Like Otto von Bismarck, SpotXchange’s Otto wants to rule the world. Well at least the world of online video ad campaigns and I don’t know that Bismarck was bent ruling anything more than the German Empire. But hey, two dudes named Otto. Sure I could have talked about Otto Herschmann or Otto Soglow or even Otto von Habsburg, but it just wouldn’t have been the same. So Otto, Spotxchange’s auto-optimizing video ad campaign feature. Read on Reel Believers.

The Rise of the Machines – Spotxchange’s Otto

Otto is a machine learning auto-optimization technology that is set to bend the ear of the online video ad industry. How so? It plans on maximizing your Roy. That’s Otto’s friend but I think it’s spelled ROI.  By creating the best performance without the delays and limitations of human evaluation it means you can make the most out of those ad campaigns. Plus, it’s a machine, it can’t be bargained with! It can’t be reasoned with! It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead!

No wait, sorry, that’s the Terminator. What I meant to say was that Otto can do all those cool optimization things non-stop because it doesn’t eat, sleep or demand humane treatment and go on strike (like people need to do to keep their rights intact).

Otto has already been doing his Rainman thing for some advertisers and they have seen a steady rise in click-through rates (CTR) — jumping from 0.75 percent to 1.48 percent in just five days, well above industry average, reports SpotXchange.

For publishers, Otto finds the best-performing publisher placements and audiences for each video ad campaign, and rewards those publishers with higher CPMs. Ding! Ding! I wonder if that was added to the press release after our conference call where I had a lot of “how does it help the publisher” questions because, I’m on that side more than the advertiser most days.

Development leader Mike Griffiths, SpotXchange’s vice president of data analytics said, “Auto-optimization technology is nothing new in the offline and online world. What SpotXchange has done before anyone else is to make this auto-optimization technology scale, operate in real-time and actually work in an online video context.”

So Mark and I had a conference call last week with SpotXchange to talk about Otto. While it is certainly interesting that it can see trends and start manipulating your ad placements on the fly what I found even more interesting were some other facets of what it might do. Otto (because I don’t want to say ‘the thing’ in case he gains intelligence and creates a robot body for itself like Adrienne Barbeau-bot who had massive…missiles) analyzes multiple layers of campaign data like historic metrics, CTR, engagement, completion rates and targeting like behavior, then it decides how best to use the ad spend you have alloted er…him.

He then begins manipulating the Matrix so that your ads are placed where they peform best, even increasing the CPM (up to a limit you set) or decreasing it as he sees fit in order to maximize effectiveness. Otto can even tell you about your campaign and whether you might want to focus on CTR instead of CPM rates, etc. Well, he’s not going to be all that extremely robust right from the get go. But over time as he learns and begins analyzing billions of video ad impressions, placements and interactions he could perhaps start to glean a glimpse of the future when robots rule the Earth and humans are sent back to living in the trees.

Alright, he’s not doing any real predictive analysis right now, but in the future…. anything is possible.

Auto-Optimizing Video Ad Campaigns – The Impact on Publishers

Now I was rather alarmed at this from a publisher’s point of view. In one fell swoop Otto might cull millions of impressions from publishers who don’t perform as well as others. Of course, if the ads aren’t performing up to snuff on your site, should you be still getting ads instead of those impressions going someplace where they perform better? No. Just like if I had two employees doing the same job and one did twice as much work, they would get more pay raises than the other who did half as much.

At present there are also no tools for publishers that will really help you because it’s mostly for advertisers. I had suggested that it might be nice for publishers to get some information on how they are doing and perhaps some hints on how they might do better (aside from not having crap content or burying video ad impressions at the bottom of a page in a freakin’ auto-play with the sound off deal).

Auto-Optimizing = Power to the Advertisers

Otto finds the best placements for a video ad by continually monitoring and evaluating various performance and audience data inputs. It processes millions of data points related to video ad creative and placement information — such as site, context, demographic and historical performance — to find the best solution for every campaign. To do this, it deploys multiple layers of ad campaign performance data within the SpotXchange system to increase the frequency of impressions that get the best results while automatically eliminating placements that are not achieving specific performance metrics.

In addition to ensuring better campaign performance instantaneously, Otto reduces costs for advertisers by proactively determining each impression’s relative value based on how it will perform against the specific campaign’s goals. This ability to select the right ad for the right opportunity helps an advertiser get the most value out of their ad spend while rewarding publishers for better performance.

Clarity of Focus

SpotXchange’s first implementation of Otto has been focused on performance-based video ad campaigns in the marketplace, such as automatically optimizing cost-per-click (CPC) campaigns. The company will soon deploy the technology against cost-per-completed view (CPCV) and cost-per-engagement (CPE) mmm... Chinese foodcampaigns.

With 30-40 million auctions a day for video ads, Otto will have his work cut out for him. He’s going to be processing massive amounts of data right from the get go and I can see that being pulled and wrapped up into some really interesting research reports (did I mention Mark and I are working on putting together a research branch here?!).

Otto is also a major leap forward for SpotXchange and may very well be the torchbearer for the company (hopefully not to grill wayward humans who get in his way) and lead them, their publishers and advertisers into a very bright future indeed.

Oh and Otto, 01001001 00100000 01101100 01101111 01110110 01100101 00100000 01111001 01101111 01110101 00100000 01001111 01110100 01110100 01101111

Kung Pao, I’m out!