“Online Advertisers Can Pay Only for Actual Conversions”

Founded in 2005, myThings is a leading global company offering conversion-driven, personalized display advertising solutions.

It personalizes over two billion banner impressions a month and operates in 15 markets including the UK, US, France, Germany, Spain, Italy, Benelux, Nordics, Russia, Turkey, Brazil, India and Japan.

A driving force behind myThings’ ongoing expansion is its recent $15 million round led by Iris Capital, the manager of the Orange-Publicis Venture Fund, in addition to existing investors Accel Partners, Carmel Ventures, T-Ventures, and Viola PE. To date, the company has raised $37 million in four rounds of financing.

As online advertising is gaining momentum in the business world, RMN Digital decided to discuss a range of related issues with myThings CEO Benny Arbel.

Here he expresses his opinion in an exclusive interview with Rakesh Raman, managing editor of RMN Digital.

Interview:

1. What’s the reason that the online ad market continues to be slow and its share in the global ad business is still at a dismal level?

Quite the contrary. There are numerous figures showing a phenomenal growth in online ad spend in general and display advertising in particular. To name just a few: GroupM research put global online ad spending in 2011 at $85 billion, up over 16% over the previous year, while the IAB US found that internet advertising revenues in Q1 of 2012 hit a record $8.4 billion, up 15% over Q1 2011.

When it comes to market share vs other advertising channels, online was the top ad spend channel in the UK, according to the IAB, while eMarketer found that online ad spend has already surpassed print and Forrester estimated that it will overtake TV by 2016. In terms of market share within online channels, eMarketer predicts that display, which has grown 20% in 2011, will overtake search by 2015.

2. Is social media – which is considered a free option for brand communications – eating into the share of paid online media for advertising?

The good news is that all online channels are growing. In terms of year-on-year growth, social is strong but in terms of total ad spend, display and search are leading the pack with display growing much faster than search.

3. As today there’s no empirical method to evaluate the impact of an online advertising campaign and click frauds are rampant, why should advertisers pay for pay-per-click (PPC) advertising?

Actually, the strength of online lies in its ability to intelligently analyze data. Lots of it. The fact that campaigns can be optimized based on real-time data is something advertisers have always dreamed of. Today’s data-driven world of online advertising is even miles ahead of rather basic online metrics such as visits, impressions and click-through rates.

Optimizing campaigns in 2012 is becoming more and more about what we call “big data” – which is the ability to handle and intelligently analyze terabytes of data to generate significant boosts in performance.

With regards to your mention of the click model, or CPC, I agree. That’s why we’ve adopted a cost per acquisition (CPA) business model in which advertisers only pay for actual conversions. After all, clicks won’t pay your bills, only euros will. With CPA, click fraud is also a non-issue.

4. What’s the USP (unique selling proposition) of myThings in the online media market?

We are built for CPA (cost per acquisition) and are the global leaders in this business model, which is especially suited for performance marketing. There’s no risk in it for the advertiser since we only get paid if there is an actual conversion (from which we get a pre-determined percentage of the sale).

To truly support this model, we are the only company whose entire infrastructure is geared toward CPA: From data collection & analysis, through optimization engines, real-time bidder, campaign management and billing (deduping).

The keys to online campaign optimization that deliver incremental sales are powerful and yet fine algorithmic engines. We are the only company that can infinitely divide (segment) the user population based on hundreds of data points, determining each user’s expected advertiser revenue and life time value.

This includes leveraging valuable internal advertiser data, also known as 1st party data. We are also the only provider that enables advertisers to set a CPA for each of their own segments via a self-service bid optimizer platform.

Since myThings does not operate in the long tail, we are truly able to stand behind the all-too-common mantras such as “dedicated account management” and “customized solutions.” For us, these are not just empty slogans but a core part of our offering that is translated into real results.

5. What message do you have for brand advertisers who want to transition from traditional media to new media?

By now, it is obvious to all that the internet has transformed our lives. It’s everywhere; and even more so since the explosion in the popularity of mobile devices. So the audience is there, in billions. Furthermore, the fact that everything, and I mean everything, can be measured online and therefore optimized means that campaigns can actually, empirically, prove their value.

John Wanamaker’s famous line “Half the money I spend on advertising is wasted; the trouble is I don’t know which half” is no longer relevant, at least online. I strongly urge advertisers who decide to shift budgets to online to go all the way with the science of the web.

Optimization is all about data and not gut feelings that are common in offline channels. I’d like to stress that I am by no means downplaying the role that traditional advertising plays. A marketing mix is always important as consumers’ conversion paths in today’s world include multiple touch points. Online is crucial part of this as it has proven to add value across the sales funnel – from awareness and branding to driving sales.

* * *

This interview is published under the RMN Digital’s “Thought Leaders” series in which top tech market leaders of the world express their views on different burning issues and market trends.