10 Important Online Advertising Trends
author/source: Miles Galliford
10 Important Online Advertising Trends
Economic downturn always shakes up the advertising industry.
Limited ad budgets search out the most cost effective media channels and demand more bang for their buck.
Whilst the Internet has fared better than TV, radio and print, the changes that are taking place today will alter the face of online advertising forever.
Everyone involved with online business needs to understand what is happening or they’ll be left on the platform after the train has left the station.
Trend 1 – Publishers in Quiet, But Deadly War, With Ad Agencies
Publishers want to sell their inventory to the highest bidder. They want to push their average ad rates up by selling the quality of their audiences. They want to reverse the trend of print dollars, digital dimes.
Ad agencies want to demonstrate their value to their customers, the big advertisers, by paying for ads based on the value they deliver. This will result in paying more for some ad space, but less for most of it.
The publishers control access to the audience.
The ad agencies control access to the ad budgets.
Who will blink first?
This battle is the background to many of the other trends.
Trend 2 – Big Online Publishers Take Ad Sales Inhouse
The major online publishers (MySpace, AOL, TMZ, Time Warner) are bringing ad sales back in-house following disappointing results from the ad networks (Advertising.com, Microsoft Advertising, Adjug, Adconian, etc). Ad networks now have the reputation for going for quantity rather than quality, and despite sophisticated behavioural analysis tools, click-through rates have continued to fall below 0.1 per cent.
Trend 3 – Ad Networks Will Decline
As more of the big publishers reject the ad networks the ripple effect will mean that more medium size and small publishers will question the value they are providing. The result will be the ad networks will enter a spiral of decline.
Trend 4 – Ads Get Bigger And More Intrusive
Ad networks, which are usually run by people with traditional advertising backgrounds, are responding to their declining fortunes by creating bigger and more intrusive ads. Fortune.com has had a full screen, “over-the-page” ad that covers their homepage for some time, but now even sites like Techcrunch are trialling them. Apart from spam emails, there is no other adverting format that irritates and annoys Internet users more. Hopefully this is a passing trend, once publishers and advertisers realize that irritating their audience is no way to build a brand.
Trend 5 – Advertising Dollars Seep Into The Long Tail
Advertisers continue to look for ways of accessing their target market through smaller specialist websites. The ROI is much better from these sites, but there is a higher overhead managing sales to smaller sites. The industry is coming up with solutions though to address this market in a cost effective way.
Trend 6 – Aggregation and Optimization
To enable advertisers to reach smaller sites and to enable smaller publishers to get ad revenues from the biggest advertisers there is a trend to aggregate ads and sites and then automatically serve the ads based on a real time auction process. This makes complete sense to advertisers and publishers, but sidelines intermediaries like the ad agencies.
The two types of company filling this need are the ad exchanges, like DoubleClick Ad Exchange and AdvertiseSpace and the ad revenue optimization services, like Rubicon Project and Pubmatic . Both groups are focused on aggregating advertisers and publishers and serving the best ad into the best site based on a real-time auction to establish a fair price.
The trend of aggregation and optimization will continue.
Trend 7 – Ad Agencies Fight Back With Demand Side Platforms
In response to their falling influence, ad agencies are grouping together to create sophisticated ad serving platforms which have become known as Demand Side Platforms.
The goal of these services is to accurately measure the return on investment of each ad and then pay accordingly. For example if an ad on a home page is clicked and is tracked direct to a sale it would have a high value. An ad served on a news page that is not clicked would have a low value. Whilst this seems to provide a logical way to price ads, publishers argue that it commoditises their content, site and audience and eliminates the soft benefits of brand building.
Trend 8 – Social Media Advertising
The big social media sites are under growing pressure to realize their potential by finding ad serving solutions which don’t anger their users whilst providing good results for advertisers. Experimentation on services like Facebook, LinkedIn, Twitter and MySpace will continue.
Trend 9 – Advertising Will Go Mobile on Via Smartphones and Apps
The cell phone companies have struggled to find a way of reaching their mobile audience with ads. SMS has failed miserably because it is too intrusive. Now the iPhone and Android phones have finally opened up this new frontier. Smartphones and apps provide dozens of ways to serve ads to mobile users in ways which provide their customers with real value e.g. location based discount vouchers. Google’s acquisition of Admob for $750m and Apple’s acquisition of Quattro Wireless for $275m, both mobile advertising companies, suggest the mobile ad invasion is about to start in earnest.
Trend 10 – Advertisers Go Direct
Big brands have realized the potential of the web to enable them to build a relationship direct with their customers, or at the very least, do things online which positively represent their brand. These organizations are putting marketing funds into creating apps, Twittering, building web services, etc. If these activities are successful, more of their ad budget could be assigned to direct online activities.
These are very interesting times in the online advertising world. There are a lot of turf wars, experimentation, and new services emerging. Publishers have to find a way of increasing ad income, ad agencies have to show they add value and advertisers have to ensure they are getting increasing ROI on their spend in an ever noisier marketplace.
These are interesting times with many opportunities and threats to all parties. The nimble will prosper, the slow will fail.