Commentary

Flaw in the System - Part III

Earlier, we discussed how to fix the flawed system set up to scale online advertising. This week, we will take a look at the benefits this model provides for advertisers.

The Fork in the Road

Is it possible, that when Internet advertising started taking its very first baby steps, they took one collective step in the wrong direction and everyone just followed suit?

This fixed position model copied from outdoor advertising fits the medium like a pair of baby shoes, but the problem is the baby is now 10 years old. The chances of changing how inventory is packaged and sold years after the first recorded banner sale was ever made, is a huge undertaking. It would have to start with publishers embracing a new approach when their human instincts tell them to defend a past one.

And even if online publishers did adopt this fixed position pricing model, online buyers still sit firmly atop the swing of supply and demand and will pose a significant threat to allowing this change to permeate successfully throughout the marketplace.

And that's where both buyers and sellers have lost their ability to see the trees through the dot-com forest. If they collectively worked together to fix this flaw, the cost to advertise on Web sites will go up. Costs advertisers can be sold to absorb because this new model increases the value of their exposure. Which means clients may have to increase their percent allocation to Internet advertising a point or two to cover the increased expenditure necessary.

As sellers and buyers of media, we tend to work within the budget that has been placed in front us, fighting for the biggest crumb instead of working together to grow the piece of pie. This fixed position pricing model proposed, will fix the current flaw that feeds the disparity between the consumer attention captured by Web publishers, and the allocation of ad expenditures in the mediums that have lost it.

For a closer look at the benefits for advertisers and publishers of adopting this ad system, check out the bullet points below.

The benefits for the advertiser are very clear:

Advertisers can always see their own ads Please do not underestimate how important it is for an advertiser to see their own advertising. It contributes to their perceived value of exposure, so not being able to see it, has the opposite effect (consider this, how many things would you buy for say $15,000 that you were unable to actually see?).

The value of the ad exposure increases That's because they own the reader's attention exclusively. It's simple. It's a lot easier to get someone's attention if you are the only one speaking versus having to gain someone's attention if multiple people are in the room, or if people keep rotating in and out of the room.

Readers can always see the ad too The current model in place rotates advertisers with each page view generated, which only allows a user to act on the ad message at that particular time, or they lose their chance until the ad appears again within the rotation. I am not suggesting this fixed position model increases click through, but it does increase the opportunity to do so.

The list of benefits for the publisher is a bit longer, given the disadvantage they have been at within the flawed model currently in use. This fixed position pricing model allowed us as a publisher to:

Count inventory accurately By condensing our premium inventory from virtually limitless to 13 weeks per quarter, per channel front page, we had an exact number of "units" to sell (eight channels, including the home page of IGN.com, times 13 weeks equaled 104 "units" per quarter). This is a far more manageable number in which to monitor our sell-through which in turn gave us enough time to read the market's demand and act accordingly.

Increase demand This decrease in inventory supply immediately increased demand (almost overnight). This allowed us to hold the line on the CPM we needed to secure for these front page fixed positions.

Create a cost per entry Our rate card actually had a rate on it, and the price to advertise grew with increased traffic. By default, this model gave our company clearer direction as to where we should focus on growing our traffic so the reward for doing so resulted in a higher rate to advertise.

Create more urgency for the buyer to act By selling one week fixed positions, there was a firm start date to the advertisers campaign. We were then able to enforce a closing date for when materials had to arrive.

Create more urgency for sellers to sell This approach gave birth to an internal reservation system. Salespeople would reserve key weeks on key channel front pages for their advertisers. This would in turn paint a clearer picture of how much inventory was reserved versus sold for a given quarter which provided greater revenue visibility well before the end of a quarter.

Schedule campaigns with ease Unless you have worn the hat of your ad operation staff, you have no idea how difficult a job it is to schedule campaigns and have them fulfill their delivery in time. By selling one week fixed positions, the job of scheduling campaigns becomes far easier and more efficient.

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