During a discussion this week led by
Benjamin Schachter, UBS Internet and video game analyst, panelists participating in the session dubbed "The Evolution of Online Advertising" looked back at this year's roadmap and what trends may lead
in 2009.
The list reads like an alarm ringing in the minds of industry experts: Lack of technology creates complex buying processes; brands less willing to experiment with new
campaigns want more of the same; an overabundance of content is beating down CPMs. And the consolidation of ad networks will drive trends in 2009.
Pricing and complexity remain key issues for
display advertising. Aside from the faltering economy, panelists agreed that too many publishers and networks have contributed to an abundance of inventory and the downhill spiral of display ad
prices.
J. Moses, CEO of Ugo Networks, a Hearst company, New York, said no one would have predicted that tools making it easy for advertisers to do their job would produce lower CPMs (cost per
thousand page impressions) for publishers. "That largely has been caused by the enormous supply of inventory pushed through the market," he said, noting that Ugo's remnant inventory pricing dropped
significantly during the past couple of years.
Compounding the issue, the rise of blogs and social media created an imbalance between supply and demand, which some said produced confusion when
trying to price media. The promise of the Internet is accountability, but buying display ads is a complex process that makes it more difficult for demand to offset the abundance of supply.
Targeting ads to consumers has also been less than successful. Complex tech tools that don't quite hit the mark continue to stifle online ad targeting and remain the main reason that anonymous
15-year-olds continually are served the same ads, said Bill Wise, VP of business development at Yahoo. "We often talk about how the complexities of buying a $50,000 online IO are greatly more than a
$10 million broadcast deal," he said, adding that Yahoo has built and bought tech tools that analyze intent geared toward search marketing into the display business.
Wise said that Yahoo's APT
platform aims to resolve many display issues--including improving targeting and measurability, and automating the process for buying ads by giving advertisers control to optimize campaigns and
increase yield for publishers. The technology looks to increase yields for publishers and deliver advertisers that manage campaigns better ROI.
"Strong companies use strong brands in down
markets to increase market share," Wise said. "The conversations we have with clients and agencies are based on how to create incremental market share and ways to steal market share from competitors
next year. These are the types of conversations we need to have to move more advertising online."
The panel also agreed that 2008 would go down in history as being the year that video ads
became successful. Advertisers experimented with mid-to-lower-third dissolves and other types of video ads, but pre-roll won basically because it looks a lot like a television commercial. Jon Miller,
partner in Velocity Interactive Group, and former AOL chairman, said Hulu played a significant role in the transition because the Los Angeles-based company managed to prove that advertisers are
willing to pay for premium video content.
Brands are less likely to experiment with new types of ads. Account reps can no longer walk into a presentation and say: "Here's a new idea. I don't know
if it's really going to work, but let's give it a shot." Brands will look for proven concepts to move more dollars online.
When asked how much money has and will move offline to online in 2009,
Miller said the industry goes through cycles in difficult times. First brands freeze, followed by a "flight to quality," "flight to discounts" and then rebalances to create a new norm. "We are
somewhere between coming out of the freeze and flight to quality, where companies begin looking for discounts," he said.