2. What is an ad network?
An advertising network
(or ‘ad network’) is a company
that connects online publishers
who want to host
advertisements with
advertisers who want to
access their inventory and
audience.
3. Different types of ad networks
Behavioral
ad network
Vertical
ad network
Contextual
ad network
Long-tail – Publishers:
ad network – Publishers: All quality sites
Vertical sites – Typical
– Publishers:
– Typical advertiser: advertisers: ROI
non-selective driven brands
vertical brands
– Publishers: – Typical advertiser: – Pricing:
Longtail sites medium to small – Pricing:
typically CPM typically CPM/
– Typical brands
CPC
advertiser: – Pricing:
internet service CPC
brands
– Pricing:
typically CPA
Time
4. Traditional internet advertising solutions are
trapped by a reach vs. relevancy ‘curse’
High
Search marketing THE ‘CURSE’:
Index key words
Diminishing reach
through search
to gain relevancy
e.g., Baidu (China)
Relevancy
Contextual targeting
Google (U.S.)
Index page content to
target
e.g., NarrowAd (China)
Google AdSense (U.S.) Vertical
Index audience
singular dimension
e.g., Allyes (China) Untargeted banner
Advertising.com (U.S.) Index site content e.g., Sina (China)
Excite (U.S.)
Low
Small Large
Scale/Reach
5. Behavioral targeting advertising solves the
problem by delivering ads against audience
Behavioral
targeting is
not about
page
Different
persons will
see
different
ads when
landing on
the same
page
6. Behavioral audience segments are built on
observable behaviors
• Recency, frequency and volume of visits to content relevant to an
interest
• Active searches for information relevant to the interest
• Use of tools, surveys and quizzes, etc.
• Ad interactions (clicks, downloads, demo views, games played,
etc.)
• SNS activities
7. Behavioral targeting ad network business model
Advertisers Operator Publishers
• Advertisers pay BT • Behavioral targeting • The operator gets ad
network operator to operator delivers BT inventory from publishers
deliver behavioral targeted ad on the and after delivering target
targeting ad publishers network ad on the publishers,
shares revenue with the
publishers on CPM or CPC
basis
8. Behavioral targeting is typically supported by
sophisticated ad serving technology
Leading BT ad serving technology: Self learning profiling system:
• Fully scalable • Proprietary profiling database
• Real time targeting
• Proprietary self-learning
algorithm
10. Different BT algorithms
• Assign each visitor to one and
Cluster only one segment
• Target visitors who have done X
Business rule events in Y days or Y events in X
days
• Automate business rules to identify
the ideal recency and frequency of
Predictive activities that best correlate with
brand and performance goals
11. Behavioral targeting ad network is estimated to be over
US$ 2 billion by 2015 in China
US$ mn
Growth of Online Ad and behavioral targeting ad network
Other format of internet ad
• Overall market is
Behavioral ad
growing at 29.9% CAGR
CAGR=29.9%
• Behavioral targeting
will be the fastest
growing category,
expected to reach
20-30% of the overall
spend by 2015, or
$1.5-2 billion.
2005 2007 2009 2011 2013 2015
* J.P Morgan expects YOY market growth from 2010 to 2015 is 18% for online ad market in China in near term as conservative
Source: JP Morgan, CTR, Jupiter Research
12. Advertisers’ perspective
• Better targeting
mechanism
• Easy to buy since it sells
audience instead of page
• Generates better ROI
• Generally better quality
publishers than contextual
ads
13. Case Study: PinYou achieved better ROI for
English education client in China
Background / business challenge:
Conversion rate
• Our client is a leading English education brand. It
spends majority of its advertising budget on display
ads and search marketing. The key KPI it measures
is the conversion rate from clicks to registration for PinYou
their trial classes and the acquisition cost of each improved
registration.
PinYou
PinYou solution:
initial
• PinYou firstly targeted people who have visited
English education sites in the past 3 months and
resulted in 6% conversion rate. Other
display
• Later, through model optimization, we found income
level is a key factor that affects the conversion rate, ad
and we adjusted the target audience. As a result,
we improved the conversion rate to 11%.
Search marketing
• The cost per acquisition continues to be lower than
other advertising format.
14. Publishers’ perspective
• Better monetize the
unsold inventory
• Access to premium
advertisers / non-
vertical advertisers
• Save on sales force
15. Economics of ad networks
Publishers Operators %
• Traditional
agency buy
• Other ad
network
• Behavioral
targeting
16. Typical metrics
• Click-through rate
• Conversion rate of clicks
• Cost per lead
• Return On Investment (ROI)
18. Who is PinYou ( )?
• First and largest behavioral targeting
network, founded in 2008 (http://www.ipinyou.com.cn/).
• Blue chip clients include P&G, Elong,
Nestle, English First, etc.
• Nearly 1,000 quality publishers, with about
180 million UV’s/month and 1.5 billion
page views.
• Reached profitability in mid-2009.
• Recently launched a re-targeting platform
(http://www.userback.com.cn/).
19. Why did I start it?
• P&G Marketing
• McKinsey Consultant
• UCLA MBA
In 2006, everything changed …
20. Entrepreneur’s life …
- Making decisions (making mistakes and
correcting them).
- Title means nothing.
- You are spending more time with your
partners than with your family.
- You are 24/7 on call!
- There is no boss!
21. Key success factor in starting up companies
1. It’s all about the team
2. Persistence is the key
3. Lots of little things (sandwich story)
4. Don’t worry about competition
5. Start with something practical
6. Understand your strength and leverage it
22. PinYou’s business is supported by a powerful team
Business Strategy
Operation strategy
CEO VP of
VP of sales publishers
CTO
Investors
Advisors
Employees External
network
23. Persistence is the key
• Founders always misjudge the market
and are over optimistic.
• You will face all the difficulties you can
ever imagine.
• Don’t expect your company to become
YouTube or Facebook overnight.
• The “trend” is changing over time
( ).
25. Don’t worry too much about competition
• Don’t believe your idea will be “yours only”
• Don’t spend too much time studying your
competitors’ strategy, because they may be
wrong
• PinYou’s case
26. Start with something practical
• Cashflow is key
• Speed is key
• Don’t think you will get funded in a
year