Oded Itzhak – Quigo and AdSide Founder – He Basically Invented Contextual Advertising

I’m very excited to have Oded Itzhak speaking at CRS NYC on our State of Contextual Advertising Panel. Oded is the co-founder of Quigo, which basically invented the concept of placement targeting, which in turn propelled Google to create a similar product on the Google Content Network.

His new Web site – AdSide – is trying to create a similarly high-quality network focused on in-text advertising.

Just to put Oded’s knowledge in perspective – Quigo started around 2000, AdWords Select (the PPC version) was launched in 2002. Nuff said!

 

A New Breed of Contextual Advertisers

Editor’s Note: Over the next couple of weeks, I’ll feature some guest contributions from speakers, advisors, and exhibitors participating in AdSpace (April 22 in SF!). The first one is from DOCLIX, a recently-funded contextual advertising network. The company is offering publishers and advertisers a “premium contextual network” called AdSide. As they note in the company description, “AdSide places non-intrusive user-activated, expandable text ads on premium sites. It expands publisher’s ad real estate, without diluting the user experience.We serve high cost per click text ads to premium sites, and deliver search-engine grade targeting and relevance to ads placed on content sites.”

If past performance is indicative of future success, DOCLIX should be a winner – the founder, Oded Itzhak, also founded Quigo, which ended up getting acquired by AOL for over $300 million and was also the company primarily responsible for Google’s eventual entree into “placement targeting.”

Here’s a description of DOCLIX’s session at AdSpace!

Ad-tech San Francisco this year will offer an exciting insider’s view into the world of performance marketing, and in particular into a new breed of advertising: Brand Performance.

Performance-based advertising and brand advertising have traditionally been regarded as two separate entities with very different sets of goals and budgets. Many times they are handled by separate teams, agencies, separate metrics and KPIs. However, as advertisers demand more results-oriented accountability, a new type of advertising is getting more attention–one that combines ROI-focused quantifiable objectives with branding goals. This shift in advertiser strategy is gaining rapid traction, especially now when CMOs are required to justify every dollar spent.

Brand performance is a new class of PPC advertising. It allows brand-conscious advertisers to meet their ROI objectives, while maintaining proper brand visibility. It also requires high click-through rates at a viable cost, on contextually-relevant content sites.

Join us for a unique AdSpace workshop: Performance Branding on Wednesday, April 22, 2009 03:00 PM – 03:30 PM.

If you are a brand advertiser, this session can help you utilize text ads on content networks, in a manner that extends and supports your brand initiatives. The panel will be moderated by Josh McFarland, Entrepreneur in Residence at Greylock Ventures. Josh will be joined by Oded Itzhak, founder and CEO of DOCLIX. Oded was previously co-founder and CTO of Quigo.

If you haven’t registered for the conference yet, you can take advantage of a special 20% discount by entering the code ADSPACEB here. See you at the show!

 

Nine Online Advertising Companies You’ve Never Heard of, But Are Worth Checking Out

Here’s a list of nine companies (top ten lists are so passe) that you should check out if you are into online advertising. Editor’s note: I’ve tried to avoid listing companies founded by friends, but a couple of these sort of break that rule. Nonetheless, I truly believe that each of these companies will have a significant impact on online advertising in the next two to three years.

In alphabetical order:

• AdChemy: Next gen online lead generation. Like an Azoogle or Adteractive, but with an intense focus on developing algorithms and technology to optimize ad spend.
• Adknowledge: PPC applied to email advertising, with a dose of behavioral targeting thrown in for good measure.
• Collarity: Collaborative filtering and search combined. Great targeting potential for advertisers.
• eSearchVision: A newcomer to bid management agencies from Europe. Have they solved Google’s ‘yield management’ equation?
• Moola: The concept here is that you play games against other people and win money for every victory. In between each win, however, you have to watch an ad and then answer questions about the contents of the ad before you can move on. My sense is that this particular company might not be the one to take this concept to the next level, but I like the idea a lot!
• Quigo: Like AdSense, but far more targeted with far less click fraud.
• SingleFeed: My friend Brian’s company – they enable you to send data feeds to all the major shopping comparison engines through one feed.
• SpotRunner: Bid for remnant TV spots online. Plus pre-designed ads so that you don’t have to make your own spots.
• Visual Sciences: Acquired by WebSideStory, rumor has it that this is going to revolutionize Web analytics.

