Local and the Future of Ad Serving

Last week I had two separate conversations that were very interesting thematically; both involved Yahoo! The first was with ShopLocal and the second was with Yahoo! itself regarding its deal with Publicis (specifically about mobile). The ShopLocal meeting was in part a discussion of the company’s recent Yahoo! deal and the mechanics of the dynamic ad serving and distribution of retailer content.

Similarly, in the Publicis mobile case, Yahoo!’s platform is now going to determine the right ad to serve to the mobile end user. Ad creative, provided to Yahoo by Publicis, will be sliced and diced. Display ad copy and creative elements are being turned into “modules” (my word) and then recombined dynamically. At a conceptual level this is also what is happening in the ShopLocal deal; targeting data from Yahoo! determine whether to show, for example, the HP ad with the printer or the laptop image, what local store information to show and so on.

The hypothetical layers of targeting here are many: demographic, local, contextual and/or behavioral. The practical reality today, however, is somewhat less “one to one” than these capabilities suggest. One or two ad elements change rather than four or five. However the targeting is rapidly getting more sophisticated and layered. Indeed, the promised “holy grail” of mobile advertising is true “one to one marketing.” (This has historically been said about email and is now being said about social networking.) But for these recent platform advancements such precise targeting would never be possible.

Let’s step back.

There’s absolutely no chance that agencies and advertisers could do this “one to one” targeting on their own right now. They’re still figuring out basic stuff about online and how to combine traditional media with online campaigns effectively. There’s almost no way they could create a range of hypothetical campaigns that would address the various audiences and behaviors they want to target, let alone “manually” determine when to show those ads online and where (to some degree however you can do this with search campaigns and specialized landing pages).

The light bulb that went off for me is this: “the platform” is stepping in to take all the available data and then create and an ad accordingly. The “ad” is evolving from a fixed combination of creative elements into a data feed that can be parsed and recombined. As one example, United Airlines might have different fare offers for different cities. There might also be different messaging for loyal customers vs. those who aren’t enrolled in the frequent flier program. Accordingly, different messages, data and ad text can be delivered to the publisher/platform and the system figures how to put those different creative elements together and when based on the user and her behavior or profile. The ultimate “creative” is determined by the machine.

Now back to local specifically — and all this goes double for mobile/LBS.

Most major advertisers don’t know how to think about local online today and most aren’t taking advantage of current capabilities, let alone all the emerging layers of targeting. But what these increasingly sophisticated ad platforms (i.e., Yahoo!’s) will do is compensate for that lack of human sophistication. It’s a bit of a “Zen” thing: first there was simplicity, followed by complexity and then there will be simplicity on the other side of complexity.

In other words, all that the agency and marketer will eventually have to know about digital marketing (including mobile) is that they want to target women, 18-34 who live in New York, San Francisco or Chicago and are interested in certain product categories. They’ll create their ads accordingly. Then they’ll deliver electronic data feeds of their creative and the platform will determine what to show when. They won’t have to figure out much tactically or mechanically. The complexity of the entire system will be in the “black box” of the platform and buried for both the marketer and the end user, who will just see an ad and respond or not respond.

Better and more precise location targeting, for example, will be provided by “the system,” which will ferret out user location via a range of strategies (ISP, browser, user registration data, triangulation, GPS, keywords, zip identification, etc.). The advertiser or its surrogate will just need to know the conceptual capabilities of the system: the “idea” that a 40-something year old technophile on a smartphone in midtown Manhattan can be targeted.

The “how” will be taken care of.

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Addendum: This isn’t a move toward the “commoditization” of advertising. It’s about taking the complexity out of online advertising, which agencies want. There will still be plenty of “art” in figuring out the messaging and thinking about advertising across platforms and how to integrate those campaigns.

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