European search firms have been eyeing up the display market for some time now. They see massive parallels between keyword buys and biddable display. Some have even partnered with European retargeting specialists to offer clients a display-buying solution. This is merely toe-dipping stuff, and few have really got seriously involved. But I think this will change this year, as SEMs commit more budget and resource to the display channel. One search firm seizing the opportunity of cross-platform optimisation is Efficient Frontier. It has already built its own bidder and now has a Facebook buying tool, which allows it to automate buys across the social platform. ExchangeWire spoke to Jonathan Beeston, Client Services Director, Europe at Efficient Frontier, about EF's holistic approach to media buying, the state of the market and the explosive growth of the Facebook display channel.

Can you give an overview of the cross-channel buying service now offered by Efficient Frontier in Europe?

JB: We integrate search, display and Facebook buying, taking what we call a portfolio approach – in other words we can switch budget between channels depending on the price and performance trade-offs we see between ads on different channels. We do this by building predictive models to forecast the performance of a keyword or display ad at different investment levels (e.g. at higher or lower CPCs), and use proprietary algorithms to automate bidding across channels every day.

What kind of benefits can advertisers get from this holistic approach, in terms of buying across search and display?

JB: Advertisers want to understand what role each channel plays in the sales funnel. By measuring and evaluating that automatically, the ROI of integrating campaigns across channels is much higher than optimising each channel independently.

How would you define your business now that Efficient Frontier is offering optimisation across display and search?

JB: Our business is performance marketing, a term that is growing in popularity as companies want the same ethos and rigour they expect from search applied to other channels such as display advertising and social media advertising. The potential of display ads has changed beyond recognition with the advent of ad exchanges and the specific targeting opportunities they offer.

How much growth have you seen in your display media-buying business since moving into the space? Are there any particular trends you’d like to share?

JB: It’s hard to give specific figures as it’s still relatively early days, but the growth has been significant. We’re expecting high growth in 2011 – and a lot of this will come from Facebook advertising. Developments in anything that offers very specific targeting and control over ad delivery – such as location-based advertising (particularly over mobile) and a more semantic approach to contextual advertising will also drive this growth.

Another important growth driver is that advertisers want to pay more attention to understanding customer attribution. The market is much more sophisticated in how it analyses the overall impact of a specific ad or keyword, rather than just following it to the next click; and measuring the impact of one campaign element on another.

Is there still a lack of dynamic supply on the European market?

JB: It’s changing, but there is still a reticence from some publishers to work with ad exchanges. Many are still getting to grips with issues of how to price their inventory and rethinking the traditional model of how advertising is sold. But I think 2011 will see a huge shift in publishers’ attitudes. Also data exchange companies like BlueKai have had a huge impact in the US, and I expect the same to happen in Europe, with the UK leading the pack.

You have a presence in Germany? What’s your view on the market there? Again, is publisher supply too low to make the data driven display model work there?

JB: The German market – like the UK – is changing rapidly, but there’s still a way to go until the publishers open up completely to a data driven ad model. But the change is inevitable, and will be driven by advertiser demand and the advance of technology.

Is Facebook attracting the majority of your display budget? Can you give an insight into how your automated Facebook buying tool is delivering for clients?

JB: We launched our Facebook offering in September (2010), so it’s early days yet. But the interest is phenomenal and the results for our advertisers have been impressive. The beauty of Facebook is that data segmentation means you can reach an incredibly highly-targeted audience. However, right now Facebook’s ad platform is still maturing so we have had to build tools to create and manage processes. For example, we have our own Facebook Ad Builder which create ads in bulk and, using an “Auto-Split” function, targets each ad to an individual segment of Facebook users. Our technology can then assess the performance of this detailed list of segments and set bids according to the response of each individual audience, in a similar way we do in search. We’re working with a number of clients on this at the moment. Initial results show that Facebook is performing in some cases to a lower cost per acquisition than search, and so could take a significant share of online budget. But you have to balance CPA with reach, and Google is still dominating online ad spend.

Are traditional search-marketing focused advertisers now seeing the benefit of automated display buying? Has it been difficult getting clients to commit budget?

JB: Most clients are always willing to test, and they like that biddable display gives them similar control to that of search. Once we’ve started testing display, our predictive technology can forecast the potential of the campaigns so we can easily advise clients on the right budget levels based on their objectives. It isn’t then difficult to get clients to commit budget to a campaign that’s going to meet their objectives.

A lot of search firms with a display solution have partnered dynamic creative providers to offer re-targeting for existing customers. Do you think that these agencies will look beyond the lower part of the sales funnel, and adopt more sophisticated forms of targeting to drive new conversions?

JB: They’ll have to. Effective retargeting means you have to understand the incremental effect of reaching a target wherever they are in the sales funnel, and testing the most effective way of getting them to convert. But sophisticated targeting needs to be more than just showing a customer an ad of something they looked at on your site. These techniques are likely to get more sophisticated, driven by a desire to improve performance.

In terms of budget has there been a switch from search to display? Is Efficient Frontier effectively cannibalising its search marketing business?

JB: Search budgets increased by about 14 per cent year on year in the UK (23 percent in the US), so there’s no sign that display is eating into search budgets. It’s more that the budget for biddable display is coming from more traditional display buys and ad networks. In a tough market, advertisers have to be able to prove ROI, and integrated campaigns online can perform better than a single channel campaign.

What are we likely to see from Efficient Frontier in Europe over 2011?

JB: We’re expecting high growth in display and social media ads, and a greater focus on cross-channel attribution analysis, as advertisers start to understand the impact of one channel campaign on the performance of another. The strategic importance of Facebook is likely to increase and we’re expecting an increase in spend there. Much of the growth we’ll see is likely to come from the retail and travel sectors, arguably the two most sophisticated sectors in terms of targeting.