Earlier today we announced that PubMatic is expanding into Europe.  This is a very significant step for us and for the category of Ad Revenue Optimization.  While we currently work with a large number of European based pubs, this marks the first time that local sales, service, and support for our technology will be available in the UK, Holland, Germany, France, Spain and Italy.

We issued a press release about this earlier today, which goes over the many benefits of our expansion, but here on our blog I’d like to point out why PubMatic decided to expand with our partner, Improve Digital.

When we founded the category of Ad Revenue Optimization in 2006, we recognized it as a much-needed global solution to help publishers work efficiently with the growing number of specialized ad networks, and we knew we’d have worldwide presence.   At that time, however, we didn’t know exactly how it would unfold.   It became transparent well over a year ago that publisher demand for ad revenue optimization via PubMatic was greater than even we originally expected – and a large part of that demand was from international pubs.  It also became very clear that the only way to meet this large demand was to scale through a well-established partnership rather than slowly building out European offices piece-by-piece.

And so at that time we began working with our partner, Improve Digital, an Amsterdam based company that has a long-standing track record for successfully providing revenue management solutions to large European publishers.   Over the past year, Improve Digital has been connecting large European publishers with PubMatic’s technology while providing their already best-in-class service.  Now European publishers can get ramped up faster with European ad networks, response times are even faster than before, and perhaps most importantly, there is an understanding of the publisher’s needs that only someone close in physical proximity can appreciate.  This is key for maintaining a publisher’s positive experience while working with PubMatic.

So while we officially announced the “European expansion” today, at PubMatic, we’re really celebrating many months of successful coordination, training, development, and a solid partnership with Improve Digital that helps us meet the international demand for PubMatic, and for the category of ad revenue optimization we established.

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The following op-ed was written by Rajeev Goel, and originally appeared in MediaPost on 5/4/09:

With Turner Entertainment recently outlining why it dropped third-party ad networks, the industry has been whirling with debate about how publishers should use ad networks — or if they should even be used at all.

Direct ad sales account for the majority of ad revenue that is earned by most large online publishers, and it seems the trend of the week is to shut out ad networks in an effort to preserve quality and maintain ownership over inventory.

However, the industry can’t deny that as much as 70% of advertising inventory from large online publishers is now being sold as non-guaranteed inventory and this share is continuing to grow. With growth in advertising budgets slowing and sales staff and resources being reduced, advertising on the Web is bifurcating into two distinct categories:

1. High value, low volume premium sponsorships — these sponsorships typically involve immersive environments where users can really engage with an advertiser’s brand — skinning, branded widgets, multi-channel media campaigns and more.
2. Lower value, high volume non-guaranteed ad sales — these ad sales are typically for “best effort” delivery of ads, led by ad networks but also including ad exchanges and direct response advertisers.

Ad networks are the primary source of demand for non-guaranteed ad sales. If the debate is whether or not publishers should work with ad networks, it seems the answer is as simple as the ancient proverb — don’t bite the hand that feeds (and pays) you.

Developing secondary sales channels are a natural evolution for any maturing industry. We only need to look at a few mainstream industries to see this:

* Retail: designer labels sell conventional product via department stores and premium product via their independent boutiques

* Travel: travelers who want to ensure the brand consistency of their hotel experience book direct, while others more concerned about value might use Priceline or Hotwire

The key is to differentiate the products that are sold via each sales channel so that the buyer perceives different benefits at different price points.

It may be true that as the economy improves, direct ad sales will pick up again, but there are many reasons to believe that even when big ad budgets come back, the dependency on non-guaranteed sales for a significant portion of overall ad revenue will continue. This is because:

* Advertisers are increasingly moving towards performance-based marketing because of the need for increasing accountability

* Loads of quality targeting data leveraged by ad networks is improving targeting, and therefore improving campaign performance and Web user experience

* There is a growing trend of audience targeting independent of the Web site the user is on, rather than targeting by contextual relevancy

* Unlike in the 2001-2003 recession, there is a large ecosystem of ad networks, exchanges, and other players who provide performance-based display advertising solutions

Direct sales will continue to be the primary source of revenue for large online publishers, but direct sales will also continue to face challenges such as ever-growing competition and an abundance of ad inventory. Savvy publishers that create a solid strategy around monetizing non-guaranteed inventory will be in a much better position for significant revenue growth.

