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?

The planning of online display advertising has for a long time been the least flexible of the online disciplines with placements requiring to be booked for a minimum one month period in most instances and with little optimisation or flexibility available once in place.  The solution to this has been to utilise the advanced adserving technologies to improve the tracking and optimisation of display adverts and for the biggest agencies to book up inventory on popular spaces and resell it later to their client base.

But is all this about the change?  Google has had their placement network in place for a while which allows for all the functionality and flexibility of search through their display partner network, but they never quite had the distribution.  More recently they have signed up a few bigger partners and are now trialling accepting 3rd party ad serving tags which will please digital media planners.  This has made Google a more viable addition to a media plan and it sounds from the press releases that AOL and Yahoo’s platforms will be similar (even if they both claim to be revolutionary!).

I think this is the way display advertising needs to go.  A move away from long term bookings and static CPM rates and towards a dynamic environment with real time placement bidding and the ability to pause and activate display campaigns through campaign interfaces.  MSN and Yahoo have already tried this with their DR model with limited success but they still require a set period for the insertion order and also only offer their remnant, unsold inventory through the system.  In reality, the only flexibility comes from the auction model, which can only be updated once a day, so isn’t actually very flexible!

The future I foresee for display advertising brings it in line with the pay per click method of campaign advertising we are all familiar with.  Real time optimisation of placements and publisher sites in line with campaign objectives and goals.  No lengthy sign ups necessary and no “mates rates” for the bigger agencies, a simple, transparent(ish) auction model with real time optimisation capabilities.  This would be great for the real, hard working digital agencies, but bad news for the lazy media agencies, as it would require hard graft to optimise a display advertising campaign in real time based on performance metrics.  It would also be bad news for the publishers as it would invariably drive down the cost of their placements.  But in a world of economic turbulence and with advertisers demanding more from their advertising spend, it could be the saviour for online display advertising which has long benefited from traditional advertising naivety to just how measurable digital marketing can be.

Yahoo! has purchased web analytics software solution Indextools for an undisclosed fee.  The tool which one commentator described as”one of the best kept secrets in the industry” has been bought as a direct response to Google Analytics, this is easily shown by the fact that the first thing Yahoo! have done, is make it free! (remind you of any other analytics package?).  Yahoo! has had its own tracking solution for a while but lets face it, it was pretty rubbish.  So this purchase and the immediate action of making it free of charge puts Yahoo! firmly in competition with Google in the combined search, analytics market it in my eyes, gives them an advantage.  I have used Indextools for a number of years and can honestly say it is 100x the package that Google analytics is.  This is a full on, analytics, campaign management, usability, all singing, all dancing tool, which when used correctly can do some pretty impressive things.  Realistically most people wont use all the best bits of Indextools but the savvy internet marketeer could actually get for free with Indextools, what would have cost them £500-£1000 a month in the past, bargain!

I am intrigued as to what Yahoo!’s plans are for Indextools as if they are to continue to offer it for free then are they going to remove some functionality to strip down the software functionality?  I hope not but it probably makes more business sense.  Maybe then offer the additional functionality at a cost, but does that go against what Yahoo! are trying to achieve?

In order to qualify for the package at no cost existing customers are required to sign a new Yahoo! agreement.  I haven’t seen this agreement yet but it will be an interesting read (if such documents can actually be interesting!) as one of the concerns around using Google analytics, and now Yahoo! owned Indextools is the data you are passing to the search engines about your campaigns.  Who owns this information and how can it be used is key in determining whether by selling out to Yahoo! Indextools is likely to lose all its clients.  It may seem a little big brotheresq but would you really want Yahoo! knowing the details of all your online activity?  not just search (and therefore Google) but also you display, affiliate and email campaigns?  because that is what Indextools is best at, compiling data into a logical dashboard enabling you to see all your data in one place.  If Yahoo! is then going to use this data to make competitive decisions then nobody is likely to want to use Indextools anymore.  I suppose we will just have to wait to see the contents of this agreement and its approach to data usage, but I just hope by buying one of the best, most usable tools on the market, Yahoo! hasn’t inadvertently killed it.

So cue brands bidding on other brands, hiking the prices out of spite and affiliates of a field day.  But will this be the case?  No doubt initially companies will begin to bid on their competitors terms thus raising the price the brand owner has to pay.  But how will the quality score deal with this? Well you would like to think the competition will have to pay hefty minimum CPCs to even list in the first place given that their websites will have no relevancy at all to the keyword.  But will the big boys care about this?  They will probably be more concerned with stealing their competitors traffic and be willing to pay the price. 

Theoretically they wont be able to include the trademarked term in their creative but that doesn’t account for DKI which, no matter what Google suggest, isn’t going to change any time soon to combat this.  Therefore a clever search engine marketeer will get round this quite easily.

What do I think will happen?  Brand CPC’s increase, affiliates have a field day, the overall cost of PPC increases, and then when it all dies down it is back to business as usual and people forget the day brand protection was in place.  The trick is for companies to have a plan of action for May 5th, to know how they are going to deal with their affiliates, to develop and stance on competitors terms and closely monitor the first couple of weeks after this change comes into place.  Then to reassess and get on with the business of generating leads from paid search, after all we are all at the mercy of Google anyway, so why bother trying to fight it!

Google has completed its acquisition of ad-serving company DoubleClick, following the green light from the EU.At a reported £1.6bn ($3.1bn), the cash deal is Google’s biggest acquisition to date.

NMA article here