Microsoft – for its enterprise advertising technology and services.” Although Microsoft’s director of advertising business development Peter McDonald, commented obliquely that “the OpenX ad server technology might be more appropriate [than Atlas] for certain types of Web publishers,” the partnership nonetheless suggests a migration path for Atlas users should Microsoft decide to exit the ad server business.

Another clue lies in the way Microsoft has evolved its description of PubCenter. In April, Microsoft described PubCenter as “the convergence into a single platform of the many systems we’ve developed and acquired…[including] technologies and tools provided by the former Atlas and Rapt solutions, as well as a self-serve offering.” Today, the PubCenter (beta) site offers “select web site owners the chance to place advertising from the Microsoft network on their web sites.” No word of convergence.

I’ve frequently advised publishers, vendors, and advertisers to be wary of the conflicts created by companies that offer both media campaign management tools and media under the same roof, so Microsoft’s decision to favor its media business over its ad server business might be a wise one. Still, $6 billion was a lot to pay for DoubleClick’s chief rival. And Google, for its part, seems to be well on the way to making its largest acquisition pay dividends.

• “Apple Prepares to Rock the Market with Hardware Subsidizing Program”
• “Apple applies for patent on OS with embedded advertising”
• “Apple Patents Ad-Supported, Subsidized Mac OS”
• “Gimme a minute — just two more ads before it lets me use the Finder again”

As with the Google music rumors, or the latest round of Apple tablet speculation, there seems to be more smoke here than fire: Apple files lots of patent applications, and, despite some loose reporting, this is just an application, there’s no guarantee it will be granted, and given that the innovation appears to be the use of advertising to subsidize an OS (which, at the end of the day, is just software), one might expect examiners to scrutinize it carefully, and look closely at some of the prior art in Zune, among others.

What’s interesting about this is the indication that Apple is thinking hard about advertising revenue, which is something we’ve been discussing on the media team for some time. On the one hand, as the rise of Android puts Apple and Google in more competitive situations, the power of Google’s ad-based revenue engine to subsidize innovation can’t be lost on Apple. On the other hand, there’s nothing Apple seems to hold more sacrosanct than its branded user experience, and suggesting that this could be sold to advertisers will clearly strike some as sacrilege. Apple may imagine it can leverage its success corralling app developers through an approval process with advertisers as well, but the difference is, for advertising to work economically, it needs to operate at much higher reach and frequency than app development.

Bottom line: Apple’s likely to experiment with ads, and there are many ways for them to do so – especially if they open up a publishing channel in iTunes to deliver print content to an Apple eReader… but an ad-supported OS carrying the Apple brand? With ads appearing at predefined times, blocking activities? Running a preroll after that iconic startup chime? Hard to imagine.

Still, if the patent issues, perhaps there’s some upside in licensing the IP to Android….

First, the highlights.

This year’s challenge listed 61 company names, of which 15 responded, a nearly 25% response rate.  An additional 4 who were not mentioned also responded. Last year, 34 company names were listed, of which 23 responded, a 68% response rate. An additional 13 who were not mentioned responded last year. Of 36 who responded last year, 17 didn’t respond this year, even though they were all on the list.

Whatever the reason, some of the companies that didn’t respond remain on my list of top-tier players based on the work they’re doing for clients, which of course is the ultimate test.

Second, an observation. Even among those who responded quickly, I was surprised at how many neglected to take the step of mentioning their company’s name in the response. I’d suggest it’s wise to always keep SEO in mind and make it second nature when posting anything on behalf of your company’s brand. Search engines still matter, shankapotamus.

Contextual Bonus Awards (given to companies who were not on the list but responded anyway):

ImpactWatch (also noted for taking the opportunity to plug that they also monitor offline media)

Media Monitors (also noted for taking the opportunity to plug a newly released product: Mediaportal.com)

Waggener Edstrom (also noted for taking the opportunity to plug a newly released product: twendz)

VMS Info

Rapid Response Bonus Awards (given to companies who responded within fifteen minutes of the post)

InsideView  (special note as the respondent appears to be a client rather than a representative of the company)

Filtrbox (New to the list)

Responsiveness Awards (please note that some of these companies have taken pains to point out that they are not “watchdogs” or monitors in any limiting sense, but focus more broadly on strategic inferences from broad range of consumer conversations. However, their mention here at least attests to the fact that they are listening.)

