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Moneyball
                                    How buying by “On Base Percentage”
                            rather than “RBIs” drives results in Display Advertising


                                                 Olly Downs, PhD
                                              Consulting Chief Scientist




Thursday, December 22, 11
THE ART OF WINNING
                AN UNFAIR GAME




                            2002 New York Yankees   2002 Oakland Athletics


Thursday, December 22, 11
THE ART OF WINNING
                AN UNFAIR GAME
                                    $125,000,000




                                                      $41,000,000




                            2002 New York Yankees   2002 Oakland Athletics


Thursday, December 22, 11
WHY?
           BASEBALL & DIGITAL ADVERTISING



                                            Baseball        Digital Advertising
                                            Runs                  Actions
      Goal
                                    (more than opponent)   (more than alternative)

      Asset                                  Players            Media / Data


      Budget                            Player Salaries       Media Purchased

                                            9 Innings
      Constraint                                            Campaign Duration
                                            (27 outs)

Thursday, December 22, 11
WHY?
           BASEBALL & DIGITAL ADVERTISING



                                               Baseball                            Digital Advertising

                                          RBI (runs-batted-in)
             How to Evaluate                                                              eCPC / eCPA
                                        OBP (on-base-percentage)


      The Premium Strategy                        A-Rod                            Home Pages / Sponsorships


            The Non-Obvious        Find Undervalued Talent/Use Different              Find Undervalued,
                Strategy                         Metrics                          Non-Obvious Sites/Segments

                                    Pick More Mature Players or Identify
                                                                           Intelligently Initialize and/or Quickly Adapt/
                                   Commonalities of Younger Players with
                                                                                  Optimize Campaign Parameters
                                              Known Players


Thursday, December 22, 11
MONEYBALL
           STRATEGY




Thursday, December 22, 11
MONEYBALL
           STRATEGY


           • We might want to buy runs, but we benefit from players who get on base

                • Purchase Established Players based on different metrics – OBP vs. HR
                • Selectively draft College Baseball players rather than High School Players – stable statistics
                • Buying High School Players, look for similarities with mature players who have the right metrics




Thursday, December 22, 11
MONEYBALL
           STRATEGY


           • We might want to buy runs, but we benefit from players who get on base

                • Purchase Established Players based on different metrics – OBP vs. HR
                • Selectively draft College Baseball players rather than High School Players – stable statistics
                • Buying High School Players, look for similarities with mature players who have the right metrics




Thursday, December 22, 11
MONEYBALL
           STRATEGY


           • We might want to buy runs, but we benefit from players who get on base

                • Purchase Established Players based on different metrics – OBP vs. HR
                • Selectively draft College Baseball players rather than High School Players – stable statistics
                • Buying High School Players, look for similarities with mature players who have the right metrics

           • It’s been 9 years since the Oakland A’s incredible season

                • Moneyball principles have garnered significant adoption across MLB
                • BUT inefficiencies still exist




Thursday, December 22, 11
THE “EFFICIENT FRONTIER”
           BASEBALL




                                              100%
                        Signing Probability




                                              50%


                                                     Salary Offered
                                               0%



Thursday, December 22, 11
THE “EFFICIENT FRONTIER”
           BASEBALL


                                                     What at least one other
                                                      team is willing to pay


                                              100%
                        Signing Probability




                                              50%


                                                                               Salary Offered
                                               0%



Thursday, December 22, 11
THE “EFFICIENT FRONTIER”                                   W
           BASEBALL




                                              100%
                        Signing Probability




                                              50%


                                                     Salary Offered
                                               0%



Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-COST, HIGH PERFORMANCE PLAYERS




Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-COST, HIGH PERFORMANCE PLAYERS


         • Top 10 players                  Players by Salary   Team                           Salary
                                           Alex Rodriguez              New York Yankees                $32,000,000
              • By 2011 Salary             Vernon Wells               Los Angeles Angels               $26,642,857
                                           CC Sabathia                 New York Yankees                $24,285,714
                                           Mark Teixeira               New York Yankees                $23,125,000
                                           Todd Helton                 Colorado Rockies                $20,275,000
                                           Miguel Cabrera                  Detroit Tigers              $20,000,000
                                           Roy Halladay               Philadelphia Phillies            $20,000,000
                                           Ryan Howard                Philadelphia Phillies            $20,000,000
                                           Alfonso Soriano                 Chicago Cubs                $19,000,000
                                           Carlos Lee                    Houston Astros                $19,000,000




Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-COST, HIGH PERFORMANCE PLAYERS


         • Top 10 players                  Players by AVG    Team                         Salary
                                           Skip Schumaker          St Louis Cardinals               $2,750,000
              • By 2011 Salary             Jimmy Rollins          Philadelphia Phillies             $8,500,000
              • By 2011 Batting Average    Chase Utley            Philadelphia Phillies            $15,285,714
                                           Jorge Posada            New York Yankees                $13,100,000
                                           Brett Gardner           New York Yankees                  $529,500
                                           Ryan Braun             Milwaukee Brewers                 $4,287,500
                                           Kelly Shoppach            Tampa Bay Rays                 $3,000,000
                                           David Freese            St Louis Cardinals                $416,000
                                           Chris Young        Arizona Diamondbacks                  $5,200,000
                                           Magglio Ordonez             Detroit Tigers              $10,000,000




Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-COST, HIGH PERFORMANCE PLAYERS


         • Top 10 players                  Players by HR     Team                      Salary
                                           Jose Bautista           Toronto Blue Jays             $8,000,000
              • By 2011 Salary             Matt Kemp           Los Angeles Dodgers               $7,100,000
              • By 2011 Batting Average    Mark Reynolds          Baltimore Orioles              $5,333,333
                                           Dan Uggla                  Atlanta Braves             $9,146,942
              • By 2011 Home Runs          Mike Stanton              Florida Marlins              $416,000
                                           Jacoby Ellsbury          Boston Red Sox               $2,400,000
                                           Jay Bruce                 Cincinnati Reds             $2,791,667
                                           Michael Morse       Washington Nationals              $1,050,000
                                           Paul Konerko          Chicago White Sox              $12,000,000
                                           Troy Tulowitzki        Colorado Rockies               $5,500,000




Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-COST, HIGH PERFORMANCE PLAYERS


         • Top 10 players                  Players by OBP    Team                         Salary
                                           Jorge Posada            New York Yankees                $13,100,000
              • By 2011 Salary
                                           Chase Utley            Philadelphia Phillies            $15,285,714
              • By 2011 Batting Average    Skip Schumaker          St Louis Cardinals               $2,750,000
                                           Miguel Cabrera              Detroit Tigers              $20,000,000
              • By 2011 Home Runs          Jimmy Rollins          Philadelphia Phillies             $8,500,000
              • By On Base Percentage      Albert Pujols
                                           Ryan Braun
                                                                   St Louis Cardinals
                                                                  Milwaukee Brewers
                                                                                                   $14,508,395
                                                                                                    $4,287,500
                                           Magglio Ordonez             Detroit Tigers              $10,000,000
                                           Kelly Shoppach            Tampa Bay Rays                 $3,000,000
                                           Chris Young        Arizona Diamondbacks                  $5,200,000




Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-COST, HIGH PERFORMANCE PLAYERS


         • Top 10 players                        Players by OBP    Team                         Salary
                                                 Jorge Posada            New York Yankees                $13,100,000
              • By 2011 Salary
                                                 Chase Utley            Philadelphia Phillies            $15,285,714
              • By 2011 Batting Average          Skip Schumaker          St Louis Cardinals               $2,750,000
                                                 Miguel Cabrera              Detroit Tigers              $20,000,000
              • By 2011 Home Runs                Jimmy Rollins          Philadelphia Phillies             $8,500,000
              • By On Base Percentage            Albert Pujols
                                                 Ryan Braun
                                                                         St Louis Cardinals
                                                                        Milwaukee Brewers
                                                                                                         $14,508,395
                                                                                                          $4,287,500
                                                 Magglio Ordonez             Detroit Tigers              $10,000,000
                                                 Kelly Shoppach            Tampa Bay Rays                 $3,000,000
                                                 Chris Young        Arizona Diamondbacks                  $5,200,000



        • Optimizing these metrics and combinations of them at all costs is great if you
              don’t have a constrained budget…
Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-PERFORMANCE PER DOLLAR PLAYERS




Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-PERFORMANCE PER DOLLAR PLAYERS