Develop a distinct strategy for non-guaranteed inventory… today

The first step is understanding how to manage non-guaranteed inventory more efficiently, while protecting the publisher and fellow advertiser brands. There are ways to control the quality of ads without taxing your staff. There are ways to segment inventory to offer unique products through the direct sales force and through secondary channels that don’t create channel conflict.

Due to the economic crisis and the lack of resources or necessary expertise, some publishers have not yet developed a distinct strategy for non-guaranteed inventory. It’s just not perceived as a significant breadwinner.

It’s time to wake up — non-guaranteed inventory is more important now than it ever was, and creating a distinct strategy for non-guaranteed inventory will allow publishers to drive higher revenue even with less resources.

There are at least three key elements to developing a strategy for non-guaranteed inventory that publishers should consider:

* Differentiate ad products between your direct sales and non-guaranteed sales in order to reduce channel conflict — with different ad units, targeting capabilities, placement options, and more

* Develop clear rules on acceptable creative standards that protect your brand and users’ experience

* Find the right mix of ad networks and exchanges that can support you — for large publishers with a global audience, it’s not uncommon for 15 or more ad network partners to provide the optimal mix of control and revenue

As online advertising increasingly bifurcates into premium sponsorships and non-guaranteed sales, it’s important for publishers to develop distinct monetization strategies for each sales channel. More and more ad dollars are flowing through ad networks and exchanges as they increasingly provide solutions and capabilities that advertisers desire. As a result, savvy publishers are figuring out how to work within this ecosystem to maximize their revenues and manage their brands, rather than hoping for a return to the environment and economies of the past.

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I’m just about to jump on a panel here at AdSpace, which is part of AdTech in SF.  The panel title is “10 Proven Methods to Increase Your eCPM.”   Many of the 10 methods that will be discussed are included in what we’ve been publishing in our Publisher’s Guide to Ad Revenue Optimization.

We created another version of our Publisher’s Guide for this event, which has 8 tips that are geared specifically towards the AdSpace audience.  Check it out below:

Publisher’s Guide to Ad Revenue Optimization - Get more Business Documents

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It seems like our AdRevenue 08 conference wasn’t too long ago, but we’re already gearing up for AdRevenue 09, happening 10/08/09.   This time we’re moving the conference from San Francisco to NYC.   AdRevenue 08 was oversubscribed by 50%, and despite the tough economic conditions we expect to have a full house this year as well.

The focus will be slightly different from last year’s.  We’re still focused on strategies to increase revenue publishers make from their unsold inventory, but we’re also zooming out slightly to put the entire online display advertising ecosystem into perspective – clients and agencies, media buying platforms, ad networks and exchanges, publisher optimizers, data exchanges, and of course large publishers themselves.

Many things have changed in this space during the past year. The fundamentals for how online display advertising is bought and sold are rapidly evolving.  There has been a steady rise of new segments and players within this ecosystem, advertisers are increasingly demanding more transparency, and many companies are finding that the very core of the businesses they’ve built over decades are changing in a matter of a couple of years.

AdRevenue 09 is going to take an eye opening approach to demonstrating how this digital ecosystem isn’t unlike ecosystems in nature – the segments in this ecosystem are all intertwined on some level and when one segment has radical changes, it will have an effect that will be felt by all of us in this space, for good or for bad.  And those are the scenarios we aim to explore at this event.   I’ve never seen anything done like this, so I’m personally as excited to learn as I hope the attendees are.

