Online Advertising Insights from Swoop CEO Ron Elwell

We continue Catalyst’s Digital Tech Innovation Series, in which we interview the technology movers and shakers in the digital marketing industry, with today’s interview of Ron Elwell, Founder and CEO of online advertising innovator Swoop.

After spending 20 years as an executive working with various speech and language technologies, Ron has spent the last decade working in online media. After being an investor and BOD member of a number of digital advertising startups including Millennial Media, he moved on to build and run one of the largest sport sites in the world, www.goal.com. At the time of its sale, Goal was the 200th largest website in the world. This experience as a publisher was a core motivation to his co-founding of Swoop, with a mission to re-imagine digital advertising in a way that is better for users, advertisers, and publishers.

To that end, you can find Catalyst’s interview of Ron below, uncovering his insights into the future of digital advertising. Enjoy!

***

Please tell our readers about Swoop and how you are different from the competition.

I get asked this a lot and the easiest way to explain it is that we DON’T show an ad over 60% of the time. Swoop is really unique in that we create all our own ad slots. When a page loads, there is nowhere for us to put an ad. If we find a really high quality targeting signal that matches with an ad we have, only then will we dynamically create a new ad slot in the content of the page and insert the ad. And we choose not to insert an ad more often than we choose to insert an ad. Sure we could always insert an ad, but we would do that at the expense of the user experience. It’s not that we don’t believe in optimizing revenue growth, it’s just that we believe, in the long term, the way to optimize revenue growth is to optimize the experience for the user and the publisher.

Can you share an example or two of extremely effective Swoop campaigns, and why you think they were so effective?

We have many examples with brands ranging from pharmaceutical companies to auto manufacturers, CPG’s and financial institutions, where we have back-end performance data for both Google AdWords and Swoop. If we combine all of those together, on average, Swoop had 14% better performance. That may have been measured as cost per high value action, completed forms, or just time on site, but in all cases you should expect performance on par with Search.

What are the various types of native ads in the market, along with their respective pros and cons?

Native advertising is certainly in the middle of the hype cycle and can mean a lot of different things to different people. Some see it as the creation of content on a publisher site that is paid for by an advertiser, but otherwise indistinguishable from other content on the site. Some see it as viral video or stories, with what Buzzfeed is doing as a great example. And others think of it as any monetization element that appears in the content, with Swoop or Outbrain being examples.

But they are all tied together by one overriding factor: publishers are having a tougher and tougher time monetizing their properties. Programmatic is driving down CPMs and consumer usage is shifting to mobile, which monetizes at a lower rate than desktop. So all of this is simply the publisher community trying to find a sustainable business model that allows them to continue to provide us quality content for free. Once you understand that it is hard to criticize any of the approaches. I would note here that people often think of Swoop as native because of where our Search ads appear, but we very clearly think of ourselves as Search. We are building a third (after Google and Bing), scalable, programmatic alternative for Search advertisers. We just happen to do it off the search portal, in content.

How do you see native advertising evolving over the coming years?

We believe that native advertising, which I’ll define as some kind of seamless melding of publisher content and sponsored content, will become the major source of advertising revenue for publishers. We have a long way to go, but a media property that gives me the content I want, and suggests and promotes other content and brands relevant to me at that moment is where we are headed. Interestingly, as Google pulls more content into the search result page and becomes more of a media destination, it has become the best example of this.

What’s the future of online advertising in general? What’s coming next?

The big picture is we need to stop optimizing the individual hole that the publisher cut in the page and we need to start thinking instead about how we optimize the entire user experience with content and ads on the page.

• Why do I see four ads in the same position every time the same page loads?
• Why don’t I sometimes see two on that page and sometimes five?
• Why don’t they move around on the page?
• Why are they a fixed size?

The answer of “to facilitate RTB and other programmatic sources” is just not true. We do it that way today because we’re locked into a format developed 20 years ago. There is a lot of institutional momentum that needs to be broken to make a fundamental change, but since we’re talking about the future of the Internet it seems worth the effort.

Swoop appears to be a critic of the traditional banner ad. Can you explain your position?

We do believe that the fundamental IAB standard banner ecosystem is broken beyond repair. Engagement with ads has been below 0.1% for years simply because the industry has spent 20 years delivering, on average, irrelevant ads.

Without geeking out too much on human psychology, we’ve created a frequently repeated stimulus (ads of a particular size in a particular location) that is on average irrelevant. This teaches us to ignore the stimulus, because our self-conscious has learned the irrelevance. This also addresses the argument that banner ads aren’t about engagement, they are just brand billboards that make an impression over time. We know for a fact that the bombardment of irrelevant ads over 2 decades has driven wide spread ad blindness in the vast majority of consumers. At this point no amount of behavioral targeting and machine learning can overcome the damage done. These ads have been an integral part of helping the internet grow, but as Neil Young said “Gone, Gone, the damage done”.

Can you share a few aspects of your upcoming product roadmap with us?

Only that we will continue to work on improving the user experience as the starting point for what we do. To provide users with advertising they WANT to engage with, to provide advertisers with measurable results that stack up against search, and to provide publishers with a better business model.

Also, we heard that you ran a Tough Mudder last year. How’d you do?

Well, it was easier than changing the future of advertising on the web!