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ComScore + AdXpose is the Most Important Deal in Online Advertising in Years

The online advertising industry has reached an inflection point. No better is this critical moment in digital advertising portrayed than in the acquisition of AdXpose by comScore for $22 million.

CMOs are feeling increasingly comfortable diverting or devoting larger percentages of their budgets online, convinced that the benefits of online advertising are as revolutionary as promised. Brands spend tens of billions of dollars online, and they expect results.

How campaign performance is measured varies by brand or agency; some seek simple impressions, others seek clicks and conversions. One of the key selling points of online advertising is the ability to measure campaign performance against objectives in real-time. Tracking technologies record every visit and every impression, but the validity of these measurements have recently come into question. A major concern is falsely inflated impression counts, artificially inflating CPM prices for media buyers. Impressions are traditionally counted in tandem with page visits, which has proven to be a deeply flawed system of measurement.

AdXpose is changing everything.

Led by CEO Kirby Winfield, AdXpose verifies impressions by telling advertisers where their ad was placed on the page and, if below the fold, whether or not a visitor scrolled down to see the ad.

“If you’re counting every impression as viewable when only 50% are viewable, then every metric that you’re using to value your media is inefficient and inaccurate,” Winfield said. “You’re pulling in a bunch of impressions that have no chance to be viewed.”

Adxpose Logo

The company also identifies the content the ad was placed next to, an important tool for CMOs demanding their ads be served beside “brand safe” content. Winfield argues the consolidation of advertising measurement data is vital if digital wants to slice into the holy grail of ad dollars, television.

“You have to go to one vendor to get viewabililty data. Another for survey data. A vendor to get audience verification. Another to get conversation data,” Winfield said. “You’re taking a buying process that is already 4-5x more difficult than buying TV and making it 4-5x more difficult to get metrics.”

comScore CEO Magid Abraham believes a pricing revolution is underway.

“Prices are going to adjust. All of the junk inventory is going to be significantly slashed,” Abraham said. “If you’re charging $.25/CPM but only 20% are visible, then the unit price is actually $1.25. We will move from a medium from where there is no scarcity to an industry where there is scarcity.”

comScore and AdXpose serve as a powerful duo at a critical juncture. As TechCrunch’s Erick Schonfeld astutely notes, “it’s not about clicks and conversions, it’s about attention.” Innovation in online advertising is at an all-time high; it’s no longer simply text and banner ads. Rich media, branded content and social solutions are transforming the industry with the aid of real-time exchanges.

Ferociously accurate data is the catalyst that can launch online advertising to the forefront of brand spending in the digital era. CMOs are demanding stronger performance, media buyers are getting smarter, auditors are more closely scrutinizing campaign performance, and this industry evolution is good for everyone. Brands get accurate, verified audience data, and publishers are able to charge premium CPMs through guaranteed, validated ad presentation.

The revolution has begun, and AdXpose is poised to create a shakeup with financial implications that will dwarf its $22 million price tag.

Google Dives Head First into Display Advertising

[UPDATE 10/14/10] Google shares soar as the company reports impressive 23% YoY growth after the closing bell. CEO Eric Schmidt attributes growth to strength of Google’s core businesses and “significant momentum” in its newer display and mobile advertising businesses. For the full report from Google, click here.

In a move intended to diversify their revenue stream, Silicon Valley giant Google launched a sprawling multimedia campaign named “Watch This Space”, announcing their increased efforts to grow their business in the display advertising sector.

There was a time when Google could do no wrong, and investors witnessed the search engine’s share price rocket into the stratosphere, reaching its peak at $741.79 in November 2007. Google shares are down approximately 16% YTD ($525.62) and many indicate this is the result of growing concern over the company’s dependence on search. As the New York Times highlighted in September, over 90% of Google’s revenues come from text ads.

The new campaign includes a massive interactive billboard in Manhattan and seemingly omnipresent display ads across the web displaying bold messages: “This Space Can Be Smarter” and “Display ads are big. They’re gonna be huge.” The ads often occupy every open display ad slot on their platform sites, making it difficult for readers to miss.

Google Ad Campaign - Bloomberg

Earlier this year, Facebook surpassed long-time industry leader Yahoo! to become the leading publisher of display ads in the United States with 16.2% of the market. Yahoo! sits in second with 12.1%, and Microsoft has a 5.5% share to hold third place. (It is critical to note that comScore does not include ads from Yahoo! and Microsoft’s partner networks, which would undoubtedly vault Yahoo! beyond Facebook as number one, and advertisers pay significantly less to display ads on Facebook than Yahoo! and Microsoft.)

Notice the glaring omission? Google is nowhere to be found. Back in 2007, when Yahoo! acquired Right Media for a total of $725 million, the display ad market was growing but the future of success was not set in stone. The fear was that with a wealth of new websites competing for visitors and advertisers, the average price of display ads would decrease. As it turned out, the fear was not to be realized, as ad exchange services like Right Media and Google’s DoubleClick increased the average price of ads as a result of the tracking information and user behavior metrics they were able to provide.

With display advertising now solidified as a powerful revenue source, growing faster than the overall ad market, Google is at a key competitive disadvantage by not having a meaningful presence in the market. These new efforts indicate Google’s recognition that they can capitalize on a rapidly growing advertising sector by leveraging their incredibly talented human resources, expansive networks, and powerful financial position. Its search dominance not in doubt, Google needs a blockbuster new business unit to reassure investors that they aren’t a one-trick pony.

Will Google become a major player in the display advertising sector? Share your thoughts with a comment below.