Wall Street's Wieser To Premium Publishers: You're On The Endangered Species List

Brian-WieserDon’t count on the emergence of “native” advertising, larger ad formats or publisher alliances to do much to reverse the gains made by programmatic buying at the expense of traditional content-based advertising.
In a keynote talk at the OMMA Premium Display conference Thursday, Brian Wieser, senior research analyst at Pivotal Research, offered a dim outlook for the future of premium Web advertising.
In addition to the rise of audience-based buying, he pointed to factors including flat ad spending overall, a slowing shift of ad dollars to digital, and the stronger negotiating position of advertisers in digital media.
“The reality is, I just don’t see a lot of growth,” said Wieser. “There are real practical reasons I see what we have historically seen as premium display is challenged for structural reasons.” His address follows a recent research report he issued titled “The Eventual Death of Premium Web Advertising.”
One of the underlying hurdles is the overall weak forecast for ad spending into next year. Because of factors like the looming fiscal cliff and Hurricane Sandy, Pivotal has reduced its projection of U.S. advertising, predicting it will fall slightly in the second half of 2012 and be flat for the full year. It projects growth of just 1.2% for 2013.
Wieser also pointed out that annual ad budgets for large companies in recent years has been flat — averaging about $60 million from 2001 to 2008. That lack of growth in budgets is compounded by a lack of new ad categories and advertisers entering the market. “Growth only occurs when you get new categories of marketers showing up," he said.
He suggested the shift of spending from traditional media to digital has slowed, with big brands still heavily reliant on TV advertising for major campaigns. Brands have, in effect, used the Internet to substitute for magazines, limiting how large the digital portion of a media budget can grow.
At the same time, the growth of audience-based buying through real-time bidding exchanges, agency trading desks and the like has made the economics of display advertising more efficient. But instead of reduced costs leading to increased spending, Wieser argues that marketers just do more with less -- reallocating spending to social platforms like Facebook or Twitter.
In the digital realm, the advantage in negotiating for inventory also swings to the buy side because advertisers have better information than publishers to determine pricing. When it comes to negotiating with premium display owners, ad buyers have the upper hand.
“All these factors put together do not create favorable circumstances for premium display,’ said Wieser, noting there will be a big winner from the same trends undermining premium advertising: Google. With the largest ad exchange (AdX), the Google Display Network, and a huge amount of aggregated content through YouTube, the search giant is poised to become the dominant player in display.
What can conventional Web publishers do in the face of premium ad erosion? In his research report, Wieser advised them to find ways to become a one-stop-shop by making it possible to reach virtually everyone as often as a marketer wants. Plus, he suggested the combination of Yahoo, AOL and MSN into a single entity would “dramatically change conditions” in the industry by providing a counterweight to Google and Facebook.

5 comments about "Wall Street's Wieser To Premium Publishers: You're On The Endangered Species List".
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  1. Bob Gordon from The Auto Channel, November 9, 2012 at 9:37 a.m.

    Why go to the web if there is no content?
    Does Mr. Wieser foresee the day when the web is just a giant yellow pages?

  2. Andrew Coleman from Rogue Two Marketing, November 9, 2012 at 12:37 p.m.

    RTB & trading desks may indeed grow to a point that their size/scale dwarfs the "premium publisher" model, but to suggest the approach might go extinct entirely is a radical overreach.

    As long as marketers care about content, and see the intuitive logic of "reaching my target demo via the content I already know they consume," there will always be a desire to cherry-pick & align with specific media properties & content sites. Ask any luxury marketer: would you rather cast a wide net, and hope to reach some affluent among them, or align with a specific (but smaller) site that you know caters to your niche?

    The 1% will always exist and have profitable sponsorship opportunities. The real fallout occurs when the next 2%-10% of publishers realize they're not quite as premium a buy as they previously believed... THAT is the playhouse that's about to come crashing down...

  3. Karl House from DECA, November 10, 2012 at 12:38 p.m.

    @andrewcoleman - the point of the article is that your luxury marketer can indeed reach that same niche affluent customer using programmatic buying. It's targeted, so by definition, you're not casting a wide net. The real question is whether advertisers will pay a premium to align with content if they know they can reach that same customer for less through an content-agnostic audience targeting exchange. I think it will vary by advertiser - those looking for efficient buys will probably more heavily weight spend to programmatic buying while those with higher margin products with lower volume will veer toward content.

  4. Rebecca Caroe from Creative Agency Secrets, November 18, 2012 at 4:45 p.m.

    I"m thinking that your 'giant yellow pages' prediction may be truer than many have thought.

    The rise of content marketing and adjustments to search algorithyms (Facebooks' recent EdgeRank reduced brand page prominence and Google's promoted links) show that when consumers are reading they are reading and often don't want ads... and when they are searching they are treating the internet like a giran yellow pages and they want information - which can be in an ad or an article or a link.....
    Consumers lead; brands follow.
    But the search engines and social media hosts command the army.
    It's the new online order.

  5. Paula Lynn from Who Else Unlimited, December 2, 2012 at 4:53 p.m.

    Brave New World

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