BurrellesLuce

Cision

Converseon

filtrbox

InsideView

The McGraw-Hill Companies J.D. Power and Associates Web

MotiveQuest

Onalytica

Radian6 Technologies

Sentiment Metrics

Spiral16

Sports Media Challenge

Sysomos

Alterion Techrigy

Visible Technologies

Thanks again to all who participated and please don’t hesitate to let flow the feedback.

Final note: as MotiveQuest’s Tom O’Brien noted, Microsoft Advertising was in the news last week at Advertising Week in NYC with a social media monitoring product called LookingGlass (AdAge, ClickZ), which we’ll be evaluating in more detail shortly (though not necessarily on the blog).

Such a move clearly suggests there’s still play in the social media monitoring space, even as the table stakes go higher. Microsoft’s entry may tend to commoditize the brand monitoring function and shift value focus to either broader forms of analysis, characterized by more strategic service-oriented approaches. Will the incumbent agency space dominate these services, or can new approaches scale better working outside the agency legacy? Stay tuned…

Much has happened in a year, but one thing that hasn’t happened is a thinning of the field through consolidation or collapse. While some companies have merged or shifted focus, and a clear leadership tier has emerged, the overall number in my database has nearly doubled to sixty-one, making for a pretty noisy category. The good news is demand seems to still be growing as well, so, while consolidation’s to be expected, there’s yet a prize in store for the best vendors, and plenty of choice and competition for users who are still waking up to the critical importance of analyzing social media, or refining their approach based on some experience.

The goal here is simple: to determine which of these companies can respond with a comment within 48 hours (when the results will be posted) of having their name appear on this blog.

Disclaimer: this is not a true product test, nor is it meant to imply that a company’s ability to detect its own brand is necessarily a significant factor in choosing the right vendor. It’s just a way to showcase the power of this dynamic category, and to discover if this list is missing anyone important. Some may find it a useful guide as links to the websites (which are not always obvious) are included.

It’s also a way to foreshadow that we’ll be publishing more research on this category soon.

I look forward to hearing from you.

1st2c
Aberdeen Group
Attensity
Attentio
backtype
Biz360
BrandIntel
Brandseye
Brandtology
Brandwatch
BurrellesLuce
Buzzgain
BuzzLogic
Nielsen Buzzmetrics
Channel Signal
CIC
Cision
Clarabridge
Collective Intellect
Converseon
Crawdad Technologies
Crimson Hexagon
CSC NameProtect
CustomScoop
Cyberalert
TNS Media Intelligence Cymfony
dna13
eCairn
Echo Research
Envisional
News Corp Dow Jones Factiva
filtrbox
Gnip
Imente
InsideView
The McGraw-Hill Companies J.D. Power and Associates Web Intelligence
Jive Software
Kaava
Lexalytics
Leximancer
Market Sentinel
Moreover
MotiveQuest
Networked Insights
New Media Strategies
Onalytica
PopularMedia
Radian6 Technologies
RelevantNoise
RepuMetrix
ScoutLabs
Sentiment Metrics
SentiMetrix
Spiral16
Sports Media Challenge
Sysomos
Alterion Techrigy
Trackur
Unbound Technologies
VibeMetrix
Visible Technologies

The FCC also announced the “beta” launch of OpenInternet.gov, a site that will track the progress of all this.

In 2004, the former FCC chairman Michael Powell established four principles that formed the basis of net neutrality policy. Now, Genachowski has added two more:

The Principle of Non-Discrimination

The fifth principle is one of non-discrimination — stating that broadband providers cannot discriminate against particular Internet content or applications.

The Principle of Transparency

The sixth principle is a transparency principle — stating that providers of broadband Internet access must be transparent about their network management practices.

