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By Paul DeBraccio
There seems to be a war of words and some actions going on in the ad world, and the armistice seems to be far off.
If you speak to the advocates of DSPs (Demand Side Platforms) like Datran, Bluekai, Lookery and Lotame, et. al., they will tell you that the days of buying ads on a specific site are numbered and that audiences can be reached anywhere and at a much lower cost than advertisers are now paying. They claim to do a more efficient job than ad networks or even brand-name sites.
However, it makes one wonder how universal their applications may be. They advocate buying media agnostically, but how will the sites they are gleaning audience data from exist if they are forced to sell their inventory at a below-cost price?
The war appears to be taking the form of more than words. Internal debates abound at major and minor agencies as to which direction will best serve their clients and their balance sheets. Online data aggregators are growing rapidly as they present a cost-effective option for advertisers that desire low-cost inventory that also has little waste.
Some buyers suggest that a true ad exchange with pure supply and demand pricing is the future of media. They are vehement in their insistence that publishers should bend to market demands and allocate most or their entire inventory to this marketplace. Others are not so sure. Proponents of multifaceted sponsorships feel that paying a premium for exclusivity or having logo ownership and games or sweepstakes would be more productive.
It will be almost impossible for publishers of everything from Web sites to magazines or even TV shows to create quality content if they are to compete with low-cost blogs or homemade TV programmers for advertiser dollars if the advertisers have decided to run their ads on the lowest-price areas. If this is taken to its logical conclusion, media will be forced to lower their production costs while trying to retain or increase their audiences. It will be interesting to see how this plays out.
For example, sports.com, with generic information, may be interesting to some (such as those who like to pore over data and come to their own conclusions). For the rest of us, high-quality writing with a perspective (controversial or not) is our desire.
Digital media buyers (some of those employed by data aggregators) talk about the fact that their methods significantly reduce acquisition costs and that acquiring customers is their reason for media spending anyway. Realizing that non-branded or second-tier media have been around for decades and have been core for the DR-focused advertisers, this is not a new pipeline (think late-night infomercials and the back-of-magazine advertisers and classified sections of newspapers), but the opportunity for advertisers to retrieve the plethora of data efficiently and rapidly significantly changes the playing field.
The traditional media world seems to think that the Internet will solve a lot of their problems; that may be true, but it will also present them with many new problems. In my consulting business, we encounter many high-level traditional media publishers who are not aware of the depth ad exchanges and data aggregators have in the market. When we present our recommendations to us, they respond incredulously. We then tell them we can guide them through the maze and they appear to calm down, but we know they do not fully believe that a lot of their ad revenue is heading out the door.
They can close the door by jumping in with both feet and with their eyes wide open. I do not see many other alternatives.
Minsider columnist Paul DeBraccio is CEO of Interevco.
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