The Digital Lookout

Advertising network Adrevenue has gone into administration today after talks with potential buyers fell through.  The advertising network which has been operating since 2000 served display adverts across publisher sites in a standard network auction model.  They offered both blind and transparent media buying solutions as well as mobile advertising and search advertising.  Their selling point was their large network of smaller niche sites allowing for targeting by user type or interest.

The announcement isn’t a huge shock as networks of this type have been becoming less and less popular for a long time now (flexible digital marketing is the future remember!) but the question I am asking is, are Adrevenue the first in a long line of casualties in the current economic climate, or are they the anomaly?  Is this really the start of Web Bust 2.0 or just a blip?

There has been much talk about digital being the go to medium in the impending recession, but in reality, every advertising channel is going to suffer as companies tighten the purse strings.  Blind advertising networks and inflexible digital channels only ever had a limited shelf life as Internet marketers look for accountability and transparency on spend.  Are they the first casualty in what is bound to be a tough year for all forms of media?

What do you think  A one off, or a sign off things to come?

In an attempt to combat the impending slump in gambling revenues following Google’s change in gambling policy Yahoo! has taken the unusual step of REMOVING some of its advertising listings from key sports keywords.  A search for football betting on Yahoo! UK will now return just 4 paid search listings at the top of the SERP and 2 at the bottom with the right hand inventory devoid of PPC ads, replaced only by universal searchelements such as image search results and Eurosport news results. This seems a rather strange attempt to reverse a decline in revenues by removing the elements that generate the revenue in the first place! The explanation given by Yahoo! is that this is a beta trial to determine whether the streamlined user experience out-ways the loss in revenue.  And the impression is their appearance will be done at a keyword level determined by whether the revenue out-ways the experience for that particular keyword. Ill be honest, I don’t think this is going to get out of beta testing.  Gambling has been one of Yahoo!’s key sectors and with the Google changes likely to see advertisers diverting their PPC funds away from Yahoo! naturally anyway.  The effective removal of available positions on page 1 will make pay per click marketers consider whether it is worth bothering with Yahoo! at all if they cant afford to be in the top 4 slots. Well done Yahoo! kick yourself while you are down!

Yahoo Removes PPC Listings for Gambling Keywords

Microsoft have conducted a piece of research which goes further towards showing the need for an integrated approach to digital marketing where display advertising and search engine marketing are concerned.  Off the back of the overused Atlas example which suggested a 22% uplift in conversion could be produced from a combination of search and display, and Yahoo’s piece which suggest similar impact, Microsoft have launched their own research which backs up the previous reports.

The figures which have come out of the Microsoft report show a 2x improvement in website visits through a combined approach along with a 54% increase in likelihood of a user conducting a brand search if they had been exposed to a display advert.

You have to take into consideration the producers of these pieces when reviewing the results they show you.  Atlas earn their money based on the amount of activity you are undertaking so have a vested interest in increasing it (plus they earn off both impressions and clicks with display).  Yahoo have seen a downturn in the last quarter in the premium CPM display advertising and so it is in their interest to get you buying more.  And similarly Microsoft need something to prop up their lack of progress in paid search.

So you have to take what they say with a pinch of salt, but that’s not to say there is nothing at all in it.  i do believe an effective online plan involves a balance of all elements.  Search as the flexible, movable return based feast, affiliate marketing as the finite guaranteed return and display advertising to boost the brand and increase awareness.  That said I am an advocate of flexible solutions for display advertising and don’t think that any placement is worth more than £10 CPM, there isn’t enough branding to warrant anymore than this amount.

So whilst I would view the actual stats displayed with an air of scepticism, the general principal is sound in my opinion.  A balanced approach with a blend of channels means you get the best of each without placing all your eggs in one basket.

View Microsofts findings here

Yahoo have disclosed their Q3 revenues and they aren’t good, a measly 1% increase on the same period last year and down $20 million on Q2.  The announcement comes hand in hand with them announcing they would be cutting 10% of their workforce to improve cost efficiencies.  This is no great shock in the current economic client but it is the breakdown of revenues which shows the most interesting facts.

Paid Search and performance based display advertising, such as Right Media and their Yahoo Direct Programme, were actually up a much greater percentage than the overall picture with the drop in revenues coming from “premium display advertising”, i.e. the CPM based placements across the Yahoo portal.  This ties in with what I have spoken about before regarding the future of digital media buying being a more flexible, reduced cost environment with many more placements being bought on an auction model or at the very least on a CPC basis.

There are two main causes for me believing this is the way digital display advertising needs to go:

1. The Global Economic Climate: advertisers cant afford to be paying premium CPM rates in the name of “brand building” when the economic climate is so fragile.  The next 12 months for advertisers, both on and offline, is about making sure a return is gained on advertising spend, and £20+ CPM, is never going to bring about a direct return no matter who you are.

2. Advertisers are Getting More Savvy: being from a paid search background and working for a results driven agency, when I spent some time media buying I was astounded at the stunts that some publishers tried to pull with their CPM’s.  Just because it is a high traffic or niche area of the site does not mean that anybody is paying anymore attention to the ad on that page than they are on the less popular pages.  An ad is an ad and 99% of Internet users can spot them a  mile off.  Thankfully more and more companies and media buyers are now beginning to think this way too and not buying the expensive slots thus meaning prices fall.  The old model of media buying also doesn’t play to the strengths of online, they make no sense.  So I am advertising online, where I can review performance real time, change ads real time, but your telling me I have to book for a minimum one month period no matter how it performs? It just doesn’t add up.  Publishers need to start operating in the online world rather than the offline media buying world.

So even more evidence from Yahoo that traditional media buying online is on its way out, but who can be the first to capitalise from it with an effective flexible ad platform?

Mediapost has reported that online display advertising rates have hit the lowest point this year in the US with the average display ad page generating just 27 cents CPM in Q3 of 2008.  This is no great surprise if you follow the trends in the market or work in this arena, but the article’s commenter seems a little less certain of the cause;

“It’s not surprising that it’s been trending down, but what is surprising is the size of the drop,” says Rajeev Goel, president and co-founder of PubMatic. “What we don’t know yet is whether the trend is due to increasing capacity on the supply side, or to the fact that the economic malaise is beginning to find its way into the online ad industry.”

Well, Im pretty sure I can tell you what has caused it.  Firstly advertisers are tightening their belts, no risks are being taken in such an uncertain time.  And secondly, they are channelling their ad spend into channels with a better return, like paid search and natural search engine optimisation.  A recession is no time for elaborate brand awareness campaigns, it si a time for keeping things tight, keeping profitability solid and riding the storm.  There is a time and a place for online display advertising but unfortunately for publishers, now isn’t it.

The net affect of this is with less advertisers booking space, and those that do driving a hard bargain, publishers are forced to take what they can get, and sell of the remnant inventory cheap.  There will still be exceptions to the rule, but not too many, and most advertisers will be driving a hard bargain for anything they do buy.  Good news for the media buyers (if your clients still have a budget that is!) but not so good for the publishers.