      • Now let’s look at the Top 10 Players per $ against the same metrics
      • Top 10 batters Per $                 Players by AVG/$ Team                        2011 Salary
                                            David Freese             St Louis Cardinals            $416,000
           • By 2011 Batting Average        Ryan Roberts        Arizona Diamondbacks               $423,500
                                            Brett Gardner            New York Yankees              $529,500
                                            Jason Jaramillo          Pittsburgh Pirates            $422,500
                                            Jason Donald             Cleveland Indians             $423,200
                                            Don Kelly                    Detroit Tigers            $423,000
                                            Lucas Duda                 New York Mets               $414,000
                                            Starlin Castro               Chicago Cubs              $440,000
                                            Emilio Bonifacio            Florida Marlins            $425,000
                                            Jason Bourgeois            Houston Astros              $423,000




Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-PERFORMANCE PER DOLLAR PLAYERS


      • Now let’s look at the Top 10 Players per $ against the same metrics
      • Top 10 batters Per $                 Players by HR/$  Team                       2011 Salary
                                            Mark Trumbo            Los Angeles Angels             $414,000
          • By 2011 Batting Average         Mike Stanton               Florida Marlins            $416,000
          • By 2011 Home Runs               Andrew McCutchen        Pittsburgh Pirates            $452,500
                                            Neil Walker             Pittsburgh Pirates            $437,000
                                            Carlos Santana          Cleveland Indians             $416,600
                                            J.P. Arencibia          Toronto Blue Jays             $417,400
                                            Freddie Freeman             Atlanta Braves            $414,000
                                            Gaby Sanchez               Florida Marlins            $431,000
                                            Logan Morrison             Florida Marlins            $414,000
                                            Danny Valencia           Minnesota Twins              $437,500




Thursday, December 22, 11
EFFICIENT FRONTIER
     HIGH-PERFORMANCE PER DOLLAR PLAYERS


      • Now let’s look at the Top 10 Players per $ against the same metrics
      • Top 10 batters Per $                 Players by OBP/$ Team                        2011 Salary
                                            David Freese            St Louis Cardinals                  $416,000
          • By 2011 Batting Average         Allen Craig             St Louis Cardinals                  $414,000
          • By 2011 Home Runs               A.J. Ellis           Los Angeles Dodgers                    $421,000
                                            Lucas Duda                 New York Mets                    $414,000
          • By 2011 On Base Percentage      Jason Donald             Cleveland Indians                  $423,200
                                            Dexter Fowler           Colorado Rockies                    $424,000
                                            Mike Stanton                Florida Marlins                 $416,000
                                            Emilio Bonifacio            Florida Marlins                 $425,000
                                            Jason Jaramillo          Pittsburgh Pirates                 $422,500
                                            Carlos Santana           Cleveland Indians                  $416,600




Thursday, December 22, 11
“David Freese completed a
         startling night of comebacks
         with a home run leading off
         the bottom of the 11th
         inning to beat Texas 10-9 on
         Thursday, and suddenly fans
         all over got something they
         have waited a long time to
         see: Game 7 in the World
         Series."

         2011 World Series MVP...
         ...and Top Moneyball Pick in
         the Major Leagues!
                                    DAVID FREESE
Thursday, December 22, 11
EFFICIENT FRONTIER
     COST-EFFECTIVE WAYS TO LOAD THE BASES




Thursday, December 22, 11
EFFICIENT FRONTIER
     COST-EFFECTIVE WAYS TO LOAD THE BASES
     • On-Base Percentage is still uncorrelated with Salary!!
                            0.4




                                                                                                                            OBP
                             0.3



                                  0.2

                                                                                                                    A-Rod
                                                                                                          $26,000,000
                                   0.1                                                            $15,000,000
                                                                                         $7,500,000
                                                                                $3,500,000
                                                                   $1,500,000         Salary
                                         0
                                                        $750,000
                                             $250,000


Thursday, December 22, 11
EFFICIENT FRONTIER
     COST-EFFECTIVE WAYS TO LOAD THE BASES
     • Which means it’s clear where to put your money to
       maximize OBP per $MM!
                            0.5




                                                                                                                           OBP/$MM
                             0.4



                              0.3
                                                                                                                   A-Rod
                                                                                                         $26,000,000
                                                                                                 $15,000,000
                                  0.1
                                                                                         $7,500,000
                                                                               $3,500,000
                                                                  $1,500,000         Salary
                                        0
                                                       $750,000
                                            $250,000


Thursday, December 22, 11
EFFICIENT FRONTIER
     PLAYER PERFORMANCE PER $



                            175

 • Looking for the hitter




                                                                                                                         RBI/$MM
                                                                                                                         RBI/$MM
   to deliver the RBI’s     131


 • There’s a pretty good      88
   valuation of home-
   run hitters
                                  44                                                                             A-Rod
                                                                                                      $23,000,000
                                                                                             $15,000,000
                                                                                    $7,500,000
                                                                          $3,500,000
                                   0                         $1,500,000
                                                  $750,000                       Salary
                                       $500,000
Thursday, December 22, 11
EFFICIENT FRONTIER
     PLAYER PERFORMANCE PER $



                            175

 • Looking for the hitter




                                                                                                                         RBI/$MM
                                                                                                                         RBI/$MM
   to deliver the RBI’s     131


 • There’s a pretty good      88
   valuation of home-
   run hitters
                                  44                                                                             A-Rod
                                                                                                      $23,000,000
                                                                                             $15,000,000
                                                                                    $7,500,000
                                                                          $3,500,000
                                   0                         $1,500,000
                                                  $750,000                       Salary
                                       $500,000
Thursday, December 22, 11
MONEYADS
     THE STRATEGY




Thursday, December 22, 11
MONEYADS
     THE STRATEGY

     Baseball                                            Digital Advertising
     We might want to buy runs, but we benefit            We want to drive consumer action, but we can
     from players who get on base                        benefit by growing our remarketable audience
        • Purchase Established Players based on            • Target campaigns to optimize audience
          different metrics – OBP vs. HR                     acquisition rather than actions, which
                                                             demands a lower premium per impression
          • Selectively draft College Baseball players     • Find pockets of inventory that we know
            rather than High School Players – stable         from historical data will deliver high-quality
            statistics                                       click-based audience at low cost

          • Buying High School Players, look for           • Buy previously unseen media based on
            commonalities with the background of             commonality with seen media that performs
            mature players who now have good                 well against our new target metrics
            “different metrics”

Thursday, December 22, 11
MONEYADS
     THE STRATEGY

     Baseball                                            Digital Advertising
     We might want to buy runs, but we benefit            We want to drive consumer action, but we can
     from players who get on base                        benefit by growing our remarketable audience
        • Purchase Established Players based on            • Target campaigns to optimize audience
          different metrics – OBP vs. HR                     acquisition rather than actions, which
                                                             demands a lower premium per impression
          • Selectively draft College Baseball players     • Find pockets of inventory that we know
            rather than High School Players – stable         from historical data will deliver high-quality
            statistics                                       click-based audience at low cost

          • Buying High School Players, look for           • Buy previously unseen media based on
            commonalities with the background of             commonality with seen media that performs
            mature players who now have good                 well against our new target metrics
            “different metrics”

Thursday, December 22, 11
MONEYADS
     THE STRATEGY

     Baseball                                            Digital Advertising
     We might want to buy runs, but we benefit            We want to drive consumer action, but we can
     from players who get on base                        benefit by growing our remarketable audience
        • Purchase Established Players based on            • Target campaigns to optimize audience
          different metrics – OBP vs. HR                     acquisition rather than actions, which
                                                             demands a lower premium per impression
          • Selectively draft College Baseball players     • Find pockets of inventory that we know
            rather than High School Players – stable         from historical data will deliver high-quality
            statistics                                       click-based audience at low cost

          • Buying High School Players, look for           • Buy previously unseen media based on
            commonalities with the background of             commonality with seen media that performs
            mature players who now have good                 well against our new target metrics
            “different metrics”

Thursday, December 22, 11
MONEYADS
     THE STRATEGY

     Baseball                                            Digital Advertising
     We might want to buy runs, but we benefit            We want to drive consumer action, but we can
     from players who get on base                        benefit by growing our remarketable audience
        • Purchase Established Players based on            • Target campaigns to optimize audience
          different metrics – OBP vs. HR                     acquisition rather than actions, which
                                                             demands a lower premium per impression
          • Selectively draft College Baseball players     • Find pockets of inventory that we know
            rather than High School Players – stable         from historical data will deliver high-quality
            statistics                                       click-based audience at low cost

