Impressions and Icebergs

by Jeff Montgomery, Sep 26, 2005, 6:00 AM

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There's a battle out there for quality inventory. Much has been written about the rumored talks between AOL and MSN, and even more about Google's rumored counteroffer. What's missing is the reason for this possible industry consolidation: because quality inventory is scarce these days. If you don't believe me, just listen to what online buyers told us during our Q2 Buyer Perception study.

Tribal Fusion conducted a nationwide online media buyer perception study in the first half of this year. When we asked, "how do you measure quality in online media?" we heard that it has indeed become a seller's market. We are far past the doldrums of 2002 and 2003, when the market turned to performance-based buys, and when impressions buys became CPA deals. Then, sites inadvertently flooded the market with countless impression in the hopes of getting a conversion. The impression was dead.

Today, buyers cannot afford to buy at those levels, as rates increase and premium sites are getting sold-out for months in advance. "Quality inventory is hard to find, now that the marquee sites are sold-out," said one buyer. This funny word "quality" began to creep up as we spoke to more and more media buyers, planners and directors. One entertainment agency president told us, "I make all of my planners calculate Share of Voice for every part of the plan."

We also learned that buyers are starting to demand better impressions, rather than just more conversions. As one agency president asked, "does it matter if the 'right user' views my ad at the 35th impression of the hour on Yahoo Mail?" These agencies and top marketers are starting to get bigger budgets for online, increasingly from brand advertisers. And they are beginning to understand that current inventory is sort of like an iceberg: you like what you see above the water, but you need to watch out for what is underneath.

Where does this leave buyers today? In a search for quality, according to our study. Overwhelmingly, we heard that while the big media outlets are becoming sold-out, there are still questions about the quality of those campaigns, and marketers are measuring media choices like never before. They are calculating the value of the impressions they are receiving, the lifetime value of conversions, and on and on.

Our study begged the question: "what is quality in the eyes of online media buyers?" The Big Four (AOL, Yahoo!, MSN and Google) seem to feel it is a mixture of content pages and search results. Makes sense. But isn't there more? What about the old impression that those buyers were talking about? Does that matter?

John Chandler-Pepelnjak and Young-Bean Song of aQuantive's Atlas Institute make the strong case in their research that "first impressions really count." Meaning that for most advertisers, conversion rates are highest on the first impression. Perhaps AOL's and MSN's inventory is not necessarily full of early impressions. A recent Nielsen//NetRatings press release had Yahoo Mail making up more than 5% on overall impressions online. So let's assume that not all impressions are created equal.

In the end, maybe this war is between icebergs? Meaning that what you see above water might look great, like the impressions and placements you want. What lies beneath is what you also get on your buys -- what some researchers have called the "long tail" of impressions online. The buyers we heard from were starting to ask tougher questions, like "Do you buy remnant inventory?" "What type of impressions will I get in this buy?" While this market switch has turned to a seller's market, buyers with budgets are starting to expect more for their dollar. They are starting to expect quality. This is a great sign that our industry is finally getting closer to its potential.

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