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?

This obviously as cause agencies to rethink their current commercial agreements with clients and could see some major shake-ups in the search marketing agency world as existing contracts become unmanageable without the commission in place.

What has become clear in the last couple of weeks however is what Google now plans to do with agency commission, they are going to use it to grow their non-search products.  It has been clear to see recently for those who deal with Google on a regular basis, that Google is desperate to expand their product mix outside of paid search.  They have launched media planning tools, display ad creation tools and have used every given opportunity to push the Google Placement Network.  Similarly with Youtube and their video advertising options, there has been national roadshows to agencies broadcasting the availability of their video advertising options.

And now this week Google has announced that they will be introducing agency commissions on all YouTube advertising (nma article here) and it is thought that the rebate amount is going to be back up to the 15% agencies enjoy on other media channels.  There are also rumours in the industry that a commission is set to be introduced on advertising across the Google Placement Network, although only for the largest players.

So it appears Google no longer feels it needs to compete in pay per click advertising due to its dominance, and that it is better placed rewarding advertisers in the areas it wishes to grow in.  You cant really fault them on that logic.  The removal of Best Practice Funding is unlikely to see agencies pulling spend from their Google Adwords campaigns, as it remains the best performing search engine around.  But by offering an incentive to broaden the products utilised they can begin to make headway in other areas.

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

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?

“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.

It certainly has the audience for it, with nearly double the unique user figures of Facebook there is an audience there to be tapped into, but impressions are what the modern day advertiser is after.  It is also most certainly not what the small business advertiser is after, I know from experience that if a small business is investing £100, then they sure as hell want £200 back.  They do not have large marketing budgets and they don’t give a hoot about brand building, they want a return on investment.  And I’m not convinced Myspace can give it.

For a start on Myspace there is less browsing involved.  On Facebook you are looking at news feeds, checking out updated status’ and searching for groups, and this is the time when you are most likely to be tempted to click and ad.  With Myspace there is less of these type of actions involved, at least there is how I use it.  And you are generally there to view a particular persons profile or catch up with a contact, and when you have a purpose, you are less likely to be tempted to click an ad, no matter how well targeted.

Also, the garish nature of Myspace profiles means that it will take something special for an ad to look right on the page, this will make users opposed to the ads and less likely to accept them as useful.

I suppose the idea of the ads, much like Facebook’s similar programme, is to utilise the profile information to target your audience effectively and I buy into this, use all the information you can to show the right ad, to the right person, at the right time.  I’m just not sure Myspace has the layout and the typical user actions to support such a programme.  And certainly my experiences with Google Placement ads on Myspace haven’t shown me anything to suggest otherwise.