          • Buying High School Players, look for           • Buy previously unseen media based on
            commonalities with the background of             commonality with seen media that performs
            mature players who now have good                 well against our new target metrics
            “different metrics”

Thursday, December 22, 11
THE “EFFICIENT FRONTIER”
           DISPLAY ADVERTISING - DELIVERY - WINNING MEDIA




                                                                                                       Delivery=Spend/Budget
                            1.5


                            1.1


                             0.8


                              0.4                                                                    $1.60
                                                                                             $1.30
                                                                                    $1.00
                                                                            $0.80
                                   0
                                                                    $0.60
                                                            $0.40      CPC Bid($)
                                                  $0.20
                                       $0.00

                                        2nd Price Auction Model     Google KW CPC Delivery

Thursday, December 22, 11
THE “EFFICIENT FRONTIER”
           DISPLAY ADVERTISING - DELIVERY - WINNING MEDIA




                                                                                                       Delivery=Spend/Budget
                            1.5


                            1.1


                             0.8


                              0.4                                                                    $1.60
                                                                                             $1.30
                                                                                    $1.00
                                                                            $0.80
                                   0
                                                                    $0.60
                                                            $0.40      CPC Bid($)
                                                  $0.20
                                       $0.00

                                        2nd Price Auction Model     Google KW CPC Delivery

Thursday, December 22, 11
THE “EFFICIENT FRONTIER”
           DISPLAY ADVERTISING - DELIVERY - WINNING MEDIA




                                                                                                       Delivery=Spend/Budget
                            1.5


                            1.1


                             0.8                                                                                               Diminishing Returns

                              0.4                                                                    $1.60
                                                                                             $1.30
                                                                                    $1.00
                                                                            $0.80
                                   0
                                                                    $0.60
                                                            $0.40      CPC Bid($)
                                                  $0.20
                                       $0.00

                                        2nd Price Auction Model     Google KW CPC Delivery

Thursday, December 22, 11
THE EFFICIENT FRONTIER
         DISPLAY ADVERTISING - PERFORMANCE


                            4.00




                                                                                                                          1/CPA Perf
                             3.00



                              2.00



                               1.00
                                                                                                             $5.50$6.00
                                                                                                   $4.50$5.00
                                                                               $3.00 $3.50 $4.00
                                     0                             $2.00 $2.50
                                                             $1.50
                                                       $1.00                Bid, CPC ($)
                                                 $0.50
                                         $0.00


Thursday, December 22, 11
THE EFFICIENT FRONTIER
         DISPLAY ADVERTISING - PERFORMANCE


                             4.00




                                                                                                                           1/CPA Perf
             At low bids, we 3.00
                              win
                  low quality
              impressions that
             have low CTR and  2.00
               convert poorly

                                1.00
                                                                                                              $5.50$6.00
                                                                                                    $4.50$5.00
                                                                                $3.00 $3.50 $4.00
                                      0                             $2.00 $2.50
                                                              $1.50
                                                        $1.00                Bid, CPC ($)
                                                  $0.50
                                          $0.00


Thursday, December 22, 11
THE EFFICIENT FRONTIER
         DISPLAY ADVERTISING - PERFORMANCE

                                                                                                    At high bids, we buy premium
                             4.00                                                                   impressions that result in high
                                                                                                            CPC and CPA




                                                                                                                           1/CPA Perf
             At low bids, we 3.00
                              win
                  low quality
              impressions that
             have low CTR and  2.00
               convert poorly

                                1.00
                                                                                                              $5.50$6.00
                                                                                                    $4.50$5.00
                                                                                $3.00 $3.50 $4.00
                                      0                             $2.00 $2.50
                                                              $1.50
                                                        $1.00                Bid, CPC ($)
                                                  $0.50
                                          $0.00


Thursday, December 22, 11
THE EFFICIENT FRONTIER
         DISPLAY ADVERTISING - PERFORMANCE

                                                                                                    At high bids, we buy premium
                             4.00                                                                   impressions that result in high
                                                                                                            CPC and CPA




                                                                                                                           1/CPA Perf
             At low bids, we 3.00
                              win
                  low quality
              impressions that
             have low CTR and  2.00
               convert poorly

                                1.00
                                                                                                              $5.50$6.00
                                                                                                    $4.50$5.00
                                                                                $3.00 $3.50 $4.00
                                      0                             $2.00 $2.50
                                                              $1.50
                                                        $1.00                Bid, CPC ($)
                                                  $0.50
                                          $0.00


Thursday, December 22, 11
EFFICIENT FRONTIER
     FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA




Thursday, December 22, 11
EFFICIENT FRONTIER
     FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA

         • We use predictive models to discover
           statistically similar media to media not
           previously run




Thursday, December 22, 11
EFFICIENT FRONTIER
     FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA

         • We use predictive models to discover
           statistically similar media to media not
           previously run




Thursday, December 22, 11
EFFICIENT FRONTIER
     FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA

         • We use predictive models to discover
           statistically similar media to media not
           previously run

         • This allows us to identify optimal
           combinations of media sources, budgets to
           apply and bidding delivery and performance
           curves




Thursday, December 22, 11
EFFICIENT FRONTIER
     FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA

         • We use predictive models to discover
           statistically similar media to media not
           previously run

         • This allows us to identify optimal
           combinations of media sources, budgets to
           apply and bidding delivery and performance
           curves




Thursday, December 22, 11
EFFICIENT FRONTIER
     FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA

         • We use predictive models to discover
           statistically similar media to media not
           previously run

         • This allows us to identify optimal
           combinations of media sources, budgets to
           apply and bidding delivery and performance
           curves

         • At each node of the tree we have both
           spend, initial bid, delivery and performance
           models



Thursday, December 22, 11
EFFICIENT FRONTIER
     FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA

         • We use predictive models to discover
           statistically similar media to media not
           previously run

         • This allows us to identify optimal
           combinations of media sources, budgets to
           apply and bidding delivery and performance
           curves

         • At each node of the tree we have both
           spend, initial bid, delivery and performance
           models



Thursday, December 22, 11
EXAMPLE
     ADVERTISING EMPLOYING THE STRATEGIES
     • These models are estimated dynamically and used to learn quickly
                                                    1.50                                                                                          $300.00
                                                                                                         $276.45



                                                    1.13                                                                                          $225.00
                            Delivery=Spend/Budget




                                                                                                                  $165.98




                                                                                                                                                            CPA($)
                                                    0.75   Commonality-Based                                                                      $150.00
                                                            Intelligent Initial Bid                                                     $127.89

                                                                (Bid=$2.20)
                                                                            $69.15
                                                    0.38                                                                                           $75.00



                                                      0                                                                                               $0
                                                           1     2      3        4     5     6       7        8        9     10   11   12   13
                                                                                                 Data Points
                                                                                      Delivery                             CPA
Thursday, December 22, 11
EXAMPLE




                                                                                                                                                            Delivery=Spend/Budget
     ADVERTISING EMPLOYING THE STRATEGIES
     • These models are estimated dynamically and used to learn quickly
                      1.5

                                                    1.50                                                                                                   $300.00
                                                                                                                  $276.45
                                                           1.1

                                                    1.13                                                                                                   $225.00
                            Delivery=Spend/Budget




                                                           0.8
                                                                                                                           $165.98




                                                                                                                                                                                         CPA($)
                                                    0.75 0.4 Commonality-Based                                                                   $127.89
                                                                                                                                                           $150.00
                                                                     Intelligent Initial Bid
                                                                         (Bid=$2.20)
                                                                 0                   $69.15
                                                    0.38                                                             CPC Bid($)                             $75.00



                                                      0                                                                                                                             $0
                                                                 1        2      3        4     5     6       7        8        9     10   11   12   13
                                                                                                          Data Points
                                                                                               Delivery                             CPA
Thursday, December 22, 11
EXAMPLE
     ADVERTISING EMPLOYING THE STRATEGIES
     • These models are estimated dynamically and used to learn quickly
                                                    1.50                                                                                          $300.00
                                                                                                         $276.45
                                                               First Bid Optimization
                                                           (Optimize Delivery Bid=$3.85)
                                                    1.13                                                                                          $225.00
                            Delivery=Spend/Budget




                                                                                                                  $165.98




                                                                                                                                                            CPA($)
                                                    0.75   Commonality-Based                                                                      $150.00
                                                            Intelligent Initial Bid                                                     $127.89

                                                                (Bid=$2.20)
                                                                            $69.15
                                                    0.38                                                                                           $75.00