The specific topics need to be extremely timely, and as such we haven’t finalized them yet.  Thought leaders are welcome to submit content ideas via the AdRevenue 09 site, which we’ve soft launched specifically for that purpose.  We’re also creating an advisory board of some the brightest minds in the industry to help select the content, but it will be in line with the aforementioned theme.

We’ll be adding a lot more content to the site and announcing participants, as we get closer to the event.  In the meantime, save the date.  This conference has no intention of trying to be everything to everybody; instead it will be acutely relevant to those that are a part of this particular ecosystem.

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PubMatic Premier, our ad solution designed specifically for large media companies, was officially launched today.   We’re very excited about the launch, and while today marks the “official” launch, we’ve actually deployed Premier to dozens of our largest publishers over the last several months. What makes PubMatic Premier different is that it is a full service solution with dedicated team members that take the time to understand the needs of publishers they work with.

The launch also marks the beginning of the next stage of growth for PubMatic.  Since our inception we’ve worked with over 5,500 large and medium publishers, and by working with so many publishers over the past three years, we’ve been able to develop and improve exclusive technologies that simply can’t be matched elsewhere.  Now with PubMatic Premier, we’ve added dedicated publisher account teams on top the most advanced revenue generating technology in the industry.

Additionally, Advanced Ad Quality Control, a major component of PubMatic Premier, will help to ensure that a publisher’s brand is protected by not allowing ads on their website that don’t meet their approval.

More details on PubMatic Premier features can be found here.

We also announced today our Series B funding, which has already allowed us to:

•    Build a robust team of industry veterans that will be dedicated to working with large publishers to meet their needs
•    Expand our offices to New York and Europe

•    Continue heavy development of technology that increases revenue with pinpoint precision

As mentioned in previous posts, 2009 is truly a breakout year for PubMatic and for our publishers as they build out and improve their second channel for monetizing online ads by implementing a strong ad network strategy.   We’ve got more detailed news to deliver soon on the three bullet points above, in addition to plenty of other exciting announcements and releases in the next few months, so stay tuned.

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Yesterday, I was the opening presenter for the “Monetizing All Things Digital” portion of the Newspapers Association of America’s mediaXchange conference in Las Vegas. Day one was very interesting because, as anyone reading this blog or the news in general probably knows, newspapers are struggling to survive. For years print advertising revenue has been declining, and with the economy making a tough situation worse, most newspapers are looking to create a long-term strategy to increase revenue from their online components. My presentation today offered a few suggestions to get them on the right path to increase their online ad revenue by creating a smart ad network strategy; and although this was for the NAA conference, my suggestions hold true for most large publishers regardless of category.

I started the presentation by walking through some trends that are happening in online advertising, most notably that this year online advertising is set to surpass print advertising for the first time ever. However, I also pointed out that online advertising is not recession proof by highlighting several examples of industry analysts that have lowered their original 2009 growth forecasts – one by as much as 69%. That is a sobering number to say the least, but if you look beyond the intimidating numbers, you’ll find that some sectors of online advertising are steadily growing. Performance advertising, for example, is increasingly more popular with advertisers as budgets shrink and there is a greater need for more accountable, better performing campaigns. Understanding these trends will allow publishers to select the right ad network partners for the most optimal ad network strategy.

Publishers need to shift from an increasingly outdated strategy that relies only on selling a high volume of high priced inventory through a direct sales force (image 1), and understand that direct sales is a declining percentage of their overall ad revenue (image 2). To make up for the decline in high priced direct sales, they should implement a smart ad network strategy that supports direct sales and can serve as a second, high volume revenue stream (image 3).

The shift demonstrated in the images above is what is already happening in today’s online advertising market. The large publishers that understand this shift and are able to find the right balance between direct sales and ad networks sales will be able to protect the value of their ad inventory, and the value of their brand, even in this challenging time.

The entire presentation can be found on docstoc.

