Wundelroop at Ad:Tech Paris

I met  Michel Kleindl and discovered Wunderloop at AlwaysOnMedia NYC in 2007. He was kind enough to spend some time with me and to give an interview to this blog. Since then, Wunderloop seems to have been very successful in making its case for behavioral targeting, womething that was not that obvious back when I first heard about them. Some of the trends were clear, but not everyone agreed that behavioral was the way to go or that it would be feasible and accepted by people online. That's a good example of a business quest that is pursued with succcess by someone who gladly calls himself an "fossil" and a "dinosaur" because he's been working in the field of online marketing wince 1994 (Gosh, that does sound like prehistoric times!).
Today, Michael is here to speak about what he calls six megatrends in the industry and his views should be worth listening to. Here are his trends:

1. Internet going very strong: Internet adoption has strong momentum, broadband fixed and mobile connexions are the norm and the average amount o time we all spend online is growing, which leads advertisers to allocate a larger share of their budgets online to reach more than 20% by 2010 according to the IAA. Young people are spending more time online than in front of traditional TV sets, while e-commerce is finally becoming big business. Online ad sepnd in Europe will be 15 billion euros this year and grow to 20 billion euros in 2009 and 25 billion by 2010 according to ZenithOptimedia. That's just huge and for anyone who is looking at figures, that's nothing new under the sun.



2. Eyeball aggregation: business models are moving to being consumer driven instead of property driven. Portals are dead because the audience is increasingly fragmented and autonomous. Ad networks will play a central role in securing necessary aggregation for advertisers to achieve reach in a world that will be essentially people centric and mass-customized. That's a great insight and it has huge implications for some of my customers.



3. Multiplatform business: no longer just web pages: online brochures and static sites are clearly not relevant in today's environment essentially because they provide no interactivity and therefore no feedback loops for brands to build a better understanding of their markets. Between February 2006 and February 2007 the reach of the top ten German portals dropped from 28% of the online population to a paltry 14%. The web in now really enabled for multimedia and therefore brands need to have an integrated and coordinated approach to the various platforms (blogs, social networks, video platforms, online on-demand TV programs as enabled by companies like like Move Networks, interactive TV schemes like Joost, mobile...) where their customers may be active.



4. Global / Pan-European scale of business: advertising budgets are becoming pan-European and pan-European budgets are growing much faster than the industry average (+89% between 2005 and 2006 and + 71% between a year later, with growth in 2008 likely to be even greater according to IAA). The implication of this trend is enormous in terms of minimal critical mass necessary for a business to grow and probably one of the strategic justification for various forms of consolidation from industry driven M&A to purely financial roll-up schemes.



5. Video advertising will be big with Jupiter Research expecting video advertising to exceed 1 billion US dollars by 2011 representing over 5% of total display advertising. That's big



6. Targeting: targeting is the crux according to Kleindl (well, to be fair I would not expect him to say ant less, but that's fair game and the logic is impeccable). Kleindl believes this is a paradigm shift where advertisers who were accustomed to buy space (context oriented) will have to learn to focus on people's behaviors ("it's about people, not pages"). Reflecting about the empowerment of an ever more fragmented consumer population AOL's Ron Grant says "we need a way for advertisers to take advantage of that fragmentation" and of course Kleindl adds "targeting simply works". More importantly he makes a powerful point in saying that "there is no reason why any campaign should not be targeted". Aside from Michael's vested interest in the point, I think it is extremely valid and you'd better bet on it. Now of course, the business and legal environment is likely to become more difficult especially in Europe as governments become increasingly interested in new marketing methods and tools chiefly because of their focus on privacy. A huge contradiction: people spend 5% of the time searching and 40% on content and yet advertisers spend 40% of their budgets on search versus 30% on sites with online content. There's an opportunity stemming from a major inefficiency of the market! According to figures from GroupM, in B2B if you buy untargeted bulk ads, CPM costs 1 to 2 euros, while CPM for very well targeted places the cost is 50 to 150 euros. This is also an inconsistency, because content does not necessarily mean much in terms of the individual visitor's attributes  and preferences as expressed through their behavior. Michael's conclusion of course is that Wunderloop has a very bright future, something I tend to believe. In 1995, 94% of ad euros web to only ten top destinations online and it's been dropping very significantly ever since, even though metrics are difficult in that field. That means big fragmentation and also a big opportunity to reach users on a variety of place, with, I suppose, big value being derived from a consolidated understanding of behavioral patterns, but I don't know whether Michael would go that far in the reasoning.

Again some very interesting insights by a great insider of the industry, who seems like a very agile dinosaur indeed IMHO.