                                                      0                                                                                               $0
                                                           1     2      3        4     5     6       7        8        9     10   11   12   13
                                                                                                 Data Points
                                                                                      Delivery                             CPA
Thursday, December 22, 11
EXAMPLE
     ADVERTISING EMPLOYING THE STRATEGIES
     • These models are estimated dynamically and used to learn quickly
                                                    1.50                                                                                          $300.00
                                                                                                         $276.45
                                                               First Bid Optimization
                                                           (Optimize Delivery Bid=$3.85)
                                                    1.13                                                                                          $225.00
                            Delivery=Spend/Budget




                                                                                                                  $165.98




                                                                                                                                                            CPA($)
                                                    0.75   Commonality-Based                                                                      $150.00
                                                            Intelligent Initial Bid                                                     $127.89

                                                                (Bid=$2.20)
                                                                            $69.15
                                                    0.38                                                                                           $75.00



                                                      0                                                                                               $0
                                                           1     2      3        4     5     6       7        8        9     10   11   12   13
                                                                                                 Data Points
                                                                                      Delivery                             CPA
Thursday, December 22, 11
EXAMPLE




                                                                                                                                                            Delivery=Spend/Budget
     ADVERTISING EMPLOYING THE STRATEGIES
     • These models are estimated dynamically and used to learn quickly
                      1.5

                                                    1.50                                                                                                   $300.00
                                                                                                                  $276.45
                                                           1.1       First Bid Optimization
                                                                 (Optimize Delivery Bid=$3.85)
                                                    1.13                                                                                                   $225.00
                            Delivery=Spend/Budget




                                                           0.8
                                                                                                                           $165.98




                                                                                                                                                                                         CPA($)
                                                    0.75 0.4 Commonality-Based                                                                   $127.89
                                                                                                                                                           $150.00
                                                                     Intelligent Initial Bid
                                                                         (Bid=$2.20)
                                                                 0                   $69.15
                                                    0.38                                                              CPC Bid($)                            $75.00



                                                      0                                                                                                                             $0
                                                                 1        2      3        4     5     6       7        8        9     10   11   12   13
                                                                                                          Data Points
                                                                                               Delivery                             CPA
Thursday, December 22, 11
EXAMPLE                               6.00
     ADVERTISING EMPLOYING THE STRATEGIES
     • These models are estimated dynamically and used to learn quickly




                                                                                                                                                        1/CPA Perf
                                                     1.50
                                                    4.50                                                                                            $300.00
                                                                                                           $276.45
                                                                 First Bid Optimization
                                                             (Optimize Delivery Bid=$3.85)
                                                    1.13                                                                                            $225.00
                            Delivery=Spend/Budget




                                                    3.00

                                                                                                                    $165.98




                                                                                                                                                                 CPA($)
                                                    0.75     Commonality-Based                                                                      $150.00
                                                     1.50                                                                                 $127.89
                                                              Intelligent Initial Bid
                                                                  (Bid=$2.20)
                                                                              $69.15
                                                    0.38 0                                                                                           $75.00
                                                                                                           Bid, CPC ($)

                                                       0                                                                                                $0
                                                             1     2      3        4     5     6       7        8        9     10   11   12   13
                                                                                                   Data Points
                                                                                        Delivery                             CPA
Thursday, December 22, 11
EXAMPLE
     ADVERTISING EMPLOYING THE STRATEGIES
     • These models are estimated dynamically and used to learn quickly
                                                    1.50                                                                                               $300.00
                                                                                                         $276.45
                                                               First Bid Optimization                                               Second Bid Optimization
                                                           (Optimize Delivery Bid=$3.85)                                             (Optimize Performance
                                                    1.13                                                                         /Delivery Trade-Off, Bid=$2.00)
                                                                                                                                                        $225.00
                            Delivery=Spend/Budget




                                                                                                                  $165.98




                                                                                                                                                                 CPA($)
                                                    0.75   Commonality-Based                                                                           $150.00
                                                            Intelligent Initial Bid                                                          $127.89

                                                                (Bid=$2.20)
                                                                            $69.15
                                                    0.38                                                                                                $75.00



                                                      0                                                                                                     $0
                                                           1     2      3        4     5     6       7        8        9     10      11    12    13
                                                                                                 Data Points
                                                                                      Delivery                             CPA
Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING

   • Batter Up!




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING

   • Batter Up!
   • Get on base!



                                            7 ways!




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING

   • Batter Up!
   • Get on base!

   • Batter Up!




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING

   • Batter Up!
   • Get on base!

   • Batter Up!
   • Get on base!




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING

   • Batter Up!
   • Get on base!

   • Batter Up!
   • Get on base!

   • Get the Slugger up!!...




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING

   • Batter Up!
   • Get on base!

   • Batter Up!
   • Get on base!

   • Get the Slugger up!!...
   • ...and run them in!                    !!!



Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING


                                            • Construct the media plan...
                                            • ...to efficiently acquire retargetable
                                              audience




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING


                                             • Construct the media plan...
                                             • ...to efficiently acquire retargetable
                                               audience
                                               • Keyword Campaigns - optimized for click-
                                                 generation
                                Many ways!     • Site Targeted Campaigns - targeted to placements
                                                 optimized to get clicks for advertiszer




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING


                                            • Construct the media plan...
                                            • ...to efficiently acquire retargetable
                                              audience
                                              • Keyword Campaigns - optimized for click-
                                                generation
                                              • Site Targeted Campaigns - targeted to placements
                                                optimized to get clicks for advertiszer
                                              • Look-a-like Users/Behavioral Segments
                                              • Social Media and Search




Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING


                                            • Construct the media plan...
                                            • ...to efficiently acquire retargetable
                                              audience
                                              • Keyword Campaigns - optimized for click-
                                                generation
                                              • Site Targeted Campaigns - targeted to placements
                                                optimized to get clicks for advertiszer
                                              • Look-a-like Users/Behavioral Segments
                                              • Social Media and Search
                                            • Retarget!



Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING


                                            • Construct the media plan...
                                            • ...to efficiently acquire retargetable
                                              audience
                                              • Keyword Campaigns - optimized for click-
                                                generation
                                              • Site Targeted Campaigns - targeted to placements
                                                optimized to get clicks for advertiszer
                                              • Look-a-like Users/Behavioral Segments
                            !!!               • Social Media and Search
                                            • Retarget!
                                            • ..and convert the audience!


Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING


                                            • Construct the media plan...
                                            • ...to efficiently acquire retargetable
                                              audience
                                              • Keyword Campaigns - optimized for click-
                                                generation
                                              • Site Targeted Campaigns - targeted to placements
                                                optimized to get clicks for advertiszer
                                              • Look-a-like Users/Behavioral Segments
                                              • Social Media and Search
                                            • Retarget!
                                            • ..and convert the audience!


Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING


         • Construct the media plan...
         • ...to efficiently acquire retargetable
           audience
              • Keyword Campaigns - optimized for click-
                generation
              • Site Targeted Campaigns - targeted to placements
                optimized to get clicks for advertiszer
              • Look-a-like Users/Behavioral Segments
              • Social Media and Search
         • Retarget!
         • ..and convert the audience!


Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING
                                                                                Conventional Approach
         • Construct the media plan...                                                           Targeted
                                                                                                 Campaign
         • ...to efficiently acquire retargetable
           audience
              • Keyword Campaigns - optimized for click-                                                    Impressions
                generation                                         Driving traffic through to one-time
                                                                               conversion.
              • Site Targeted Campaigns - targeted to placements
                optimized to get clicks for advertiszer              Treat first-time and returning
                                                                           visitors the same
              • Look-a-like Users/Behavioral Segments
                                                                                                              Clicks
              • Social Media and Search
         • Retarget!
         • ..and convert the audience!                                                                       Actions

Thursday, December 22, 11
MONEYADS
     FROM BASEBALL TO DISPLAY ADVERTISING
                                                                                  MoneyAds Approach
         • Construct the media plan...                                                           Broad Audience
                                                                                              Acquisition Followed by
         • ...to efficiently acquire retargetable                                                    Retargeting
           audience
              • Keyword Campaigns - optimized for click-
                                                                       Driving Traffic -> Building
                                                                                                                Impressions
                generation
                                                                           Retargeting Pool
              • Site Targeted Campaigns - targeted to placements
                optimized to get clicks for advertiszer
              • Look-a-like Users/Behavioral Segments               Retargeting established cookie
                                                                   pool, with message contextualized         Clicks/Cookies
              • Social Media and Search                              to previous site visits, to drive
                                                                               conversion
         • Retarget!
         • ..and convert the audience!                                                                              Actions

