The Digital Lookout

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?

Following hot on the heals of the rumours of TV advertising through Adwords, it is reported that Google may introduce the ability to buy in game advertising through their online portal.  Dubbed Adsense for games, it is reported that Google “has developed an in-game advertising technology that allows it to insert video ads into games.”  Whilst there are a large number of other providers offering in game advertising, most notably Microsoft through the acquisition of Massive Incorporated, this would make Google the first to simplify the process and increase its viability for inclusion in a standard media plan and their purchase of Adscape in February of 2007 certainly gives them the expertise.

If all the rumours and news stories are true about Google’s plans, coupled with the recently launched Adplanner tool, Adwords could be on its way to becoming the holy grail of advertising platforms, incorporating online offline and in game into one web based portal.  Whether they can pull it off or not remains to be seen but they seem to be putting a lot of effort into achieving the same dominance in other media that they have in search.

WPP owned 24/7 Real Media has been suspended by the IASH for failing to comply with an a audit of ad placement in July.  This news follows hot in the footsteps of recent evidence of ad misplacement by networks, the most high profile advertiser being Orange. 

Ad misplacement is a key issue when considering the use of blind networks as part of a display advertising programme.  Although these networks offer certain “guarantees” with their placements and you can select to appear on certain channels, by the very nature of the channel, you can never be 100% sure that misplacement isn’t occurring.  You have to rely on the regulatory bodies like the IASH conducting regular audits and clamping down hard on any offenders, which thankfully they appear to be starting to do.

The temptation is always there, due to the rock bottom CPMs, to utilise a network within your media plan but cost is not always the best way to plan display advertising.  After all, the primary aim of any display campaign should be to build brand awareness within your target customer base.  Blind media buys achieve neither of these objectives as you open yourself up to the risk of negative brand association with unsuitable sites, and you don’t know who is seeing your ads. 

Blind networks are becoming a thing of the past as companies expect more from their online advertising and this can only strengthen the position of intelligent media planning agencies.  My advice is to avoid them when planning other than in extreme circumstances.  Get you lower cost impressions and clicks from paid search and focus your display advertising on reaching the right people at the right time with the right message.

Google has this week launched into closed beta testing its new media planning and buying tool, to be know as Google Adplanner.  The web based software enables media planners and buyers to build schedule’s for their clients using Google’s placement network.  The functionality looks pretty neat with the ability to filter the sites based on demographic and geographic factors and the ability to see all the volume information currently available through the adwords interface.  In itself the adplanner tool is only useful for the placement network and so has limited use to the every day media planner.  But you have to assume that somewhere along the line this functionality will be rolled out across non google sites, and if incorporated with double click adserving technology, will transform Google into an adserving and media planning provider.  One to look out for as Google tries to strengthen its grip on non search related markets.