In addition to the presentation, we also distributed an abridged version of our Publisher’s Guide to Ad Revenue Optimization that details 5 strategies large publishers can use to earn more revenue, and we’ve seen thousands of times first hand that they work.

Online Publisher’s Guide to Ad Revenue Optimization (NAA Conference Edition) - Get more Business Plans

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Efficiency is more than a feel-good buzzword.   Lack of efficiency has been the cause of problems ranging from slowing the shift of dollars from traditional media into online media to fragmentation of advertising demand across hundreds or thousands of players in the industry.  At the same time, advertising effectiveness has been hampered by a lack of visibility into targetable, actionable data about every ad impression.  After all, every ad impression is unique and represents a unique value to advertisers.

Today, we’ve crossed a major milestone towards helping ad networks and publishers improve efficiency and effectiveness with the official launch of our real-time monetization API (application programming interface).    The API will enable ad networks to connect instantly to transparent publisher inventory—and perhaps more importantly, it gives them greater control over the pricing and timing of their campaigns.  Ad networks can target based on standard and advanced parameters.  Publishers enjoy seamless access to a new set of buyers for their ad inventory.  The end result is better monetization for publishers (higher ad rates) and improved control for ad networks and their clients.

The official launch of our API comes after a successful closed beta period involving multiple ad network partners and millions of ad impressions per day.  The benefits for ad networks and publishers are clear -

Benefits for Ad Networks:

• Increased Reach: Access to over 125 million unique users and thousands of websites

• Improved Targeting: Ad networks can leverage expanded targeting options including geography, frequency, user re-targeting, ad tag type, and much more

• Campaign Control: Ad networks have total control over pricing and timing for campaigns

Benefits for Publishers:

• Increased Monetization: Allowing more ad networks to instantly access publisher inventory increases publisher ad rates and sell through rates

• Increased Visibility: Dozens of new ad networks can get instant and transparent access to publisher inventory

• Better User Experience: More premium campaigns and better targeting result in users seeing higher quality and more relevant advertising

• Zero Integration: PubMatic publishers have instant access to premium campaigns and ad networks via the API, with zero integration effort

We’re very excited to bring our real-time API to you.  This is just the start of many new innovation announcements we’ll have in 2009, so stay tuned.  If you’re a publisher or ad network, and want to learn more, you know where to find us.

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In September of last year, we launched AdFlex, the first entirely transparent campaign fulfillment service designed to provide ad networks with on-demand publisher inventory.  Since that time, we’ve connected dozens of ad networks to hundreds of publishers in order to fulfill high CPM campaigns, and we’ve increased revenue for both along the way.  Now we’re expanding AdFlex to offer AdFlex International.

We’ve seen that as much as 30-40% of a typical U.S. publisher’s traffic is international, so introducing AdFlex International is a natural extension of our service that will help both our ad network partners and publisher partners alike.

With AdFlex International, ad networks can target qualified international inventory based on specific targeting requirements including geography, frequency, or user re-targeting.  There are no long-term contracts required to give ad networks the flexibility to access highly transparent inventory, and ad networks can use AdFlex International for repeated and single campaigns.

Since ad networks are leveraging certified inventory provided by online publishers using PubMatic’s ad optimization platform, our publishers are also able to see significant lifts in their revenue by participating in premium-priced AdFlex campaigns.

We’ve worked with some great partners on AdFlex International before rolling it out, and they’ve seen the same level of success as ad networks that have been using AdFlex for months.  So we look forward to the opportunity to continue helping our partners better monetize international traffic.

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We’ve hit the ground running in 2009, and we intend to continue to be trailblazers in the category of Ad Revenue Optimization.  So I’m very happy to announce the release of two major reports filled with detailed information that can be useful to anyone in the online advertising industry, but especially for publishers:

•    The Q4 2008 AdPrice Index - This is our quarterly report that includes pricing trends from quarter to quarter for websites according to size and category.  This gives publishers an opportunity to see how their website is performing against their category’s ad price average.

