Downstream Marketing acquired by Efficient Frontier Inc.

Leading digital performance marketing provider partners with global leader in digital marketing solutions

SYDNEY, Australia – October 18th, 2011 – Downstream Marketing, Australia’s largest digital performance marketing provider, announced today that it has been fully acquired by Efficient Frontier, the global leader in digital marketing solutions. The partnership provides an opportunity to accelerate growth in existing channels as well as across emerging mediums such as social and mobile. Deal terms were not disclosed.

“The investment by Efficient Frontier represents a key milestone for Downstream Marketing as we capitalise on the huge market opportunity that exists in Australia for brands across search, social & display advertising,” said Stephen Knowles, CEO and Founder of Downstream Marketing. “By combining forces with Efficient Frontier, we have further cemented our position as market leader and will be able to deliver even better technology, insights & services to our clients.”

Downstream Marketing has been a partner of Efficient Frontier since 2006, licensing their platform and providing search, social and display marketing for its clients.  Downstream Marketing has captured significant market share, having grown twice as fast as the general market.  It serves many leading brands in the region including American Express, Wotif, Lenovo, iSelect, Avis, Suncorp, Air NZ, WeightWatchers and Westpac, delivering technology, strategy, insights and execution across digital performance media channels.

 “For the past 5 years, Downstream Marketing has successfully deployed Efficient Frontier’s platform to provide strategic advantage in digital marketing for our clients,” said Steve Knowles, CEO of Downstream Marketing. “We’re excited to officially join forces to expand our product offerings in our market as well as provide additional global reach to Efficient Frontier’s existing client base.”

“We are excited to deepen our partnership with Downstream Marketing, a true leader in this market,” said David Karnstedt, CEO, Efficient Frontier.  “We’d like to welcome the entire team to the Efficient Frontier global family.”

The Australian Interactive Advertising Bureau (IAB), reports that online advertising expenditure in Australia reached $2.45 billion, up 20% YOY in the 12 months ending June 30, 2011.   Search was up 23% YOY, and Display was up 12% YOY. The online advertising business is on track to surpass $3 billion in 2012.

About Downstream Marketing

Downstream Marketing is Australia’s leading provider of digital performance marketing solutions; managing search, social and display advertising for a range of clients across the financial services, travel, technology, telecommunications and online retail sectors. Utilising market leading optimisation technologies developed by Efficient Frontier, Downstream Marketing maximises performance from digital marketing investment by household brands in Australia & New Zealand. Headquartered in Sydney, Downstream Marketing services clients located across Australia and New Zealand.

About Efficient Frontier
Efficient Frontier is a leader in online digital marketing, managing search marketing, display and social media campaigns for advertisers and agencies around the world. Efficient Frontier currently manages more than $1 billion in annual digital marketing spend on behalf of its clients globally.

In May 2011, Efficient Frontier acquired Context Optional, the leading provider of social marketing management solutions for global brands on the leading social networks, including Facebook and Twitter. Context Optional’s Social Marketing Suite enables global enterprises to build, manage and measure their brand presence, and engage their fans to increase mindshare, word of mouth, customer loyalty and website traffic. Together, Efficient Frontier and Context Optional offer a complete solution for brands to acquire, activate and drive value from fans on Facebook and Twitter.
Efficient Frontier is headquartered in Sunnyvale, California, with offices in New York, Chicago the United Kingdom, France, Germany, and India, and technology licensing partnerships in Japan, Hong Kong and Australia. Context Optional is headquartered in San Francisco. Efficient Frontier is a privately held company with funding from Redpoint Ventures and Cambrian Ventures. For more information on Efficient Frontier, visit http://www.efrontier.com and for Context Optional visit http://www.contextoptional.com.

Media Contacts:

Stephen Knowles

CEO

Downstream Marketing

02 9295 5110

steve@downstreamonline.com.au

Efficient Frontier – World’s Most Advanced DSP

Downstream Marketing is the exclusive licensee of Efficient Frontier in Australia & New Zealand. Our technology license, together with our great campaign management and strategy team have developed some of the most advanced and profitable Search campaigns for some of Australia’s biggest and most digitally advanced brands. Efficient Frontier has allowed us to develop optimise  some of the most complex campaigns and ROI models across the globe. Anyway back to Efficient Frontier.