 

Adios AdSense?

The news that Amazon is currently in beta with an AdSense competitor has raised a lot of eyebrows today. The obvious question on everyone’s mind is ‘will this impact Google?’

My thought is that there is a short story here and a long story. The short story is that Amazon “AmSense,” or whatever they want to call it, won’t impact Google too much at all. After all, A9 – Amazon’s search engine – hasn’t developed too much traction and recently lost their top man, Udi Manber to Google. So what makes anyone think that Amazon is going to suddenly take away huge market share from Google in contextual advertising?

True, Amazon does have a loyal cadre of associates (or affiliates) and they plan to market this service as an additional revenue-generating opportunity. But these folks – more than anyone else – are concerned about one thing – revenue. Whether that revenue comes from AdSense or Amazon is pretty much irrelevant to them. Whoever gives them the most revenue wins.

The longer story here is that Amazon is one of many big players who are chomping at the bit to get some of that AdSense revenue. Consider this list of competitors:

• Yahoo Performance Network (YPN)
• Amazon “AmSense”
• Ebay Keywords

Pretty much the only big etailer missing from this list is MSN, and I suspect its only a matter of time before they follow suit.

The result of this heated competition will be more choice for publishers and less margins for distribution networks. Again, most publishers are agnostic to their distribution network – they will follow the money.

Of course, right now, Google has a huge advantage over their competitors, simply because the AdSense network has much higher CPCs than anything else out there. This is largely because there are so many more advertisers opting-in to Google’s network and thus bidding against each other, resulting in higher bids.

But this is a barrier to entry that is easily surmountable by Google’s big-pocketed competitors. First, as I noted in a prior column, CPC prices will gradually become efficient, with the network with the highest quality clicks getting the highest prices. Google’s distribution network has what I would call “moderate quality.” In other words, some sites in the network are good and produce great revenue, and others are downright awful. By going for quality instead of quantity, a savvy competitor can gradually wean wallet-share away from Google by simply creating higher CPC prices (or in the parlance of the industry, higher “eCPM” – earnings per thousand impressions).

Second, competitors can offer publishers a much higher revenue share. Google allegedly offers its publishers around 78% of revenue at the moment. If Yahoo came along and offered someone 90% of revenue, this could eliminate the eCPM gap between the two networks and make it more advantageous for that publisher to try the Yahoo Performance Network. From Yahoo’s perspective, this is a great deal – it’s additional revenue and profit they didn’t have before. From Google’s perspective, it’s a Catch 22 – either up the rev share and sacrifice margin, or get nothing.

Finally, let’s not forget that competition is coming not only from the major etailers, but from multiple sources. There are, for example, small companies that are focused on nothing but content distribution (Quigo, Industry Brains, ContextWeb). Perhaps even more disturbing for Google, there are affiliate marketing companies that could one day offer CPA (cost per acquisition) based distribution networks for the masses. Ultimately, this sort of scenario presents a higher risk to the publisher, but also the chance for a much higher return. Some publishers will no doubt opt to take this route.

And let’s not forget that a lot of Google’s revenue comes from companies that have simply been lazy about maximizing their revenue. Increasingly, I predict that companies in the Google distribution network will realize that having a small salesforce – or even an online self-serve solution – will make more sense for them, simply because they can eliminate the middleman and drive more profits.

Combine Amazon, eBay, MSN, Yahoo, affiliate networks, and savvy publishers and you’ve got to wonder whether Google’s golden goose might start to look a little tarnished. Will AdSense go away? Of course not, but don’t be surprised to see a much more level playing field in the near future.