By Chris Lee

Online advertising is big money. The 2009 survey from the European Interactive Advertising Association (EIAA) indicates that an ever-increasing slice of ad budget is moving online. The group recently reported an 18 per cent rise in online ad spend which is expected to continue, with substantial growth both this year and next.

At the forefront of this revolution are ad network optimisation firms like Improve Digital. The company’s CEO Joëlle Frijters co-founded Improve Digital in 2007 to help publishers optimise the ad space available on their sites.

NMK’s Chris Lee caught up with Frijters to gauge how ad network optimisation works and the challenges ahead in 2010 for the industry.

Just quickly, what does Improve Digital do and how does it differ from other online ad firms?

Improve Digital is one of the very few companies that make up the emerging 'ad network optimisation' sector of the online advertising industry. Very simply, it helps online publishers to make more money from their advertising inventory.

Specifically, Improve Digital helps premium online publishers to sell their unsold ad space to the ad network or ad exchange offering the highest price. Market sector figures estimate that this accounts for up to 80 per cent of online publishers' total inventory. This is in part fuelled by the growing amount of user-generated content, which creates more web pages and therefore more advertising space.

One key to Improve Digital's success is sophisticated technology, which is developed by its US-based partner, PubMatic. This puts in place an automated process, or 'auction' mechanism, for online publishers that makes decisions in real-time about which ad networks or ad exchanges will pay the most for each page impression, or view. This sees increased revenues of between 50 and 300 per cent.

Improve Digital also recognises that “one size does not fit all” and it needs to have a local presence in each of the geographical regions in which it works. This enables it to provide specific regional market knowledge and personalise relationships.

You’ve described the perception of ad network optimisation as a “dark art”. Why is that and how do you combat that perception?

Essentially, ad network optimisation is a new element of the online advertising industry, which in itself is often still perceived as relatively new, and there is a lack of readily-available information on the topic. At the same time, the digital marketing landscape, and the technology that enables it, continues to change rapidly. Combine these facts and it is not hard to see why understanding ad network optimisation can seem a daunting prospect, and a discipline about which it is hard to learn.

So there is currently a paradox: technology is now available that makes it straightforward to maximise advertising revenues at the same time as maintaining brand control. However, as with any new industry, there is a lack of in-depth experience and knowledge available, which can make it appear threatening.

What success stories can you point to?

Improve Digital's success stories of 2009 include: a large international television and radio broadcaster saw an increase in overall eCPM (cost per thousand page impressions) of 106 per cent; an international classified site has grown its overall eCPM by 118 per cent; a large classifieds portal increased its revenues by 122 per cent within a three-month period; and a key social media player saw its revenues rise by 80 per cent.

What are the main challenges facing firms hoping to use the Web to advertise in 2010?

Organisations wanting to benefit from advertising online need to ensure that they protect their brand. As consumers spend more and more time online on a variety of activities, the number of web advertisements has also increased. However, this means that advertisers need to have complete confidence that their ad only appears on reliable, safe and relevant websites where there is no risk of their brand being damaged.

At the same time, premium publishers face the same challenge. They only want to run advertisements from reliable brands in order that the image of their website, and those of their advertising customers, is protected.

An additional issue from the perspective of online publishers is the pressure to maximise their advertising revenues – often to justify their existence. Never has this been more pronounced than in today's tough economic climate when, despite a cautiously positive outlook, advertising budgets are uncertain and publishers are fighting for survival.

However, as outlined above, the lack of widespread and in-depth knowledge about online advertising can make it hard to make the most of the opportunities that it offers. Publishers want to benefit from the advertising budgets available in ad networks and ad exchanges, but find managing and optimising these returns time-consuming and difficult.

Will the online ad landscape be wildly different in 2010 compared to last year? If so, what’s changed?

The online ad landscape will continue to evolve and become increasingly mature as new technologies and new business models are brought to the table. In our opinion, there are two factors that will become increasingly important in 2010: real time bidding (RTB) and the use of data.

Real time bidding is the automated system that allows ad networks and exchanges to bid in real time for each page impression, with publishers selling to the highest bidder. Using up-to-date information enables better targeting, tracking and adjustment of the message so that the advertisement served is relevant to the person viewing it. In addition, because RTB can be carried out across multiple suppliers (ad exchanges and networks) by one source (Improve Digital, for example), it will help to reduce the effect of the current fragmentation of media. By making the media buying process less complex and more efficient, it will also make it less expensive, thereby encouraging advertisers to increase their online budget.