Efficient Frontier had established itself as the world’s most advanced Search Marketing technology long ago, bringing a fundamental change to the Search technology landscape by developing advanced predictive models for Search investments based on Modern Portfolio Theory (MTP) or for the nerds among us Markowitz Theory. In the last few years though, through some serious product development, Efficient Frontier has morphed itself from a Search only platform into becoming the most advanced Demand Side Platform. Efficient Frontier is now capable of simultaneously managing Search, Performance/Biddable Display and Facebook  together. This advancement to manage, forecast and execute across multiple digital performance channels is a groundbreaking advancement for ROI focused marketers by being able to uniquely understand and attribute value in combination to all channels that lead to a conversion.

To discover more about Demand Side Platforms and Downstream’s unique technology offering here in Australia find out more here http://www.efrontier.com/

The Economics of a click vs. impression

Today no one can run from the economic downturn we are all facing. As the credit crunch continues to tighten its grip on the economy we are seeing advertisers demand more from every dollar they invest. In recent years we’ve seen the rise and rise of digital marketing as an effective way for brands to invest their dollars due to two key factors; the channel is the fastest growing on the planet and perceived level of accountability it offers. What is beyond me though is the lack of transparency and understanding most clients have around their digital investments and the blind faith they place in the reports they get from their media agencies. Without wanting to be alarmist most acquisition and engagement focused clients could save upwards of 30% of their digital display budgets with little or no impact what so ever on their campaigns performance. Even worse they can in most cases reinvest this wastage into performance based media and Search for a 50% – 200% increase in campaign performance.

The problem…

The primary problem is most (not all) campaign performance reports delivered by media agencies use blended metrics of post impression vs. post click success events (CPA etc). In some cases I’ve seen this blended metric as high as 95% post impression and 5% post click. With cookie windows of up to 60 days this introduces a high level of bias into reports. But today the problem goes deeper, some digital media plans are unethically designed to introduce a cookie spraying methodology into the media plan. Cookie spraying is a deliberate tactic to buy as much low performing, low placement, cheap remnant digital inventory  as possible. This type of media strategy can ensure upwards of 70% of an available Internet population ( e.g. Australian internet users) ALWAYS have a cookie on their machine.  In some instances I’ve seen a single client drop 4 billion post impression cookies in a 12 month period, with only 13 million active  Internet users in Australia you do the math. So a user may never ever click, engage or even see a brands ad, navigate to the brands site either by direct entry of another medium ( e.g. Search) and the value is attributed on a post impression basis to an advertising / media plan that had little or no effect on consumer behavior. Think how many times a consumer may visit a social networking site (www.facebook.com and www.myspace.com), use an IM program ( Microsoft Messenger, AOL Chat etc), use a free email service ( sponsored ad email) (Yahoo mail, Hotmail etc), or check the news or stocks from their favorite site. Every time they do this a cookie is dropped on a users machine.

The economic impact:

1. Clients are relying on false or skewed data to make digital media investment decisions
   
2. Clients are double paying for performance in some instances ( i.e. paying an affiliate commission, the cost of an impression or a Search click) – lack of ability to de-dupe
   
3. Clients are missing their true value creation opportunity as their campaigns are being optimized and planned on fictitious data sets and not investing in high yielding digital media
   
4. Some media agencies are falsely claiming media rebates and commissions they are not morally entitled to
5. Some media agencies are doing this by deliberate design to meet their contract commitments to networks and publishers to gain OMI (other media income) and discounted wholesale rates that they mark up due to a group buy – all in the face of not operating in a clients best interest and not disclosing this as part of their strategy ( why would they?)

The impact on performance numbers

The impact on this practice on a clients performance numbers is significant. In some cases I’ve seen digital success metrics overstated by by to a factor of up to 20 times.

Example

Industry                              Blended Metric                                Post Click Metric(actual CPA)

Telco                                    $86 CPA                                             $679 CPA

Credit Card                         $54  CPA                                            $1894 CPA

Homeloan                          $205 CPA                                            $29,452 CPA

The Solution

1. Base all value attribution ONLY to last cookie (last cookie should win in all circumstances)
2. Understand the difference both post click & post impression metrics. A post click engagement is worth SIGNIFICANTLY more than an impression.
   
3. Have a common cookie window policy across all digital mediums (display, affiliate networks, search etc)
   
4. Understand conversion latency (time from click to conversion – they differ greatly between digital mediums)
5. De dupe conversions / cookie pools etc
   
6. Understand the consumer journey and what exposure a consumer has had to all digital advertising (what has lead to what)
   
7. In the case of post impression metrics attribute value only within a very finite window ( i.e. 6, 12, 24 hrs from LAST impression)
   
8. Apply a universal set of data business rules to digital value attribution
   
9. Break down your media buy in transparent terms. Understand what components of the digital media buy is CPM, ROS (run of site) CPC, Remnant inventory etc.  This will allow you to understand cookie spraying if it is going on. Also get all performance reports broken down on the same basis, the results may shock you.
   