Thursday, December 22, 11
EXAMPLE
           CONVENTIONAL APPROACH



                             Site Content
                                             Impressions Retargeting Campaign on
                              Campaign                      current cookie pool
                            eCPM:! $1.50
                            eCPC: !$1.09       Clicks
                            eCPA:! $184.92                     eCPM:! $2.92
                                                               eCPC: !$2.36
                                                               eCPA:! $73.02
                                              Actions



Thursday, December 22, 11
EXAMPLE
           MONEYADS APPROACH




Thursday, December 22, 11
EXAMPLE
           MONEYADS APPROACH


            Audience Acquisition Campaign
                                             Impressions
                 eCPM:! $1.50
                 eCPC: !$1.09
           Retargeting campaign on          Clicks/Cookies
           expanded cookie pool
                 eCPM:! $2.92
                 eCPC: !$2.36
                 eCPA:! $73.02                 Actions
                 Conversion Rate: 3.23%



Thursday, December 22, 11
EXAMPLE
           MONEYADS APPROACH


            Audience Acquisition Campaign
                                             Impressions     Overall Performance
                 eCPM:! $1.50
                 eCPC: !$1.09
           Retargeting campaign on                                    CPCacquisition + CPCretargeting
                                            Clicks/Cookies   eCPA =
           expanded cookie pool                                    Retargeting Conversion Rate
                 eCPM:! $2.92                                    = $106.95
                 eCPC: !$2.36
                 eCPA:! $73.02                 Actions
                 Conversion Rate: 3.23%



Thursday, December 22, 11
TAKEAWAYS




Thursday, December 22, 11
TAKEAWAYS




Thursday, December 22, 11
TAKEAWAYS

     1 - Focus on metrics that count towards a more balanced view of
     marketing success - value all the methods for getting on base.




Thursday, December 22, 11
TAKEAWAYS

     1 - Focus on metrics that count towards a more balanced view of
     marketing success - value all the methods for getting on base.




Thursday, December 22, 11
TAKEAWAYS

     1 - Focus on metrics that count towards a more balanced view of
     marketing success - value all the methods for getting on base.


     2 - Be measured about what you buy - buy college rather than
     high-school players.




Thursday, December 22, 11
TAKEAWAYS

     1 - Focus on metrics that count towards a more balanced view of
     marketing success - value all the methods for getting on base.


     2 - Be measured about what you buy - buy college rather than
     high-school players.




Thursday, December 22, 11
TAKEAWAYS

     1 - Focus on metrics that count towards a more balanced view of
     marketing success - value all the methods for getting on base.


     2 - Be measured about what you buy - buy college rather than
     high-school players.


     3 - Diversify your talent - not everyone can afford to buy A-Rod!




Thursday, December 22, 11
TAKEAWAYS

     1 - Focus on metrics that count towards a more balanced view of
     marketing success - value all the methods for getting on base.


     2 - Be measured about what you buy - buy college rather than
     high-school players.


     3 - Diversify your talent - not everyone can afford to buy A-Rod!




Thursday, December 22, 11
TAKEAWAYS

     1 - Focus on metrics that count towards a more balanced view of
     marketing success - value all the methods for getting on base.


     2 - Be measured about what you buy - buy college rather than
     high-school players.


     3 - Diversify your talent - not everyone can afford to buy A-Rod!


     4 - You don’t need to spend a lot to be successful - use focused
     strategies and robust data.




Thursday, December 22, 11
THANK YOU!
                            odowns@adready.com
                             @mathandporsches




Thursday, December 22, 11

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Moneyball: Driving Home Runs with Display Advertising

