Microsoft and Yahoo! Share Competing Yet Complementary Vision for Online Advertising Future: Jack Myers Live from the IAB Conference

Microsoft's Brian McAndrews, SVP Advertiser and Publisher Solutions Group, unveiled an elaborate vision for an advertising ecosystem of the future at the IAB Annual Meeting Ecosystem 2.0, yesterday in Phoenix. "There are only two players who have the financial resources to compete in the space," he said. Googleand DoubleClick(if the deal closes) and Microsoft in combination with its recent aQuantive/Avenue A acquisition. Responding to a question about Microsoft's proposed acquisition of Yahoo! and concerns about a duopoly in the advertising systems market, McAndrews commented "a duopoly is better than a monopoly… and Yahoo! and Microsoft together get to best practices for the industry better, faster and more economically."

This is the first IAB Member Conference to include advertiser and agency executives in the audience, the first outside of New York, and the first under the direction of new IAB president Randall Rothenberg. Originally planned for 200 attendees, the event sold out at 400 people with a waiting list.

Earlier in the day, Yahoo!'s CEO Jerry Yang and COO Sue Decker shared their vision for the industry's future and an ecosystem model that Decker suggested could "revolutionize the online advertising business in the same way the DVR impacted on the VCR." Both McAndrews and Decker suggested a future ad sales model that would enable online publishers to not only "distribute advertising campaigns across your own site, but to package, sell and distribute advertising across other sites that deliver the same audience."

Decker announced an initial relationship with a consortium of more than 600 newspaper publishers that will "streamline the ad buying process to enable buyers to focus on campaign optimization and testing. We are working with advertisers, publishers and agencies," Decker said, "to deliver a backbone for making life easier and enabling them to focus on creativity and reaching the right audiences, getting to the next level of engagement with audiences." The ambition, she added, "is to increase the yield for all publishers on the web" by enabling them to sell Yahoo's inventory and the relevant inventory of other publishers. "We want to power the industry to create more valuable inventory and the newspaper consortium is our lighthouse client."

McAndrews offered an expanded vision, arguing that only Google and Microsoft have the investment resources and scale required to build a comprehensive ad platform, adding that the Yahoo! acquisition would enable them to achieve the vision more quickly and effectively.

Microsoft Introduces Engagement Mapping

McAndrews announced a new initiative he referred to as "Engagement Mapping," that essentially discards the current model that rewards "the last ad standing" -- the ad impression delivered immediately before a transaction -- with full credit for that transaction. "There is a lot more going on," he said, and Microsoft has entered into an agreement with several advertisers and agencies, including Mindshare Interaction, Sprint and GSDM Ideacity to "test Engagement ROI attributes and give credit where it is deserved."

McAndrews, who was CEO of aQuantive when it was acquired by Microsoft, pointed to several campaign attributes such as frequency, recency, ad size and type of ad as factors that deserve varying degrees of credit when a consumer ultimately makes a transaction. "Multiple interactions are rewarded on a custom basis," he explained. "As we see more brand advertisers come online, Engagement Mapping is a way to measure how often their consumers interact [with advertising messages] and the different ways they interact."

Online Will Be the Biggest Medium by 2013

Yahoo's Decker, commenting on the increasing integration of television and online media, said "in five years [online video] will make where we are today look like black and white TV." Yang added, "the industry is on the cusp of a huge amount of innovation." He predicted in 2013 online will be the biggest medium in the U.S. in ad revenues.

Weather.com and Broadband Enterprises Receive Sales Awards

Also at the IAB Conference, Weather.com and Broadband Enterprises received the inaugural IAB Ad Sales Achievement Awards, presented in collaboration with JackMyers Media Business Reportand based on the JackMyers Annual Surveys of Advertising Executives on Online Sales Organization Performance. Weather.com received the Long-Term Excellence Award and Broadband Enterprises received the Best Newcomer Award. Accepting for Weather.com was Paul Iaffaldano, EVP of The Weather Channel Media Solutions Group, and for BBE was CEO Matt Wasserlauf.

Friction Between Online Publishers and Agencies

Christopher Vollmer, Leader U.S. Media and Entertainment Group for BoozAllen Hamilton, reported on the results of industry research that found 91 percent of ad supported online publishers say they provide agency-like services to marketers today and 63 percent say the development of agency-like services is causing friction with agencies. The types of services being provided in response to marketers' needs include consumer insights, behavioral targeting, brand strategy, consumer marketing partnerships, public relations and in-house digital production. Vollmer added "the inability to measure effectiveness is a barrier to marketers using more online." Marketers, he reported, increasingly believe creative, strategic and media buying capabilities should be re-bundled, and only 28 percent of marketers believe their organizations are digitally savvy.

The IAB Conference continues with featured presentations by Johnson & Johnson's Kimberly Kadlec and Baby Center CEO Tina Sharkey; Hulufounder and CEO Jason Kilar; GroupM Interaction CEO Rob Norman; and AOL CEO Randy Falco.