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BREAKING NEWS & VIEWS

Display Advertising to Rebound as Market ‘Bifurcates’
Friday, May 7, 2010
Steve Smith

Many signs are pointing to a hearty return to growth in the display advertising space. Anecdotally, both publishers and media buyers report more and larger RFPs arriving in Web site sales departments. In 2009, many marketers focused on performance media, driving budgets toward search and exerting downward pressure on display CPMs. By year’s end, however, some ad networks and exchanges were reporting upward trending in ad prices and a sharp return to digital buying. A new survey of media buyers from ad network Collective Media confirms that the dollars are ready to flow to display, but the market is dividing clearly between site-specific partnerships and advertisers buying reach and audiences across many sites. Collective’s annual study of buying intentions found that 52% of marketers were expecting to spend more than last year on ads at large content sites and verticals. When it comes to content types, 46% of buyers said they would be increasing their spend on video this year. Among the largest online spenders with bigger budgets, 67% said they would spend more on video. Meanwhile the online portals like Yahoo may see less enthusiasm, since only 23% of respondent said they would be spending more at these big hubs. Take these projections with a grain of salt, however. Whatever buyers may have been telling researchers, actual Yahoo display advertising grew 20% in Q1 2010.

The market is becoming more complex as ad networks throw ever more high technology at the problem of targeting their ads more effectively across the thousands of sites on which they sell remnant inventory. The marketplace is quickly dividing between site-specific buys that try to align brands with relevant, respected content environments, and audience-centric buying where marketers target interested users across ad networks. The study quotes Universal McCann evp, U.S. director of digital communication David Cohen, saying, “There is no doubt that over time our business will continue to bifurcate in two areas. One will be deeper, more strategic cross-platform partnerships. But equally important to driving our clients’ business we see tremendous growth in the sophistication and adoption of audience platforms over the next decade.”

In the survey of buyers, 35% said they expected to increase their level of spending with ad networks in the coming year. Ad networks are valued by buyers mainly for their reach and targeting capabilities. Collective Media notes that in its 2009 study 23% of respondents cited inventory quality as the best differentiator of ad networks. This year, however, that number dropped significantly to 11%. The survey suggests that advertisers now are working with genuinely bifurcated strategies when planning a campaign. On the one hand they seem to value the contextual environment that only branded media can offer, but at the same time they are attracted to the significant reach and price advantage networks provide. As the targeting technology gets richer, the idea of buying against audiences rather than content gains traction. Media companies will need to demonstrate why and by how much their contextual environments are worth to marketers and deserve the price premiums they demand over increasingly effective networks. Medium-sized publishers likely run the biggest risk in this scenario. Without scale or a highly specialized vertical to serve, these properties are harder to justify on a media plan as the targeting tools for the much larger inventories on cheaper ad networks become sharper.

If you have breaking news to share please contact Steve Smith at ssmith@accessintel.com

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