  • 1. Moneyball How buying by “On Base Percentage” rather than “RBIs” drives results in Display Advertising Olly Downs, PhD Consulting Chief Scientist Thursday, December 22, 11
  • 2. THE ART OF WINNING AN UNFAIR GAME 2002 New York Yankees 2002 Oakland Athletics Thursday, December 22, 11
  • 3. THE ART OF WINNING AN UNFAIR GAME $125,000,000 $41,000,000 2002 New York Yankees 2002 Oakland Athletics Thursday, December 22, 11
  • 4. WHY? BASEBALL & DIGITAL ADVERTISING Baseball Digital Advertising Runs Actions Goal (more than opponent) (more than alternative) Asset Players Media / Data Budget Player Salaries Media Purchased 9 Innings Constraint Campaign Duration (27 outs) Thursday, December 22, 11
  • 5. WHY? BASEBALL & DIGITAL ADVERTISING Baseball Digital Advertising RBI (runs-batted-in) How to Evaluate eCPC / eCPA OBP (on-base-percentage) The Premium Strategy A-Rod Home Pages / Sponsorships The Non-Obvious Find Undervalued Talent/Use Different Find Undervalued, Strategy Metrics Non-Obvious Sites/Segments Pick More Mature Players or Identify Intelligently Initialize and/or Quickly Adapt/ Commonalities of Younger Players with Optimize Campaign Parameters Known Players Thursday, December 22, 11
  • 6. MONEYBALL STRATEGY Thursday, December 22, 11
  • 7. MONEYBALL STRATEGY • We might want to buy runs, but we benefit from players who get on base • Purchase Established Players based on different metrics – OBP vs. HR • Selectively draft College Baseball players rather than High School Players – stable statistics • Buying High School Players, look for similarities with mature players who have the right metrics Thursday, December 22, 11
  • 8. MONEYBALL STRATEGY • We might want to buy runs, but we benefit from players who get on base • Purchase Established Players based on different metrics – OBP vs. HR • Selectively draft College Baseball players rather than High School Players – stable statistics • Buying High School Players, look for similarities with mature players who have the right metrics Thursday, December 22, 11
  • 9. MONEYBALL STRATEGY • We might want to buy runs, but we benefit from players who get on base • Purchase Established Players based on different metrics – OBP vs. HR • Selectively draft College Baseball players rather than High School Players – stable statistics • Buying High School Players, look for similarities with mature players who have the right metrics • It’s been 9 years since the Oakland A’s incredible season • Moneyball principles have garnered significant adoption across MLB • BUT inefficiencies still exist Thursday, December 22, 11
  • 10. THE “EFFICIENT FRONTIER” BASEBALL 100% Signing Probability 50% Salary Offered 0% Thursday, December 22, 11
  • 11. THE “EFFICIENT FRONTIER” BASEBALL What at least one other team is willing to pay 100% Signing Probability 50% Salary Offered 0% Thursday, December 22, 11
  • 12. THE “EFFICIENT FRONTIER” W BASEBALL 100% Signing Probability 50% Salary Offered 0% Thursday, December 22, 11
  • 13. EFFICIENT FRONTIER HIGH-COST, HIGH PERFORMANCE PLAYERS Thursday, December 22, 11
  • 14. EFFICIENT FRONTIER HIGH-COST, HIGH PERFORMANCE PLAYERS • Top 10 players Players by Salary Team Salary Alex Rodriguez New York Yankees $32,000,000 • By 2011 Salary Vernon Wells Los Angeles Angels $26,642,857 CC Sabathia New York Yankees $24,285,714 Mark Teixeira New York Yankees $23,125,000 Todd Helton Colorado Rockies $20,275,000 Miguel Cabrera Detroit Tigers $20,000,000 Roy Halladay Philadelphia Phillies $20,000,000 Ryan Howard Philadelphia Phillies $20,000,000 Alfonso Soriano Chicago Cubs $19,000,000 Carlos Lee Houston Astros $19,000,000 Thursday, December 22, 11
  • 15. EFFICIENT FRONTIER HIGH-COST, HIGH PERFORMANCE PLAYERS • Top 10 players Players by AVG Team Salary Skip Schumaker St Louis Cardinals $2,750,000 • By 2011 Salary Jimmy Rollins Philadelphia Phillies $8,500,000 • By 2011 Batting Average Chase Utley Philadelphia Phillies $15,285,714 Jorge Posada New York Yankees $13,100,000 Brett Gardner New York Yankees $529,500 Ryan Braun Milwaukee Brewers $4,287,500 Kelly Shoppach Tampa Bay Rays $3,000,000 David Freese St Louis Cardinals $416,000 Chris Young Arizona Diamondbacks $5,200,000 Magglio Ordonez Detroit Tigers $10,000,000 Thursday, December 22, 11
  • 16. EFFICIENT FRONTIER HIGH-COST, HIGH PERFORMANCE PLAYERS • Top 10 players Players by HR Team Salary Jose Bautista Toronto Blue Jays $8,000,000 • By 2011 Salary Matt Kemp Los Angeles Dodgers $7,100,000 • By 2011 Batting Average Mark Reynolds Baltimore Orioles $5,333,333 Dan Uggla Atlanta Braves $9,146,942 • By 2011 Home Runs Mike Stanton Florida Marlins $416,000 Jacoby Ellsbury Boston Red Sox $2,400,000 Jay Bruce Cincinnati Reds $2,791,667 Michael Morse Washington Nationals $1,050,000 Paul Konerko Chicago White Sox $12,000,000 Troy Tulowitzki Colorado Rockies $5,500,000 Thursday, December 22, 11
  • 17. EFFICIENT FRONTIER HIGH-COST, HIGH PERFORMANCE PLAYERS • Top 10 players Players by OBP Team Salary Jorge Posada New York Yankees $13,100,000 • By 2011 Salary Chase Utley Philadelphia Phillies $15,285,714 • By 2011 Batting Average Skip Schumaker St Louis Cardinals $2,750,000 Miguel Cabrera Detroit Tigers $20,000,000 • By 2011 Home Runs Jimmy Rollins Philadelphia Phillies $8,500,000 • By On Base Percentage Albert Pujols Ryan Braun St Louis Cardinals Milwaukee Brewers $14,508,395 $4,287,500 Magglio Ordonez Detroit Tigers $10,000,000 Kelly Shoppach Tampa Bay Rays $3,000,000 Chris Young Arizona Diamondbacks $5,200,000 Thursday, December 22, 11
  • 18. EFFICIENT FRONTIER HIGH-COST, HIGH PERFORMANCE PLAYERS • Top 10 players Players by OBP Team Salary Jorge Posada New York Yankees $13,100,000 • By 2011 Salary Chase Utley Philadelphia Phillies $15,285,714 • By 2011 Batting Average Skip Schumaker St Louis Cardinals $2,750,000 Miguel Cabrera Detroit Tigers $20,000,000 • By 2011 Home Runs Jimmy Rollins Philadelphia Phillies $8,500,000 • By On Base Percentage Albert Pujols Ryan Braun St Louis Cardinals Milwaukee Brewers $14,508,395 $4,287,500 Magglio Ordonez Detroit Tigers $10,000,000 Kelly Shoppach Tampa Bay Rays $3,000,000 Chris Young Arizona Diamondbacks $5,200,000 • Optimizing these metrics and combinations of them at all costs is great if you don’t have a constrained budget… Thursday, December 22, 11
  • 19. EFFICIENT FRONTIER HIGH-PERFORMANCE PER DOLLAR PLAYERS Thursday, December 22, 11
  • 20. EFFICIENT FRONTIER HIGH-PERFORMANCE PER DOLLAR PLAYERS • Now let’s look at the Top 10 Players per $ against the same metrics • Top 10 batters Per $ Players by AVG/$ Team 2011 Salary David Freese St Louis Cardinals $416,000 • By 2011 Batting Average Ryan Roberts Arizona Diamondbacks $423,500 Brett Gardner New York Yankees $529,500 Jason Jaramillo Pittsburgh Pirates $422,500 Jason Donald Cleveland Indians $423,200 Don Kelly Detroit Tigers $423,000 Lucas Duda New York Mets $414,000 Starlin Castro Chicago Cubs $440,000 Emilio Bonifacio Florida Marlins $425,000 Jason Bourgeois Houston Astros $423,000 Thursday, December 22, 11
  • 21. EFFICIENT FRONTIER HIGH-PERFORMANCE PER DOLLAR PLAYERS • Now let’s look at the Top 10 Players per $ against the same metrics • Top 10 batters Per $ Players by HR/$ Team 2011 Salary Mark Trumbo Los Angeles Angels $414,000 • By 2011 Batting Average Mike Stanton Florida Marlins $416,000 • By 2011 Home Runs Andrew McCutchen Pittsburgh Pirates $452,500 Neil Walker Pittsburgh Pirates $437,000 Carlos Santana Cleveland Indians $416,600 J.P. Arencibia Toronto Blue Jays $417,400 Freddie Freeman Atlanta Braves $414,000 Gaby Sanchez Florida Marlins $431,000 Logan Morrison Florida Marlins $414,000 Danny Valencia Minnesota Twins $437,500 Thursday, December 22, 11
  • 22. EFFICIENT FRONTIER HIGH-PERFORMANCE PER DOLLAR PLAYERS • Now let’s look at the Top 10 Players per $ against the same metrics • Top 10 batters Per $ Players by OBP/$ Team 2011 Salary David Freese St Louis Cardinals $416,000 • By 2011 Batting Average Allen Craig St Louis Cardinals $414,000 • By 2011 Home Runs A.J. Ellis Los Angeles Dodgers $421,000 Lucas Duda New York Mets $414,000 • By 2011 On Base Percentage Jason Donald Cleveland Indians $423,200 Dexter Fowler Colorado Rockies $424,000 Mike Stanton Florida Marlins $416,000 Emilio Bonifacio Florida Marlins $425,000 Jason Jaramillo Pittsburgh Pirates $422,500 Carlos Santana Cleveland Indians $416,600 Thursday, December 22, 11
  • 23. “David Freese completed a startling night of comebacks with a home run leading off the bottom of the 11th inning to beat Texas 10-9 on Thursday, and suddenly fans all over got something they have waited a long time to see: Game 7 in the World Series." 2011 World Series MVP... ...and Top Moneyball Pick in the Major Leagues! DAVID FREESE Thursday, December 22, 11
  • 24. EFFICIENT FRONTIER COST-EFFECTIVE WAYS TO LOAD THE BASES Thursday, December 22, 11
  • 25. EFFICIENT FRONTIER COST-EFFECTIVE WAYS TO LOAD THE BASES • On-Base Percentage is still uncorrelated with Salary!! 0.4 OBP 0.3 0.2 A-Rod $26,000,000 0.1 $15,000,000 $7,500,000 $3,500,000 $1,500,000 Salary 0 $750,000 $250,000 Thursday, December 22, 11
  • 26. EFFICIENT FRONTIER COST-EFFECTIVE WAYS TO LOAD THE BASES • Which means it’s clear where to put your money to maximize OBP per $MM! 0.5 OBP/$MM 0.4 0.3 A-Rod $26,000,000 $15,000,000 0.1 $7,500,000 $3,500,000 $1,500,000 Salary 0 $750,000 $250,000 Thursday, December 22, 11
  • 27. EFFICIENT FRONTIER PLAYER PERFORMANCE PER $ 175 • Looking for the hitter RBI/$MM RBI/$MM to deliver the RBI’s 131 • There’s a pretty good 88 valuation of home- run hitters 44 A-Rod $23,000,000 $15,000,000 $7,500,000 $3,500,000 0 $1,500,000 $750,000 Salary $500,000 Thursday, December 22, 11
