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Premium Display Advertising Slowdown Evident in Yahoo Announcement

October 22, 2008 //
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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?

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Categories Display Advertising

Digital Marketing Set to Benefit from Recession

October 15, 2008 //
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I have questioned in the past whether affiliate marketing is set to benefit from the economic doomand gloom spreading around the world at the moment due to its relatively guaranteed return on investment.  This message is now being expanded by the press to include other areas of digital marketing and the whole spectrum of online advertising due to its measurability and accountability. 

A recent poll by toprankasked 400 business marketers “What 3 Internet marketing tactics will you emphasize most in the next 6 months?”.  The results showing SEO top of the digital agenda with 149 votes, Blogging second with 134 and Pay per click third with 107.  These are pretty high statistics for a group of people who were not necessarily Internet focused and would undoubtedly be considering these channels against other offline possibilities.  It shows a growing confidence in these channels from mainstream marketeers and a growth in understanding of the benefits to the business.

Similarly Jonathan Mendez is Spitting in the Face of Pessimism regarding the recession and saying that Internet firms with a solid model should be relishing the prospect of economic downturn as long as their business model is built on the right foundations.  Suggesting that Internet advertising models which are based on return and performance are set to benefit, and even prosper in a period where marketers will be prudent with their spending.

I have to agree with these pieces, when the purse strings are tightened, the only channels which will be considered are those which can bring the least risk.  and with their measurability and accountability online channels are bound to come out on top.  What they maybe dont account for is that the advertisers businesses also have to survive in order for them to be spending money.  Many finance companies for example are cutting online budgets at the moment, not becasue the channel isnt performing, but because their OWN market is in disaray, similarly with property advertisers.  But on the whole, digital marketing should come out on top which bodes well for those involved int he industry.  Bring on the recession I say!

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Categories Digital Marketing

Display Advertising – The Future’s Flexible

October 2, 2008 //
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Changes are afoot in the world of display advertising if recent developments are anything to go by.  In recent weeks both AOL and Yahoo have announced the development of new platforms for buying and booking display advertising with one common them, flexibility.  The flexibility to book, buy, pause and up-weight online display advertising campaigns in real time, allowing for a more fluid media plan and more effective optimisation.

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.

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Categories Display Advertising

Is digital killing direct mail?

March 7, 2008 //
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An article in this weeks edition in Marketing Week questioned the future of direct mail in the face or increased pressure from digital direct response channels.  With direct mail volume dropping 7.4% from 2006-2007 and showing a continual decline in since 2004 has the measurability and accountability of digital mediums put pay to the direct mail industry?

For a two page, center piece article  I have to say that this seemed to me like a massive over reaction to the success of digital in the past few years.  The article eventually comes to some sensible conclusions about the evolution rather than death of direct mail and EHS Brann CEO Matt Atkinson makes the most valid point “consumers are not saying they don’t want direct mail, they are saying they don’t want junk mail!”.  it is not about cutting direct mail from you marketing mix but rather becoming more intelligent and targeted in your activity.  This is likely to mean volumes will drop but not necessarily that return will follow, more likely you will just become more efficient.

Every piece of the marketing mix has a benefit, either direct return or impact on other media.  Do you think there would be so many searches for finance companies brand terms on the search engines if the companies didn’t do so much offline activity? Of course there wouldn’t, it is all about striking the balance and appreciating the impact one media has on another.  I have experienced it first hand when a company has cut offline activity as they are getting better returns online only to see a drop in overall performance as their offline exposure stops pushing people to the search engines.

With the growing emergence of digital channels it was always going to impact other channels in one way or another, after all, economic circumstances aside, there are only every going to be a finite number of people in the market for your product at any given time.  It makes sense then, that if a percentage of these people start to use the Internet to find a supplier then the number of people using the other channels should see a dip.  What marketers really need to consider though is how to make the most of the whole marketing mix in order to maximise the opportunities the market holds, and rather than wield the sword at the under-performing media, stop to think about the impact they each have on one another.

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Categories Digital Marketing
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