So, the people I work with are probably sick of hearing me talk about the three levels of display optimization. For posterity, I’ll write them down here.
True optimization of display advertising spend must address three different, but related questions. I have dubbed them the three levels of display optimization:
Level 1. Bid Optimization – how much is this impression worth? (Equivalenty, how much should I bid?)
Level 2. Creative Optimization – now that I’ve purchased this impression, which creative variation will yield the most value?
Level 3. Landing Page Optimization – now that someone has clicked, what is the most effective sequence of pages/images/offers/whatever to seal the deal and generate revenue?
For reasons I’ve already gone through in a previous post, I believe levels 1 and 2 need to be part of the same operational stack.
Ideally, level 3 would also be part of the same stack, but I can see why advertisers would be loath to give up control over their landing pages to a third party. (Though it does happen occasionally.) My guess is that level 3 will most likely be loosely integrated, rather than optimized from within the same algorithm. This integration will probably occur by passing the “creative signature” – background color 6, with message 8, image 4, and call-to-action 2 – on the click URL. While the advertiser (and his or her landing page optimization algorithm) would almost certainly prefer the passing of this as well as the underlying targeting data, the passing of the latter might be complicated by the accompanying privacy-related conniptions of the FTC. (And don’t forget that conversion information must be passed back to both level 1 and 2, or an integrated level 1/2, to close the feedback loop(s).)
It’s interesting to note that most of the DSP-related buzz has centered around the denizens of Level 1, both the independents and the feverish efforts of the various agency holding companies to roll their own. What isn’t as well documented, though they’re starting to talk about it, are that the current residents of Level 2 and 3 are also starting to make noise on their own.
Level 2 Creative Optimizers include startups like Teracent, Tumri, Dapper, and a host of others, as well as the incumbent rich media players like PointRoll, Eyeblaster, etc, who have added (or are adding) optimization capabilities to their impressive frontend razzle-dazzle.
Level 3 LPO’s include a bunch of companies that I haven’t paid as much attention to, though I’ve been told they’re fairly numerous, especially if you count the site-side analytics guys. I think both Adchemy and Aggregate Knowledge started out here. (Someone confirm?)
Anyway, if you look closely at the good folks in Level 2 and 3, you’ll see that many of these companies are already well on their way toward moving into adjacent slots. Start reading the recent press for many of the companies named above, and you’ll see what I mean.
So who’s going to get the full stack first? Well, barring acquisition, I suppose the right question to ask is: which is hardest to build? Personally, I think it’s Level 2 and 3. (And, btw, have you noticed how similar Level 2 and 3 become if you think about landing pages as just another sequence of full-screen ads?)