Now, the Principle of Non-Discrimination has been a hot-button issue in the debate, but it’s important to note that it doesn’t prohibit carriers from selling faster internet connections for more money; it just states that they can’t discriminate on the basis of content or applications. It also allows exceptions for "reasonable network management," such as throttling Internet traffic under times of heavy usage or to prevent spam. Its intent is to counter the possibility of carriers from favoring their own services on their networks, by, for example, making (Comcast’s) Fancast work better than Hulu.

But it’s the Principle of Transparency that puts teeth in all this. In fact, the Principle of Transparency, combined with low enough switching costs and enough competition, might suffice on its own to align market forces with the intentions of the remaining regulations.

The Principle of Transparency is hard to oppose because it should generally apply to every industry, not just the Internet. And, as has been frequently demonstrated, when combined with the Internet it is far more expedient at exposing anti-consumer activities than any government agency could hope to be. That’s one of the great promises of the Internet.

Many web video platforms and content providers are already monitoring stream quality, but have little recourse but to optimize for lower bandwidth when bitrates drop inexplicably for their viewers. Transparency would empower them to get an explanation from the service providers involved, which in turn would increase competition and quality, while building confidence in the channel’s overall reliability.

If the telecom industry is to take up transparency at all, it might be to point out the double-standard of applying it to communication but not to content services, which are no less part of the public’s interest in the Internet. Why shouldn’t a company like Google be similarly required to reveal how it manages its search services? Similar issues of potential hidden discrimination are involved. Perhaps net neutrality is not just for service providers.

The issue is the long-standing disparity between measurement methodologies, which continues to produce gross discrepancies between the traffic measurements supplied by web analytics services (like Omniture) and the panel-based measurements typically supplied by media metrics providers (like ComScore). Since web analytics uses tracking pixels and server logs to generate traffic data, issues like accessing sites from multiple devices or locations, or cookie deletion, or spider misidentification, will tend to overcount the number of unique visitors to a site, while issues like panel size or universe limitations (i.e., at-work vs. at-home vs. mobile usage) will tend to undercount uniques. As a result, while the two camps bickered, web publishers and advertisers suffered from a lack of unified measurement that cost them  time, money, and credibility, belying the oft-repeated cannon that the web is our most measurable medium.

Since a unified measurement is so beneficial, the competitors of Omniture (such as Coremetrics or Webtrends) and ComScore Media Metrix (such as Nielsen/NetRatings or TNS Compete), now seem to have two choices:

1. They can join the dance and announce their own competitive alliances (potentially seeding major market share), or
2. They can finally get serious about addressing the remaining issue for customers, which is the lack of standards that continues to hamper interoperability, create switching barriers, and limit the scope of these types of alliances.

In a world governed by open standards, a web analytics customer would be able to opt-in to provision its server data to any or all panel-based metrics vendors for refinement, targeting, and advertiser arbitration, and we wouldn’t need alliances. In the absence of such standards, ComScore and Omniture have done the right thing by burying the hatchet and solving an acute problem for their customers, who are bound to be thankful. Now that they have, perhaps the new landscape will be more conducive to accelerating the slow pace of standards development.

One problem seems to be the dueling roles of the IAB (on the metrics side) and the Web Analytics Association (on the web analytics side)…perhaps they can follow Media Metrix Hybrid 360’s example and form a joint panel to resolve this. In the mean time, the publishers and advertisers should weigh in with their vendors on which course they’d prefer to see them take.

Launched just before the Google acquisition, DoubleClick’s Ad Exchange struggled to gain share in a market characterized by strong network effects (where scale of liquidity matters most) and dominated by Yahoo’s Right Media Exchange. DoubleClick’s secret weapon was its integration of the Exchange with DART for Publishers (DFP), which enabled ad sellers to automatically offer ads on the exchange that would only be pre-empted if a buyer on the exchange could beat the currently booked price, a no-risk proposition for publishers known as “dynamic allocation.”