If you are a publisher, or someone considering creating a website with the intention of making money from advertising on your site, you’ll find our AdPrice Index incredibly useful.   Understanding how the market is trending will help you to create or adjust your monetization plan accordingly.

The Q4 2008 AdPrice Index is available for download on our home page.

•    Death to the Ad Network Daisy Chain:  Generating More Revenue From Default Ad Impressions (a technology white paper) – Defaulting is something that occurs when an ad network is unable to fill an ad impression on a website with a paying ad. Often, a non-paying public service announce-ment or a blank spot is shown. Many web publishers chain several ad networks together to reduce the chances that a non-paying ad is served, but these methods are far from perfect.

This white paper describes in detail what defaulting is, why it happens, why the current method of daisy chaining is inefficient, and how to solve the problem.  The information in this white paper is based on over two years of data collected by PubMatic’s team of 30+ engineers that have worked towards solving this problem; defaulting leaves billions of dollars in revenue on the table each year that could have otherwise been collected by publishers and ad networks.

The technology white paper is available for download on our home page.

2009 will bring a lot of change to online advertising, but PubMatic’s goals will stay the same:  Developing and improving technology will remain our #1 commitment, so that publishers can have accessible, technology-based solutions that will improve their revenue.  We’ll also remain dedicated to sharing information on trends in the online ad industry and offering solutions on how to overcome problems that prevent maximum efficiency.

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We’d like to thank everyone that came out to the AdRevenue 08 conference last Friday. We followed a simple strategy: keep AdRevenue 08 interesting by fostering conversation around important issues that most other conferences are simply not addressing in detail, and bring in the brightest and most outspoken panelists to keep it entertaining. It worked. Check out the first panel of the day, The Real Difference Between Ad Networks, Ad Exchanges, and Ad Optimizers.

• Moderated by Chris Moore, Partner at Redpoint Ventures and featuring:

• Anand Subramanian, CEO, ContextWeb
• Dave Zinman, Vice President, Display Network, Yahoo! Inc.
• Jeff Green, COO, AdECN
• Matthew Boyd, SVP, Western Sales, ValueClick Media
• Michael Rubenstein, Director, Ad Exchange, Google, Inc.
• Rajeev Goel, Co-Founder and President, PubMatic

Although PubMatic developed the conference and topics, it was everyone that participated in it that made it such a success. Special thanks go out to: The Attendees: We were humbled by the large turnout and the level of engagement from the audience. Many attendees traveled a long way to attend the event, some from as far away as Europe and New Zealand!

Our Keynote speaker, Barry Parr from Forrester Research: Barry gave an opening keynote on the state of digital advertising that was both incredibly timely and informative; it was also unique since it came from an analyst’s perspective. We had a sizeable number of people asking to get a copy of that keynote.

Our Moderators: Chirs Moore of RedPoint Ventures, Ravi Belani at DFJ, Adam Gerber of Quantcast, and Brian Morrissey of AdWeek who came all the way from NYC . Each an expert in their own right, they kept the flow of the conference going and the audience engaged by asking provocative questions to the panelists.

Our Panelists: We managed to get Microsoft and Yahoo! to sit next to each other!

Our Sponsors: Eric McAlpine and the BlackStone Group, Kevin Lin and Justin.tv, Allen Stern, the mastermind behind Center Networks, Justin Smith at Inside Facebook, Myles Weissleder of SF NewTech, Joey, Surge, and the entire GigaOm crew, Karen Hartline at Mashable, and our good friend Mike Nolet who always writes in-depth and informative posts on his blog, Mike on Ads.

Eventbrite: Jack Mardack over at Eventrbrite made managing this event a breeze and helped promote it. I think Jack answered all of my emails within 10 minutes - we were impressed.

And last, but not least, the entire PubMatic team who has been working on this event since last summer… they did a fantastic job and I appreciate their dedication to improving our company, helping our clients, and maintaining our position as thought leaders in the industry.

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