Commentary

The Year Ahead, What We Can Learn From 2012

Many of the trends we saw in 2012 -- from the ongoing rise of social advertising to the success of video beyond pre-roll and in-stream -- didn’t stop when the ball dropped. 2013 will be a challenging year for the industry.

Programmed for success?

The shift to programmatic advertising, buying and selling will accelerate, putting downward pressure on display CPMs and CTRs. There’s simply too much inventory of a commodity nature, and our reliance on data vs. brand expression and creativity only emphasizes the commoditization of the underlying content. The top-shelf publishers will continue to attract premium -dollars, but we’ll likely see the “mid-tail” getting squeezed.

This won’t lead to less reliance on data and automated platforms. But it should spark a reevaluation by brands, advertising technology partners and publishers about how to push the creative envelope and find the right mix of programmatic and custom creative/in-stream solutions.

Three out of four advertisers, marketers and publishers surveyed by the IAB said that big data management tools would play "either a 'critical role' or a 'major supporting' role in bettering marketing and advertising efforts over the long-run." That’s no surprise; there are clear efficiency benefits to doing so. 

Better news is that according to a recent study of marketers and advertisers from IBM and Oxford University, "roughly half of respondents’ big-data activities are focused on customer-centric outcomes." Looking closely at what users gravitate to moves the needle on true consumer engagement and involvement. 

Visually Creative

Programmatic buys are an effective way to deliver strong reach. Conversely, publishers such as Quartz and Buzzfeed, are chasing native, integrated solutions on a smaller individual scale. These solutions are often – like the TV spots in the late ’60s/early ’70s – funnier and more engaging than the content itself.  There’s a great opportunity to create those integrated, highly impactful solutions at scale.  We’ll see venture dollars chasing that opportunity this year by funding ad startups, revamped content studios and new authoring tools. Creating template-heavy ad units and the “Buzzfeed” model of custom content will plateau, but we’ll see the development of more interactive, involved solutions that can scale – offerings that are more relevant to a user's interests and create a stronger relationship with brands on a larger scale.

The furor over Instagram’s attempt to monetize user images points the way forward to a more visual, impactful brand engagement experience. People want to engage with images, and we don’t yet have a great solution to monetizing that content. 

Another strong opportunity for 2013: solutions such as in-image formats leverage the power of pictures in the content stream (read: native advertising), helping sites monetize untapped image resources and brands get their messages across. Pinterest is making moves toward launching an ad platform of its own, and we’ll expect it to gain traction.  We’ll also see continued growth for online video. Look at what Facebook has planned to underscore how ubiquitous this ad format will be.

Mobile Matters

For the longest time, no one knew how to make money on mobile – and finally in the latter half of 2012, that began to change. On phones, expect to see heavy focus on localization solutions that span the gap between the mobile ad and in-store or in-establishment activity. 

On the tablet, we've been uncomfortable with interruptive formats, such as interstitials.  However, I expect these kinds of formats to gain traction and hopefully deliver on the creative promise that the tablet holds for content and advertising. 

Of course, there is Facebook, which finally seems to have cracked its mobile woes with sponsored stories. Third-quarter advertising revenue totaled $1.09 billion, according to Facebook’s most recent results – a 36% increase from the same quarter last year -- and 14% of that came from mobile.

By 2017, Sony Ericsson has said that 85% of the world will be covered by 3G mobile Internet and half will have 4G coverage. If we begin to lay the groundwork for better mobile engagement now, the potential for immersive advertising experiences on phones and portable devices will only increase.

 

 

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