As it turned out, this addressed the wrong issue. The display market had (and has) no shortage of supply of low-cost advertising inventory; its problems are on the demand side, and DoubleClick had much more trouble attracting ad buyers than sellers to its exchange. Google’s approach to this problem is apparently to leverage its huge customer base of search ads buyers by making it easy for them to migrate to display. Eric Schmidt has indicated on numerous occasions that he sees display as the next growth phase for Google, and has acknowledged that search must soon plateau in its growth. So the stakes are high as Google seeks to demonstrate to the market that it’s not a “one trick pony.”

There are two related challenges in this strategy. The first is the question of whether the bulk of Google’s AdWords customers – mostly SMBs for whom the channel is more about sales than advertising – will embrace the more indirect, brand-oriented medium of display, which requires, at minimum, some graphical execution. To address this, Google has launched a Display Ad Builder “to help businesses easily set up and run display ad campaigns.” Google goes on to say, “80% of advertisers who use that product have never run a display ad campaign before,” a claim that withers on double-take.

The track record of do-it-yourself ad creative tools is not encouraging. I recently spoke with Anupam Gupta, president and CEO of Mixpo, which had attempted a DIY video model for local merchants and marketers and had concluded unequivocally that bringing agency-produced local spot ads online was a much more promising model. Of course, Google is not putting all of its eggs in the DIY display basket, they’re also wooing ad networks and agency buyers who are more likely to invest in display media and creative services. For example, AdAge quotes Curt Hecht, president of the VivaKi Nerve Center, part of Publicis and a customer of Google’s platform: "Our view is display looks more and more like search every day. AdExchange makes it easier to buy without making a lot of calls to publishers or working with a lot of ad networks."

Which brings us to the second problem: agency buyers and ad networks, which often find themselves in “co-opetition,” are highly motivated and empowered to put considerable price pressure on additional intermediaries, especially if their name is Google. In its AdSense search business, Google has the advantage of opaque pricing and weak competition; in display exchanges, transparency reigns, and Google has plenty of competition. Agency buyers and ad networks, already feeling squeezed, have in common buying power and experience, which will drive exchange margins to a minimum. On the other side, publishers, especially those who consider themselves “premium,” are feeling even more squeezed, and are talking with agencies about private exchanges for their own networks that could minimize price friction in the value chain. Such developments will drive Google out toward the long tails of sites and advertisers, where display tends to lack the performance qualities of search.

Google is well aware of these challenges, and many have lost betting against Google. But the balancing act of pricing, advertiser support, and alliances among networks, agencies, and publishers in low-trust climate, with Microsoft and Yahoo! as competitors, will be very tough to pull off.

“Logic and over-analysis can immobilize and sterilize an idea,” Bernbach said, “It’s like love – the more you analyze it, the faster it disappears.” Such notions seem quaint today, in the age of web analysis, as data and analytics guide marketing and publishing budgets and increasingly become the currency of media. While some lament that digital over-analysis is indeed taking a toll on the creative quality of commercial communications, creative developers continue to take solace in the fact that they still hold sway in the design of Flash experiences, whose effects will be evaluated later – for now. And many have dutifully been instrumenting their designs with tracking pixels for years to make them more transparent – with mixed results.

But what happens when they’re introduced to their new cube-mate, an analyst trained in Omniture products who will look over their shoulder and suggest where to put the data collection tags and how to incorporate design elements aimed at real-time optimization? Such a collaboration might produce breakthrough results. Or it might not.

Bernbach is also credited with introducing the idea of the creative team consisting of a copywriter and an art director, which transformed how advertising was designed. Before Bernbach, we’re told, advertising concepts were thought up by copywriters who handed them off to art directors to illustrate. The team concept energized and accelerated the creative process. (Developers may wish to draw analogy to the “pair programming” technique associated with agile methodologies.) Could teaming up creative developers with analysts using a common Flash platform produce similar benefits? Well…

Creative developers tend to be holistic, “right-brain” thinkers who may naturally resist decomposing concepts into measurable units. Analysts tend to be reductionists, inclined to embrace such decomposition and measurement. Top-down organizational initiatives are unlikely to address the issues impeding their successful collaboration.