10. Optimize a campaign investment on your value creation terms, not the agencies hidden objectives of OMI, media commissions, groups deals etc.

Examples of Cookie Spraying – you placement / low yield inventory

Woolworths Everyday Money - Ad at bottom of page below the fold, little or no post click value

Low yielding HSBC ad - significantly below the fold, little or chance of engagement or a click

Europcar - Display ad at bottom of page significantly below the fold

Economics of site design

Today it seems every integrated campaign has a micro-site, as it should. Having a great digital experience that consumers can navigate to increases brand engagement, understanding, preference, consideration and should provide entertainment or a compelling experience that enhances a brand or products success. On-line success can be defined by a multitude of different metrics or on-line success events. The real question is how to create a disproportional impact from a creative idea, media budget or campaign mechanic.

What I find surprising though today are the number of sites that can’t be found by consumers through Search engines. The offending culprit all to often is bad site design, a lack of understanding in how the Search engines index and rank sites and more often then not a digital creative directors complete obsession with flash, justified by “creative priorities” outweighing effectiveness goals. The truth of the matter though is creativity and consumer experience does not have to preclude a sites ability to found and indexed.

Why is Search so important?

Like it or not, Search is the primary way consumers choose to navigate the web. In Australia more than 90% of consumers find new sites through Search engines, not expensive banner ads or sponsored emails with very high CPC’s and low CTR’s. Having to rely on expensive, low yielding digital media makes a campaigns life span finite and limits reaching the heights of ROI.

Search engines are also the easiest point of interaction for consumers, “I see an ad (TV, print, outdoor, on-line content, work of mouth – WOM etc) and I go straight to a query box and get exactly what I asked for. Search engines provide engaged, relevant results for engaged consumers when they are actively seeking out specific information. Search (both SEO & SEM) is also the lowest cost channel to engage consumers. Effectiveness studies, has proved time & time again that Search is 10 to 15  times more cost efficient and creates more value than digital display or other types of digital media.

Even if the channel planner has been insightful enough to include paid Search (SEM / PPC) the campaign will suffer from a low quality score as the site will not be able to be spidered, indexed etc and this leads to a poor quality scores from the Search engines. This then results in artificially high CPC’s and will burn budget very quickly. The whole quality score issue though is a topic for post, so more on that later.

The Answer

Ensure any new site build is built in a HTML with flash elements embedded within site. Also make it a mandatory for the site have a full HTML back up version for non flash users (even though flash penetration is 97%+). Also ensure all sites have HTML site maps the spiders and bots can read and index.

This will allow:

1. Site to be indexed properly for natural Search purposes, if it is full flash it NEVER will be indexed. Take advantage to the low / no cost traffic available. Remember around 70% of consumers click on natural Search rankings and 90%+ of all consumers use Search engines to navigate the web. You do the math, this is a big audience you can’t neglect through bad process, development skills, creative priorities and decision making.
2. Better SEM / Paid Search results as the site will be awarded a positive quality score – your budgets will go considerably further, resulting in larger more engaged audiences and better ROI for your total campaign. Great for effectiveness case studies and your client will think your working in their best interest, not yours or the media agency’s.
3. Take advantage of the massive trends in mobile device web surfing. As devices such as the iPhone get better and better, penetration increases and mobile data costs fall more consumers will be both Searching and visiting sites away from the desktop. Complete flash sites can’t be read on any mobile device currently. Take advantage of this huge consumer trend and don’t neglect your traffic.
4. You to justify larger creative / development budgets because your campaign will be more effective. Break the 80/20 rule where the majority of a client budget goes into costly inefficient media. The fact is you can probably do an even better job with 50% of the budget going into performance media and Search, while allocating the remainder to a better more engaging site.

Great examples of Campaign Micro-sites

Optus Broadbandmenu.com

Optus Broadband Menu

Optus Broadband Menu

What the Search Engines can see

Optus Broadband - Search Engines can index content

Macquarie Bank - Platinum Credit Card

Macquarie Bank - newformofcurrency.com

Macquarie Bank – discoverable by Search Engines

What the Search Engines can see

Room for Improvement

The Lynx Effect

Search Engine – Google Snipett (no site description)

Lynx - Googles page description

What we see

The Lynx Effect

What Search Engines can see & index

Lynx Effect - Search Engines see nothing

Rexona Million Balls

Search Engine page description

Rexona

http://millionballsmission.com.au/

What the Search Engines see

millionballsmission.com.au - Invisible to Search Engines

You be the judge on what makes more sense from a marketing ROI perspective.