Financial Times case study
Before, the sales team would send an e-mail to ad operations for an inventory forecast and it could take the ad operations team up to eight working hours to get back to them. Now, we’ve reduced that turnaround to about eight seconds of self-service.
Jon Slade of the Financial Times describes the 123-year-old business publication’s advanced approach to its online ad sales. Interview conducted by Alan Morrison, Bo Parker, and Bud Mathaisel, PricewaterhouseCoopers.
Below is an excerpt from the interview. You can read the full interview in the 2012 PwC Technology Forecast
PwC: What is your role at the FT [Financial Times], and how did you get into it?
JS: I’m the global advertising sales director for all our digital products. I’ve been in advertising sales and in publishing for about 15 years and at the FT for about 7 years.
PwC: How does a company like the FT sell digital advertising space?
JS: Every time you view a web page, you’ll see an advert appear at the top or the side, and that one appearance of the ad is what we call an ad impression. We usually sell those in groups of 1,000 ad impressions.
Over a 12-month period, our total user base, including our 250,000 paying subscribers, generates about 6 billion advertising impressions across FT.com. That’s the currency that is bought and sold around advertising in the online world.
In essence, my job is to look at those ad impressions and work out which one of those ad impressions is worth the most for any one particular client and we have about 2,000 advertising campaigns a year that run across FT.com.
Impressions generated have different values to different advertisers. So we need to separate all the strands out of those 6 billion ad impressions and get as close a picture as we possibly can to generate the most revenue from those ad impressions.
PwC: How does Metamarkets fit into this big picture? Could you shine some light on what you’re doing with them and what the initial successes have been?
JS: Sure. We’ve been working with Metamarkets in earnest for more than a year. The real challenge that Metamarkets relieves for us is to understand those 6 billion ad impressions—who’s generating them, how many I’m likely to have tomorrow of any given sort, and how much I should charge for them.
It gives me that single view in a single place in near real time what my exact supply and my exact demand are. And that is really critical information.
Previously, the way that data was held—the demographics data, the behavior data, the pricing, the available inventory—was across lots of different databases and spreadsheets. We needed an almost witchcraft-like algorithm to provide answers to “How many impressions do I have?” and “How much should I charge?” It was an extremely labor-intensive process.
And that approach just didn’t really fit the need for the industry in which we work. Media advertising is purchased in real time now. The impression appears, and this process goes between three or four interested parties—one bid wins out, and the advert is served in the time it takes to open a web page.
Now if advertising has been purchased in real time, we really need to understand what we have on our supermarket shelves in real time, too. That’s what Metamarkets does for us—help us visualize in one place our supply and demand.
PwC: In general, it seems like Metamarkets is doing a whole piece of your workflow rather than you doing it. Is that a fair characterization?
JS: Yes. I’ll give you an example. I was talking to our sales manager in Paris the other day. I said to him, “If you wanted to know how many adverts of a certain size that you have available to you in Paris next Tuesday that will be created by chief executives in France, how would you go about getting that answer?”
Before, the sales team would send an e-mail to ad operations in London for an inventory forecast, and it could take the ad operations team up to eight working hours to get back to them. It could even take as long as two business days to get an answer in times of high volume. Now, we’ve reduced that turnaround to about eight seconds of self-service, allowing our ad operations team time to focus on more strategic output. That’s the sort of magnitude of workflow change that this creates for us—a two-day turnaround down to about eight seconds.
PwC: When you were looking to resolve this problem, were there a lot of different services that did this sort of thing?
JS: Not that we came across. I have to say our conversations with the Metamarkets team actually started about something not entirely different, but certainly not the product that we’ve come up with now. Originally we had a slightly different concept under discussion that didn’t look at this part at all.
As a company, Metamarkets was really prepared to say, “We don’t have something on the shelves. We have some great minds and some really good technology, so why don’t we try to figure out with you what your problem is, and then we’ll come up with an answer.”
To be honest, we looked around a little bit at what else is out there, but I don’t want to buy anything off the shelf.
I want to work with a company that can understand what I’m after, go away, and come back with the answer to that plus, plus, plus. And that seems to be the way Metamarkets has developed.
Other vendors clearly do something similar or close, but most of what I’ve seen comes off the shelf. And we are—we’re quite annoying to work with, I would say. We’re not really a cookie-cutter business. You can slice and dice those 6 billion ad impressions in thousands and thousands of ways, and you can’t always predict how a client or a customer or a colleague is going to want to split up that data.
So rather than just say, “The only way you can do it is this way, and here’s the off-the-shelf solution,” we really wanted something that put the power in the hands of the user. And that seems to be what we’ve created here. The credit is entirely with Metamarkets, I have to say. We just said, “Help, we have a problem,” and they said, “OK, here’s a good answer.” So the credit for all the clever stuff behind this should go with them.
PwC: How is this actually translated into the bottom line—yield and advertising dollars?
JS: It would be probably a little hard for me to share with you any percentages or specifics, but I can say that it is driving up the yields we achieve. It is double-digit growth on yield as a result of being able to understand our supply and demand better.
The degree of accuracy of supply that it provides for us is upward of 15 percent better than what we’ve seen before. I can’t quantify the difference that it’s made to workflows, but it’s significant. To go to a two-day turnaround on a simple request to eight seconds is significant.
PwC: Given our research focus, we have lots of friends in the publishing business, and many of them talked to us about the decline in return from impression advertising. It’s interesting. Your story seems to be pushing in the different direction
JS: Yes. I’ve noticed that entirely. Whenever I talk to a buying customer, they always say, “Everybody else is getting cheaper, so how come you’re getting more expensive?”
I completely hear that. What I would say is we are getting better at understanding the attribution model. Ultimately, what these impressions create for a client or a customer is not just how many visits will readers make to your website, but how much money will they spend when they get there.
If we understand our supply and demand picture in a much more granular sense, we know when it’s a good time to walk away from a deal or whether we’re being too bullish in the deal. That pricing piece is critical, and we’re looking to get to a real-time dynamic pricing model in 2012. And Metamarkets is certainly along the right lines to help us with that.
PwC: A lot of our clients are very conservative organizations, and they might be reluctant to subscribe to a cloud service like Metamarkets, offered by a company that has not been around for a long time. I’m assuming that the FT had to make the decision to go on this different route and that there was quite a bit of consideration of these factors.
JS: Endless legal diligence would be one way to put it—back and forth a lot. We have 2,000 employees worldwide, so we still have a fairly entrepreneurial attitude toward suppliers. Of course we do the legal diligence, and of course we do the contractual diligence, and of course we look around to see what else is available. But if you have a good instinct about working with somebody, then we’re the size of organization where that instinct can still count for something.
And I think that was the case with Metamarkets. We felt that we were talking on the same page here. We almost could put words in one another’s mouths and the sentence would still kind of form. So it felt very good from the beginning.
If we look at what’s happening in the digital publishing world, some of the most exciting things are happening with very small startup businesses and all of the big web powers now were startups 8 or 10 years ago, such as Facebook and Amazon.
We believe in that mentality. We believe in a personality in business. Metamarkets represented that to us very well. And yes, there’s a little bit of a risk, but it has paid off. So we’re happy.