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Friday, January 16, 2009
Cache & Packets
The ad campaign where less really means more
By Efrain Viscarolasaga
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I don’t think I am the only one that cringes every time an analyst or research firm tells of the billions in revenue to be generated in the coming years through online advertising. The Interactive Advertising Bureau said the first nine months of 2008 generated $17.3 billion in online advertising, and because of the economic slowdown, many advertisers will be moving even more dollars online, eventually generating $1.1 billion by 2012, according to a recent report from IDC.
That may be well and good for the stake holders — brands hoping to sell product, advertising networks hoping to sell campaigns, and websites hoping to support an ad-based business model, but for the everyday consumer, it just means more ads online.
But as a seemingly endless parade of advertisements infiltrate the online ecosystem, an advertising platform developer in Connecticut is actually fighting against the glut.
Last spring, online advertising network Chitika Inc. launched a targeted advertising platform based on knowing when NOT to show an ad. Chitika CEO Venkat Kolluri said the plan was counter-intuitive to the way almost every company in the advertising space has operated, but with online advertising being a nascent environment when compared to newspapers, radio and even television, he thought it was time to take a new look at the dynamic.
The end result is a program that takes user search data and uses it to collapse advertisements that don’t fit the user’s criteria, rather than bombard them with random ads.
“I have spent ten years in this industry and the best thing I have learned is when NOT to show ads,” he said. “At first, advertisers were confused. ‘What?’ they said, ‘you want to post an ad that is collapsed most of the time?’”
But they eventually signed on, and Kolluri said the program has generated a click-through rate of three times previous ads, and the firm has seen its publisher base double to 34,000 since it was implemented. While he declined to provide financial figures, he said revenue for the company has grown steadily, and Chitika is profitable, having never accepted a dime of institutional funding.
The reason the process works, said Kolluri, lies in the inherent difficulty in tracking the value of ads once they are out in cyberspace.
“It’s an age-old problem — 50 percent of a marketing budget is being wasted, but you don’t know which 50 percent,” he said. By reducing waste, Chitika is generating less ire from the user base, which makes everybody happy.
Unlike many successful initiatives in a competitive marketplace however, Kolluri isn’t keeping the strategy under wraps. This week, he is scheduled to speak among peers at the Red Herring Conference in San Diego, where the company is also a finalist in the Red Herring 100 Global award competition. There, he will preach the gospel of “not showing ads.”
“We want to be bold enough to stand up in the industry and say ‘learn when not to show ads,” said Kolluri.
Here’s to it.
Dominant display development
In larger-scale advertising news, Boston-based digital signage company A2a Media Inc. has landed the first installation in North America for its giant Mediamesh LED display. Beginning in the spring of 2009, the firm will begin the two-month construction of a 3,400 square-foot display on the facade of AmericanAirlines Arena in Miami (home of the NBA’s Miami Heat).
The digital mesh “curtain” will be capable of displaying high-quality motion graphics for things like promotions, live events and even news reports.
While the deployment marks the first project for A2a Media, and the first appearance of Mediamesh in the U.S., A2a Media has licensed the technology from metallic fabric manufacturer GKD AG and digital-sign company Ag4 Media Facade GmbH, both based in Germany. That tandem lit the first digital media facade using Mediamesh in December of 2007 at the Palazzo dell’Arengario, in Milan, Italy.
A2a Media was founded in 2006 to take advantage of the technology, and was funded last year by $3.8 million from W2 Group, a media-based holding company formed by local marketing executive Larry Weber and others.
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