  • 28. EFFICIENT FRONTIER PLAYER PERFORMANCE PER $ 175 • Looking for the hitter RBI/$MM RBI/$MM to deliver the RBI’s 131 • There’s a pretty good 88 valuation of home- run hitters 44 A-Rod $23,000,000 $15,000,000 $7,500,000 $3,500,000 0 $1,500,000 $750,000 Salary $500,000 Thursday, December 22, 11
  • 29. MONEYADS THE STRATEGY Thursday, December 22, 11
  • 30. MONEYADS THE STRATEGY Baseball Digital Advertising We might want to buy runs, but we benefit We want to drive consumer action, but we can from players who get on base benefit by growing our remarketable audience • Purchase Established Players based on • Target campaigns to optimize audience different metrics – OBP vs. HR acquisition rather than actions, which demands a lower premium per impression • Selectively draft College Baseball players • Find pockets of inventory that we know rather than High School Players – stable from historical data will deliver high-quality statistics click-based audience at low cost • Buying High School Players, look for • Buy previously unseen media based on commonalities with the background of commonality with seen media that performs mature players who now have good well against our new target metrics “different metrics” Thursday, December 22, 11
  • 31. MONEYADS THE STRATEGY Baseball Digital Advertising We might want to buy runs, but we benefit We want to drive consumer action, but we can from players who get on base benefit by growing our remarketable audience • Purchase Established Players based on • Target campaigns to optimize audience different metrics – OBP vs. HR acquisition rather than actions, which demands a lower premium per impression • Selectively draft College Baseball players • Find pockets of inventory that we know rather than High School Players – stable from historical data will deliver high-quality statistics click-based audience at low cost • Buying High School Players, look for • Buy previously unseen media based on commonalities with the background of commonality with seen media that performs mature players who now have good well against our new target metrics “different metrics” Thursday, December 22, 11
  • 32. MONEYADS THE STRATEGY Baseball Digital Advertising We might want to buy runs, but we benefit We want to drive consumer action, but we can from players who get on base benefit by growing our remarketable audience • Purchase Established Players based on • Target campaigns to optimize audience different metrics – OBP vs. HR acquisition rather than actions, which demands a lower premium per impression • Selectively draft College Baseball players • Find pockets of inventory that we know rather than High School Players – stable from historical data will deliver high-quality statistics click-based audience at low cost • Buying High School Players, look for • Buy previously unseen media based on commonalities with the background of commonality with seen media that performs mature players who now have good well against our new target metrics “different metrics” Thursday, December 22, 11
  • 33. MONEYADS THE STRATEGY Baseball Digital Advertising We might want to buy runs, but we benefit We want to drive consumer action, but we can from players who get on base benefit by growing our remarketable audience • Purchase Established Players based on • Target campaigns to optimize audience different metrics – OBP vs. HR acquisition rather than actions, which demands a lower premium per impression • Selectively draft College Baseball players • Find pockets of inventory that we know rather than High School Players – stable from historical data will deliver high-quality statistics click-based audience at low cost • Buying High School Players, look for • Buy previously unseen media based on commonalities with the background of commonality with seen media that performs mature players who now have good well against our new target metrics “different metrics” Thursday, December 22, 11
  • 34. THE “EFFICIENT FRONTIER” DISPLAY ADVERTISING - DELIVERY - WINNING MEDIA Delivery=Spend/Budget 1.5 1.1 0.8 0.4 $1.60 $1.30 $1.00 $0.80 0 $0.60 $0.40 CPC Bid($) $0.20 $0.00 2nd Price Auction Model Google KW CPC Delivery Thursday, December 22, 11
  • 35. THE “EFFICIENT FRONTIER” DISPLAY ADVERTISING - DELIVERY - WINNING MEDIA Delivery=Spend/Budget 1.5 1.1 0.8 0.4 $1.60 $1.30 $1.00 $0.80 0 $0.60 $0.40 CPC Bid($) $0.20 $0.00 2nd Price Auction Model Google KW CPC Delivery Thursday, December 22, 11
  • 36. THE “EFFICIENT FRONTIER” DISPLAY ADVERTISING - DELIVERY - WINNING MEDIA Delivery=Spend/Budget 1.5 1.1 0.8 Diminishing Returns 0.4 $1.60 $1.30 $1.00 $0.80 0 $0.60 $0.40 CPC Bid($) $0.20 $0.00 2nd Price Auction Model Google KW CPC Delivery Thursday, December 22, 11
  • 37. THE EFFICIENT FRONTIER DISPLAY ADVERTISING - PERFORMANCE 4.00 1/CPA Perf 3.00 2.00 1.00 $5.50$6.00 $4.50$5.00 $3.00 $3.50 $4.00 0 $2.00 $2.50 $1.50 $1.00 Bid, CPC ($) $0.50 $0.00 Thursday, December 22, 11
  • 38. THE EFFICIENT FRONTIER DISPLAY ADVERTISING - PERFORMANCE 4.00 1/CPA Perf At low bids, we 3.00 win low quality impressions that have low CTR and 2.00 convert poorly 1.00 $5.50$6.00 $4.50$5.00 $3.00 $3.50 $4.00 0 $2.00 $2.50 $1.50 $1.00 Bid, CPC ($) $0.50 $0.00 Thursday, December 22, 11
  • 39. THE EFFICIENT FRONTIER DISPLAY ADVERTISING - PERFORMANCE At high bids, we buy premium 4.00 impressions that result in high CPC and CPA 1/CPA Perf At low bids, we 3.00 win low quality impressions that have low CTR and 2.00 convert poorly 1.00 $5.50$6.00 $4.50$5.00 $3.00 $3.50 $4.00 0 $2.00 $2.50 $1.50 $1.00 Bid, CPC ($) $0.50 $0.00 Thursday, December 22, 11
  • 40. THE EFFICIENT FRONTIER DISPLAY ADVERTISING - PERFORMANCE At high bids, we buy premium 4.00 impressions that result in high CPC and CPA 1/CPA Perf At low bids, we 3.00 win low quality impressions that have low CTR and 2.00 convert poorly 1.00 $5.50$6.00 $4.50$5.00 $3.00 $3.50 $4.00 0 $2.00 $2.50 $1.50 $1.00 Bid, CPC ($) $0.50 $0.00 Thursday, December 22, 11
  • 41. EFFICIENT FRONTIER FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA Thursday, December 22, 11
  • 42. EFFICIENT FRONTIER FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA • We use predictive models to discover statistically similar media to media not previously run Thursday, December 22, 11
  • 43. EFFICIENT FRONTIER FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA • We use predictive models to discover statistically similar media to media not previously run Thursday, December 22, 11
  • 44. EFFICIENT FRONTIER FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA • We use predictive models to discover statistically similar media to media not previously run • This allows us to identify optimal combinations of media sources, budgets to apply and bidding delivery and performance curves Thursday, December 22, 11
  • 45. EFFICIENT FRONTIER FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA • We use predictive models to discover statistically similar media to media not previously run • This allows us to identify optimal combinations of media sources, budgets to apply and bidding delivery and performance curves Thursday, December 22, 11
  • 46. EFFICIENT FRONTIER FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA • We use predictive models to discover statistically similar media to media not previously run • This allows us to identify optimal combinations of media sources, budgets to apply and bidding delivery and performance curves • At each node of the tree we have both spend, initial bid, delivery and performance models Thursday, December 22, 11
  • 47. EFFICIENT FRONTIER FINDING POCKETS OF HIGH PERFORMANCE EVEN IN UNSEEN MEDIA • We use predictive models to discover statistically similar media to media not previously run • This allows us to identify optimal combinations of media sources, budgets to apply and bidding delivery and performance curves • At each node of the tree we have both spend, initial bid, delivery and performance models Thursday, December 22, 11
  • 48. EXAMPLE ADVERTISING EMPLOYING THE STRATEGIES • These models are estimated dynamically and used to learn quickly 1.50 $300.00 $276.45 1.13 $225.00 Delivery=Spend/Budget $165.98 CPA($) 0.75 Commonality-Based $150.00 Intelligent Initial Bid $127.89 (Bid=$2.20) $69.15 0.38 $75.00 0 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 Data Points Delivery CPA Thursday, December 22, 11
  • 49. EXAMPLE Delivery=Spend/Budget ADVERTISING EMPLOYING THE STRATEGIES • These models are estimated dynamically and used to learn quickly 1.5 1.50 $300.00 $276.45 1.1 1.13 $225.00 Delivery=Spend/Budget 0.8 $165.98 CPA($) 0.75 0.4 Commonality-Based $127.89 $150.00 Intelligent Initial Bid (Bid=$2.20) 0 $69.15 0.38 CPC Bid($) $75.00 0 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 Data Points Delivery CPA Thursday, December 22, 11
  • 50. EXAMPLE ADVERTISING EMPLOYING THE STRATEGIES • These models are estimated dynamically and used to learn quickly 1.50 $300.00 $276.45 First Bid Optimization (Optimize Delivery Bid=$3.85) 1.13 $225.00 Delivery=Spend/Budget $165.98 CPA($) 0.75 Commonality-Based $150.00 Intelligent Initial Bid $127.89 (Bid=$2.20) $69.15 0.38 $75.00 0 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 Data Points Delivery CPA Thursday, December 22, 11
