• by Dave Morgan , Featured Contributor, January 18, 2007

The past several years have seen the extraordinary rise of automated auctions in the sale of text-format search and contextual online advertising, driven primarily by Google and Yahoo (Overture), but also by a number of aggressive new players like Quigo. There is a lot of open speculation around the industry as to whether this business model will eventually pervade the rest of the online ad industry. Many hope and believe that all online ad sales will some day be as efficient and easy as buying and selling stocks or ordering pens and paper from Staples. It's an interesting vision and one that may come to pass for some significant parts of the advertising and marketing world--but not for brand advertising, I don't think. Why? Several reasons.

First, automated auctions and exchanges are going to have a difficult time when it comes to helping marketers truly talk to consumers, whether it is to inform and persuade, or to stand out among competitors as different and special, or to make people laugh or smile or cry. Those things are hard to commoditize. Those things are hard to sell in automated self-service auction exchanges.

Second, most brand-focused products in the online industry change and evolve so fast that they are moving targets, as are their audiences. The medium itself is so dynamic and customizable that much of what an ad product looks like upon execution depends as much on what the client wants to do with it as it does with what the publisher is selling. To publishers and their sellers, this means heavy customization. This requires selling something that didn't exist before the conversation occurred. People can do this if they're smart and creative--but machines and technology, not so well. In the technology world, the catchphrase is "customization kills." That is not a catchphrase that works well in selling brand advertising.

Third, automated systems aren't good at consultative selling. When brand-focused online sales reps from NYTimes.com or Yahoo! walks into the office of their media buying counterparts, 90% of the value proposition of what they are selling is largely unknown to the buyer. Online is still new. Products are changing daily. And, as mentioned above, much of what is great is customized. Therefore, the bulk of the discussion during the call tends to focus on the client's core marketing problems and how to craft solutions to those problems. Buyers tend to talk more than the sellers. Sellers tend to listen and think, create and iterate. This is not always a very efficient process and is hard to map with algorithms, since it tends to involve left-brain issues as much as right-brain ones. Mathematicians and machines are good, but not that good.

Does this mean that automated auctions won't change significant portions of the online advertising and marketing industry? No. Google has proven that it is great at selling the modern equivalent of yellow-page text ads, and I expect that the company will prove its ability to effectively commoditize performance-focused banner ads as well. However, when it comes to listening, consulting, creating, and convincing, Google is going to have a tough time.

This is why brand-focused online ad sales folks will be the long-term winners in a cross-platform digital advertising and marketing world. They won't be commoditized. The know how to listen, not just talk. They know how to think, not just respond. They know how to sell creative marketing solutions, not just win the price and competition wars.