Commentary

Be Like Yahoo!

  • by , Featured Contributor, October 20, 2005
Everyone in the online ad industry had to be excited by Yahoo!'s quarterly earnings announcement: third-quarter ad revenues were up 46 percent year-over-year, with brand advertising revenue growing twice as fast as its search revenue quarter-over-quarter. Wow!

If anyone was waiting for a sign that online advertising is taking off--particularly online brand advertising--this should certainly satisfy them. When a multibillion-dollar online ad company can grow at that rate, you know that you are in an explosive market. Now the question for most of the rest of us in online advertising is--how can we grow that fast? How can we "be like Yahoo!"?

Since no one is likely to either immediately replicate their 40+ billion monthly page views or hire away Wenda Millard, their chief sales officer and the online advertising dean of our industry, the better question is: How can our industry grow at Yahoo!'s growth rate? How can our entire industry achieve even 40+ percent year-over-year growth?

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I won't even try to claim that I know how to answer that question. However, I do have some ideas of what problems we as an industry will need to solve if we have any hope of achieving this kind of growth rate. Having attended at least six major industry conferences over the past four weeks, I have spent a lot of time listening to folks in the trenches talk about the challenges they face in growing their businesses. It is clear that we need to overcome some basic, yet exceptional, issues before we will truly control our destiny. Unfortunately, many of these issues have been plaguing us for years and years, with only minimal progress being made:

Late Creative. When I sold my first Web ad in 1995, we didn't get the creative on time, and spent two weeks begging with the Web site to hold the home page spot open for the ad that we were certain was "on the way." While we are much better at this 10 years later, it is still an enormous problem. Now, however, the inventory that is being held is worth tens and hundreds of thousands of dollars per day. Web publishers will never be able to solve their "inventory problem" if we can't find a way to solve this problem.

Reconciliation of Numbers. We still have not made all of our systems talk to each other in the same language and with fully comparable numbers. Our systems are still in silos, and our ad and revenue operations teams spend countless (and thankless) hours at the end of every month trying to find, collect, reconcile, and report all of the campaign numbers. Our ad servers and order management numbers and impression counts and audience reach numbers are all over the board. While, once again, we have made great progress over the years, we have a long way to go. We can't grow as fast as we need to until we solve this problem.

Talent. We need more and better talent, particularly in operations, and we need to do a better job in training and retaining the talent that we have. We focus a lot of money and attention on our most visible talent--those in sales, marketing, and product development. While great talent here can be expensive, there is still quite a bit in the market when we need to fill slots. The same cannot be said of slots in ad and revenue operations. There are not enough good candidates in the market to fill the need. While most companies in our space know how to train and groom junior sales folks, we don't know how to do it in ad and revenue operations. This problem will bottleneck our growth until we solve it.

Cookies. While many industry members may disagree on the exact number of consumers deleting their cookies, there is no question that many consumers do just that. The issue for our industry, of course, is not really about cookies--it is about managing a persistent relationship with consumers, accurate measurement, and consumer trust. All are at risk at the moment. We have come to rely on cookies for recognizing and counting our audience members, and the labeling of cookies as spyware has created some trust issues with our consumers. We need to solve this problem, whether it is with technology or communication or better practices. Persistence, measurement, and trust are all essential to the growth of our industry.

Simplicity. Very few advertisers want to go to the moon, so we shouldn't keep trying to sell them rocket science. We must make our ad products simpler and easier to understand and buy and use. When advertisers buy a full page in a newspaper or a 30-second television spot, they know exactly what they are getting. We need to be able to do the same here, and make online advertising easier to buy.

Education. Even if we make online advertising simple, we are still going to need to educate all of the players in the marketplace about what it is, how to use it, and what benefits it delivers. We cannot overestimate the need to do a better job educating everyone--from junior ad sellers and media planners to account directors, publisher CEOs, and brand managers--on the basic value proposition of online advertising, and how it is different and better than alternative advertising and marketing media and channels. We will need to dramatically increase our investments and attention in this area if we intend to grow as fast as we can.

Can we "be like Yahoo!"? Yes. The market is there. Will it be easy? No. But it wasn't easy for Yahoo!, either.

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