  • 51. EXAMPLE ADVERTISING EMPLOYING THE STRATEGIES • These models are estimated dynamically and used to learn quickly 1.50 $300.00 $276.45 First Bid Optimization (Optimize Delivery Bid=$3.85) 1.13 $225.00 Delivery=Spend/Budget $165.98 CPA($) 0.75 Commonality-Based $150.00 Intelligent Initial Bid $127.89 (Bid=$2.20) $69.15 0.38 $75.00 0 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 Data Points Delivery CPA Thursday, December 22, 11
  • 52. EXAMPLE Delivery=Spend/Budget ADVERTISING EMPLOYING THE STRATEGIES • These models are estimated dynamically and used to learn quickly 1.5 1.50 $300.00 $276.45 1.1 First Bid Optimization (Optimize Delivery Bid=$3.85) 1.13 $225.00 Delivery=Spend/Budget 0.8 $165.98 CPA($) 0.75 0.4 Commonality-Based $127.89 $150.00 Intelligent Initial Bid (Bid=$2.20) 0 $69.15 0.38 CPC Bid($) $75.00 0 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 Data Points Delivery CPA Thursday, December 22, 11
  • 53. EXAMPLE 6.00 ADVERTISING EMPLOYING THE STRATEGIES • These models are estimated dynamically and used to learn quickly 1/CPA Perf 1.50 4.50 $300.00 $276.45 First Bid Optimization (Optimize Delivery Bid=$3.85) 1.13 $225.00 Delivery=Spend/Budget 3.00 $165.98 CPA($) 0.75 Commonality-Based $150.00 1.50 $127.89 Intelligent Initial Bid (Bid=$2.20) $69.15 0.38 0 $75.00 Bid, CPC ($) 0 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 Data Points Delivery CPA Thursday, December 22, 11
  • 54. EXAMPLE ADVERTISING EMPLOYING THE STRATEGIES • These models are estimated dynamically and used to learn quickly 1.50 $300.00 $276.45 First Bid Optimization Second Bid Optimization (Optimize Delivery Bid=$3.85) (Optimize Performance 1.13 /Delivery Trade-Off, Bid=$2.00) $225.00 Delivery=Spend/Budget $165.98 CPA($) 0.75 Commonality-Based $150.00 Intelligent Initial Bid $127.89 (Bid=$2.20) $69.15 0.38 $75.00 0 $0 1 2 3 4 5 6 7 8 9 10 11 12 13 Data Points Delivery CPA Thursday, December 22, 11
  • 55. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING Thursday, December 22, 11
  • 56. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Batter Up! Thursday, December 22, 11
  • 57. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Batter Up! • Get on base! 7 ways! Thursday, December 22, 11
  • 58. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Batter Up! • Get on base! • Batter Up! Thursday, December 22, 11
  • 59. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Batter Up! • Get on base! • Batter Up! • Get on base! Thursday, December 22, 11
  • 60. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Batter Up! • Get on base! • Batter Up! • Get on base! • Get the Slugger up!!... Thursday, December 22, 11
  • 61. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Batter Up! • Get on base! • Batter Up! • Get on base! • Get the Slugger up!!... • ...and run them in! !!! Thursday, December 22, 11
  • 62. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING Thursday, December 22, 11
  • 63. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING Thursday, December 22, 11
  • 64. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Construct the media plan... • ...to efficiently acquire retargetable audience Thursday, December 22, 11
  • 65. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Construct the media plan... • ...to efficiently acquire retargetable audience • Keyword Campaigns - optimized for click- generation Many ways! • Site Targeted Campaigns - targeted to placements optimized to get clicks for advertiszer Thursday, December 22, 11
  • 66. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Construct the media plan... • ...to efficiently acquire retargetable audience • Keyword Campaigns - optimized for click- generation • Site Targeted Campaigns - targeted to placements optimized to get clicks for advertiszer • Look-a-like Users/Behavioral Segments • Social Media and Search Thursday, December 22, 11
  • 67. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Construct the media plan... • ...to efficiently acquire retargetable audience • Keyword Campaigns - optimized for click- generation • Site Targeted Campaigns - targeted to placements optimized to get clicks for advertiszer • Look-a-like Users/Behavioral Segments • Social Media and Search • Retarget! Thursday, December 22, 11
  • 68. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Construct the media plan... • ...to efficiently acquire retargetable audience • Keyword Campaigns - optimized for click- generation • Site Targeted Campaigns - targeted to placements optimized to get clicks for advertiszer • Look-a-like Users/Behavioral Segments !!! • Social Media and Search • Retarget! • ..and convert the audience! Thursday, December 22, 11
  • 69. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Construct the media plan... • ...to efficiently acquire retargetable audience • Keyword Campaigns - optimized for click- generation • Site Targeted Campaigns - targeted to placements optimized to get clicks for advertiszer • Look-a-like Users/Behavioral Segments • Social Media and Search • Retarget! • ..and convert the audience! Thursday, December 22, 11
  • 70. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING • Construct the media plan... • ...to efficiently acquire retargetable audience • Keyword Campaigns - optimized for click- generation • Site Targeted Campaigns - targeted to placements optimized to get clicks for advertiszer • Look-a-like Users/Behavioral Segments • Social Media and Search • Retarget! • ..and convert the audience! Thursday, December 22, 11
  • 71. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING Conventional Approach • Construct the media plan... Targeted Campaign • ...to efficiently acquire retargetable audience • Keyword Campaigns - optimized for click- Impressions generation Driving traffic through to one-time conversion. • Site Targeted Campaigns - targeted to placements optimized to get clicks for advertiszer Treat first-time and returning visitors the same • Look-a-like Users/Behavioral Segments Clicks • Social Media and Search • Retarget! • ..and convert the audience! Actions Thursday, December 22, 11
  • 72. MONEYADS FROM BASEBALL TO DISPLAY ADVERTISING MoneyAds Approach • Construct the media plan... Broad Audience Acquisition Followed by • ...to efficiently acquire retargetable Retargeting audience • Keyword Campaigns - optimized for click- Driving Traffic -> Building Impressions generation Retargeting Pool • Site Targeted Campaigns - targeted to placements optimized to get clicks for advertiszer • Look-a-like Users/Behavioral Segments Retargeting established cookie pool, with message contextualized Clicks/Cookies • Social Media and Search to previous site visits, to drive conversion • Retarget! • ..and convert the audience! Actions Thursday, December 22, 11
  • 73. EXAMPLE CONVENTIONAL APPROACH Site Content Impressions Retargeting Campaign on Campaign current cookie pool eCPM:! $1.50 eCPC: !$1.09 Clicks eCPA:! $184.92 eCPM:! $2.92 eCPC: !$2.36 eCPA:! $73.02 Actions Thursday, December 22, 11
  • 74. EXAMPLE MONEYADS APPROACH Thursday, December 22, 11
  • 75. EXAMPLE MONEYADS APPROACH Audience Acquisition Campaign Impressions eCPM:! $1.50 eCPC: !$1.09 Retargeting campaign on Clicks/Cookies expanded cookie pool eCPM:! $2.92 eCPC: !$2.36 eCPA:! $73.02 Actions Conversion Rate: 3.23% Thursday, December 22, 11
  • 76. EXAMPLE MONEYADS APPROACH Audience Acquisition Campaign Impressions Overall Performance eCPM:! $1.50 eCPC: !$1.09 Retargeting campaign on CPCacquisition + CPCretargeting Clicks/Cookies eCPA = expanded cookie pool Retargeting Conversion Rate eCPM:! $2.92 = $106.95 eCPC: !$2.36 eCPA:! $73.02 Actions Conversion Rate: 3.23% Thursday, December 22, 11
  • 79. TAKEAWAYS 1 - Focus on metrics that count towards a more balanced view of marketing success - value all the methods for getting on base. Thursday, December 22, 11
  • 80. TAKEAWAYS 1 - Focus on metrics that count towards a more balanced view of marketing success - value all the methods for getting on base. Thursday, December 22, 11
  • 81. TAKEAWAYS 1 - Focus on metrics that count towards a more balanced view of marketing success - value all the methods for getting on base. 2 - Be measured about what you buy - buy college rather than high-school players. Thursday, December 22, 11
  • 82. TAKEAWAYS 1 - Focus on metrics that count towards a more balanced view of marketing success - value all the methods for getting on base. 2 - Be measured about what you buy - buy college rather than high-school players. Thursday, December 22, 11
  • 83. TAKEAWAYS 1 - Focus on metrics that count towards a more balanced view of marketing success - value all the methods for getting on base. 2 - Be measured about what you buy - buy college rather than high-school players. 3 - Diversify your talent - not everyone can afford to buy A-Rod! Thursday, December 22, 11
  • 84. TAKEAWAYS 1 - Focus on metrics that count towards a more balanced view of marketing success - value all the methods for getting on base. 2 - Be measured about what you buy - buy college rather than high-school players. 3 - Diversify your talent - not everyone can afford to buy A-Rod! Thursday, December 22, 11
  • 85. TAKEAWAYS 1 - Focus on metrics that count towards a more balanced view of marketing success - value all the methods for getting on base. 2 - Be measured about what you buy - buy college rather than high-school players. 3 - Diversify your talent - not everyone can afford to buy A-Rod! 4 - You don’t need to spend a lot to be successful - use focused strategies and robust data. Thursday, December 22, 11
  • 86. THANK YOU! odowns@adready.com @mathandporsches Thursday, December 22, 11