There were clear signals last week that the digital media industry is growing up and yielding to the norms and metrics of the broader media advertising industry. The goal of these actions is to capture more brand ad dollars -- the surest path to revenue growth. Here are three examples:
Tumblr changes its tune. “We’re pretty opposed to advertising. It really turns our stomachs.” That quote was from David Karp in 2010, the founder and CEO of fast-growing micro-blogging site Tumblr. Last week, Karp claimed that he was basically an idiot when he said that and then announced plans to launch Tumblr’s first ad product next month.
What Karp came to realize is the same thing that every website since Yahoo that put a banner ad on its home page 15 years ago has known: Most consumers are unwilling to pay for content and services, so media companies need ad dollars to grow. The most surprising part is that it took Tumblr -- which makes its home in New York City, the media and advertising capital of the world -- five years to figure this out.
In this regard, WPP CEO Sir Martin Sorrell got it right when he said last year that many companies are masquerading as technology companies when they are, in fact, media companies. No amount of engineer- or consumer-generated content changes the fact that online services like Tumblr will ultimately generate most of their revenue from brand advertisers.
AOL adopts the GRP. In a development that would have been seen as heretical just a few years ago, a major portal is adopting the language and customs of the television ad industry in order to sell its video products. Last week AOL announced that it would be using Nielsen’s Online Campaign Ratings product to guarantee audiences for digital video.
With more and more premium video buys now falling under the domain of television buyers, digital media properties like AOL are cannily embracing decades-old metrics like reach, frequency, and gross rating point. By adopting the language and metrics meant for an entirely different medium, their goal is clearly to accelerate the shift of TV dollars to online.
This is just the latest move by AOL to become more brand-friendly. Project Devil, AOL’s effort to reduce the number of ads on a Web page, has been a role model in an industry where cluttered environments and confusing metrics are the norm.
Google supports viewable impressions. Earlier this year, comScore uncovered an embarrassing statistic: Nearly one-third online display ad impressions are nothing of the sort. It turns out that 31% of ads are served in places online that cannot be seen by a consumer. This means that brand marketers have been wasting a portion of their display budget for years, buying ad placements that consumers never see.
Last week Google announced a new product designed to address this problem. Active View will enable marketers and agencies to pay just for the impressions that a consumer can actually see. The technology allows ads that are below the fold or blocked by software to be removed from impression counts.
Taken together, these three announcements underscore the fact that capturing brand ad dollars is the number-one priority for digital media businesses going forward. If this means embracing new ad formats, adopting offline metrics or ridding the industry of fraudulent metrics, media companies appear willing to take any step necessary to make online a more attractive home for brand advertising.