Trend Tak­ing the guess­work out of ad pric­ing

YAP uses big data and ar­ti­fi­cial in­tel­li­gence to trans­form the on­line ad­ver­tis­ing space.

Finweek English Edition - - In Brief -

By Glen­neis Kriel

in the 0.04 sec­onds it takes for a web­site to open, the browser is auc­tioned off to hun­dreds of ad­ver­tis­ing agen­cies. While ad­ver­tis­ing agen­cies have their own data to de­ter­mine the value of a browser, on­line me­dia pub­lish­ers have had rel­a­tively lit­tle in­sight into their au­di­ence. Most charge stan­dard­ised in­dus­try rates re­sult­ing in missed money-mak­ing op­por­tu­ni­ties.

To solve this prob­lem, Paul Stem­met and Kevin Day­ton de­vel­oped YAP, a com­pany that sifts through thou­sands of data points to al­low me­dia pub­lish­ers to “sell browsers” for bet­ter prices.

“Our en­gine al­lows com­pa­nies to run 80% fewer ad­ver­tise­ments against 50% higher rev­enue, by giv­ing the pub­lish­ers a bet­ter in­di­ca­tion of the value of a browser. The browser ben­e­fits from only see­ing ad­ver­tise­ments that ap­ply to them,” Stem­met says.

The en­gine also of­fers a real-time dis­play of cam­paign per­for­mance, al­low­ing pub­lish­ers to make more in­formed de­ci­sions in terms of con­tent plan­ning.

The idea was born in 2013 while Stem­met took a twom­onth sab­bat­i­cal af­ter his other com­pany, Shinka, lost its main client, Mxit. The rec­ol­lec­tion of how the Bank of Eng­land went from merely print­ing money into be­com­ing fi­nanciers de­scribed in Fe­lix Martin’s book, Money: The Unau­tho­rized Bi­og­ra­phy, caught Stem­met’ s imag­i­na­tion.

Ac­cord­ing to the book, Sir Thomas Cook vis­ited the is­land of Yap, where peo­ple mea­sured wealth in huge lime­stone-pol­ished stone wheels, called rai. Part of the stones were lent out, with­out the stone be­ing moved be­cause of its heav­i­ness, which re­sulted in a com­plex IOU sys­tem.

“The story in­spired me to cre­ate a so­lu­tion that would bring more trans­parency to the val­u­a­tion of browsers that visit on­line pub­lish­ing sites,” Stem­met ex­plains.

The busi­ness

YAP is not only a ref­er­ence to the use of the rai, but also stands for Yield Au­to­ma­tion Plat­form be­cause it “uses big data, ad­vanced tar­get­ing al­go­rithms and ar­ti­fi­cial in­tel­li­gence to max­imise yield for pub­lish­ers”.

Data is col­lected from var­i­ous sources, in­clud­ing Stats SA, Blue Kai, Or­a­cle Data Cloud and an­other of Stem­met’s pro­grammes, Mar­ket­wise. The data pro­vides in­for­ma­tion about the fi­nan­cial and so­cial de­mo­graph­ics of each browser, as well as their brows­ing be­hav­iour.

“As peo­ple, we tend to think we are spe­cial, but we are ac­tu­ally highly pre­dictable. Credit bu­reaus and credit scor­ing in­sti­tu­tions for pri­vacy rea­sons are un­able to sell in­di­vid­ual data on clients, but do so in bun­dles of 5 000 to 6 000 peo­ple for rel­a­tively cheap. The data is anony­mous, but we are able to match it with peo­ple through the pro­grammes we have de­vel­oped over the years,” he ex­plains.

Along with browser in­for­ma­tion, the ap­peal of pub­lished ar­ti­cles is also brought into the equa­tion CEO & co-founder of YAP through a tax­on­omy scan. The scan ba­si­cally looks for words that would ap­peal to cer­tain groups of peo­ple. The word “money”, for ex­am­ple, is usu­ally equated with more af­flu­ent read­ers, ac­cord­ing to Stem­met.

De­pend­ing on the value of the browser, YAP al­lows pub­lish­ers to lift the floor price for ad­ver­tis­ing space from the av­er­age R20 to R150.

“An ad­ver­tis­ing agency is will­ing to pay more for browsers that are likely to re­act to their cam­paign. When sell­ing a hol­i­day, they want the trip to be in line with the in­ter­est of the browser, and it must be within their fi­nan­cial means,” he ex­plains.

He adds that some web­sites are some­times slower to dis­play these ad­ver­tise­ments be­cause the “auc­tion” process might have taken long.

The en­gine is chang­ing the role of tra­di­tional ad­ver­tis­ing sales staff at pub­lish­ers, re­sult­ing in them be­com­ing more like ac­count man­agers. This means that a com­pany needs fewer tra­di­tional sales staff, in ef­fect low­er­ing sales costs, he says.

Plans for the fu­ture

Stem­met used seed fund­ing from Ole! Me­dia Group and per­sonal sav­ings to start YAP, along with Day­ton and two other em­ploy­ees, Lerissa van Schalk­wyk and Ste­fan Haven­stein. Tilt Shift Agency later also bought into the com­pany, re­sult­ing in them and Ole! Me­dia Group now hav­ing a 25% stake in YAP.

Pub­lish­ing house Cax­ton was their first client, with most of the work de­voted to boost­ing on­line ad­ver­tis­ing in­come for spe­cific pub­li­ca­tions. To­day, the en­gine is used by more than 700 web­sites.

“I think we man­aged to break into the mar­ket be­cause of our ap­peal­ing re­mu­ner­a­tion model, which is based on a per­cent­age of turnover gen­er­ated through our ser­vice. We usu­ally en­ter into a 12-month con­tract with clients, which is an­nu­ally re­newed,” he says.

YAP’s big­gest chal­lenge is that its growth is re­stricted by the size of the pub­lish­ing in­dus­try, dom­i­nated by three play­ers, Naspers*, Cax­ton and Tiso Black­star. To over­come this, the com­pany has started to ser­vice over­seas com­pa­nies, such as Planet Foot­ball, and re­cently opened an of­fice in Ber­lin, as the Ger­man pub­lish­ing model is very sim­i­lar to the SA one. Ser­vices have also been ex­panded to brands, with Ned­bank be­ing the first com­pany to sign a five-year con­tract.

Stem­met is plan­ning on ac­quir­ing growth cap­i­tal to ex­pand the reach of the com­pany, but is cau­tious about this: “The com­pany is do­ing rea­son­ably well, but we would need a big in­vest­ment if we want to take it to the next level and greatly ex­pand our foot­print. The choice of part­ner, how­ever, needs to be highly strate­gic, to en­sure the new com­pany shares our views and vi­sion,” he says. ■ ed­i­to­[email protected]­week.co.za

*fin­week

Paul Stem­met

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