So, while most commercial web development interests appreciate the need for increased transparency and accountability in their efforts, the question of how best to integrate analytics with web design as a practical matter remains thorny, and the impact of Adobe’s integration efforts will depend not just on Adobe’s execution, but on industry-wide attempts to evolve the web development process in line with Adobe’s vision.

July 29, NYC: The author discusses Microsoft/Yahoo! deal on Bloomberg TV

After walking halfway down the aisle with Google in 2008 in a proposed (and then scrapped) search-advertising pact, Yahoo! has inked a 10 year deal in which Microsoft will power Yahoo! search and sell self-service keywords through AdCenter while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. The deal is subject to regulatory approval and both parties hope to close in early 2010 if not sooner.

The deal is another chapter in the Yahoo-Microsoft-Google marketplace drama. Various permutations of deals between Yahoo! and Google and Yahoo! and Microsoft have been discussed since Microsoft made a public offer to acquire Yahoo! in 2008. This deal does not include any upfront cash to Yahoo! although, according to Yahoo!, this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.

For Microsoft, the deal is a positive indication that it’s investment in search and launch of Bing in June will pay off. While no solid marketshare numbers have surfaced, Microosft has created positive momentum and it’s that traction that gave Yahoo! the indication it would need to invest heavily in search to remain competitive with Google and Microsoft. By making the pragmatic decision to cede its search technology to Microsoft, the company effects a potential $700 million swing and shows management is able to make tough decisions.

The fine print on the deal continues to be brought into greater relief, but some key questions have been raised:

1. Yahoo! has put a significant amount of time and energy into its open search strategy, namely BOSS and Search monkey. According to Microsoft, that platform will fall under its umbrella which leaves developers and publishers to question the future of both efforts as well as their desire to work with Microsoft.
2. While some contend regulatory issues may not be a major hurdle here, Microsoft is a lightning rod for attention from governing bodies in both the U.S. and Europe. Yahoo! and Microsoft represent the two largest consumer web portals in the world, and portals (as well as their toolbars) are starting points for consumer search queries.
3. How will Yahoo! sell its search deal to affiliates currently powered by Yahoo’s search engine once the deal in done?
4. How much time, effort and expense will Google put into throwing roadblocks that stall the deal? Google, the jilted groom in a proposed Yahoo! deal in 2008 has, according to reports, shown some anxiety of Microsoft’s newly found search momentum.
5. Publicly stating it will be going through a brand refresh in 2009, how will Yahoo! position itself with advertisers, consumers and Wall Street having relinquished one of its key product and services pillars.
6. What about the future of search-display convergence, which was cited as a key principle in Yahoo!’s rejection of earlier overtures from Microsoft? Search-display convergence, which implies the use of search data to better target display ads, is a key battleground for Google as it seeks to extend its advertising business into rich media and beyond.

One question that’s been raised that may be less important is whether the Microsoft-Yahoo! combination will significantly move needle on search share. Microsoft and Yahoo! together handle about 28% of the world’s searches, as compared with Google’s 65%. However, this question overlooks the strategic challenge that this deal represents. By dividing the search advertising market between premium buyers and self-service “long-tail” advertisers, Microsoft achieves a kind of pincer move around Google, challenging it directly on its home turf of self-service AdWords (it’s primary source of revenue) while empowering Yahoo! to block its expansion into the higher end of the market, the premium advertisers, where search and display convergence (along with mobile and social and online video and next-generation television) are important. In other words, this sharpens the distinction between Microsoft’s “technology company” role and Yahoo!’s “media company” role, making it harder for Google to play both against their alliance.

For advertisers, such escalating competition spells opportunity. AdWords users may now find AdCenter to be a more competitive option, especially in categories where Microsoft has focused Bing’s development like travel and retail, while premium brands and agencies may now find Yahoo! to be more capable of supporting brand campaigns with integrated search and search-related targeting capabilities. The fly in that ointment remains the privacy issues that will impede the flow of search data between the two companies. Watch for this issue to escalate in the inevitable challenge from Google.