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According to the 2010 Display Advertising Study conducted by Advertiser Perceptions on behalf of Collective Media, the number of advertisers planning to increase their spend this year on site-specific ad buys is greater than the number planning to increase their spend on ad networks.

The study, which was based on interviews with 420 advertisers, found that nearly half of the advertisers interviewed planned to spend more money this year with "spending increases limited to vertical content and video sites". While ad networks are also set to be the recipients of greater spending, the number was closer to a third of respondents.

The logic is obvious: many advertisers still get a good feeling buying inventory from content sites because they 'know' what they're getting -- and they probably won't lose their jobs buying from well-known content brands. Furthermore, and perhaps most importantly, advertisers still largely believe that specific sites give them access to their target audiences. Supporting this, the study found that 74% of advertisers cited "targeting" as the primary reason they make site-specific buys.

The only problem with site-specific buying, of course, is economics. Advertisers, particularly those with big ad budgets, can't get to the scale they need with site-specific deals. They're just too inefficient. Which is why a greater number (40%) of advertisers with annual budgets greater than $10m plan to spend more on ad networks this year.

But soon, advertisers may not have to choose between site-specific buys and ad networks. According to the study's authors, "We expect the next wave of this study to show a marked increase in audience data as the single biggest differentiating factor among ad networks."

In other words, ad networks may not be able to match site-specific buys, but by collecting and using audience data, they can give advertisers the same level of targeting advertisers believe they're getting when they buy on specific sites. Interestingly, the 2010 Display Advertising Study found that "the ability to target precise audiences based on 'user data' has risen to be the number one criteria in selecting a media partner."

If accurate, this is probably not good news for publishers, and it may provide publishers an even greater incentive to avoid ad networks altogether. After all, if advertisers come to believe that they can reach specific audiences through ad networks at costs lower than what they'd pay through site-specific ad buys, they may have far less of an incentive to do those site-specific deals. If targeting (read: audience) is what it's all about, why pay $10 CPM for an audience when you're convinced you can buy the same audience for $3 CPM through an ad network?

In my opinion, momentum in audience-driven ad buying should give publishers good reason to reevaluate their relationships with ad networks. Many publishers essentially hand over their audience data to ad networks for free. As ad networks and advertisers get savvier about using it, publishers giving away the farm may find themselves going hungry.

Patricio Robles

Published 7 May, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Chris Ellis

Surely there will always have a place for both? We can do things with advertisers (e.g. sponsorship of a program, highly targeted) that networks by definition cannot. But we will continue to sell remnant space as part of a network once the premium inventory is gone.

about 6 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Chris,

That may be true to some extent, and you are right that an ad network can't offer the level of integration publishers themselves can (eg. sponsorship, etc.). But when advertisers can buy an "audience" through an ad network, that's the "targeting" the majority of them are looking for according to this study. So instead of paying a much higher rate buying direct, many advertisers will/may increasingly feel that they can get what they're looking for much cheaper through ad networks.

So in theory, you'll be selling far less of your "premium" inventory (which according to the study isn't really all that important to many advertisers) and you'll be stuck with far more of that unsold inventory. The bigger issue is that of user data. Ad networks can't sell "audiences" without it, and I don't know any publishers who are being paid by the ad networks for this data. So it raises the fundamental question: are publishers giving ad networks their most valuable asset at no cost?

about 6 years ago

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Name Tags

Patricio, I agree with your response. At the end of the day it is just going to come down to the same thing as everything else, and that is money. If they can advertise cheaper, they are going to do it. Great post, thanks for sharing!

about 6 years ago

Neil Warren

Neil Warren, Publisher at 2N Media Ltd - ModernSelling.com

Interesting points Patricio.

This seems, to me, to have echoes of all preceding media and advertiser evolutions, only now compacted into speed-of-light changes with which digital is keeping us entertained.

It starts with B2C comparisons, where the most popular print equivalents of their day (say The Times or something) would have started by offering an audience of “people who can read” (inferring whatever buying potential they had) and today translating into “people who use the internet”.

In the print world, over the next 100+ years, that slowly (or was it quickly?) fragmented into “people who can almost read but anyway enjoy a picture” through to male/female, young/old, rich/poor, local/national and on into the specialist versions of scuba-diver/angler, sewer/painter and so on. The battles raged throughout, with The Times always still claiming that x% of its audience were anyway wealthy, young, males who went scuba diving. And that left the advertisers trying to figure out whether their products or services could, or would in fact be consumed by “most” of whatever audience, or whether a specific niche was more cost effective (so are you selling a bank account or a £2,000 carbon-fibre angling pole?).

Similar battles ensued over the last 50+ years as B2B caught on to all this, and advertising and marketing started to have a stab at replacing one-to-one selling. So again, there would have been some statistical claims knocking around about the “percentage of our readers who are frequent flyers” to grab a share of the pretty (and prestigious) airline adverts, but over the final 25 years or so, advertisers tended towards wanting those “pretty” adverts to start to be “effective”, or “pretty effective”, at least. That then put the pressure on publishers to try to ensure that they were delivering real readers, who actually made it to page 92, and read the feature, and clipped the coupon or entered the competition, rather than just having an overall “readership” profile.

A survey of US advertisers in eMarketer yesterday, noted that “the click” is still the metric most favoured (60%) by online advertisers – inferring that we have, at least, got beyond “the impression” as the equivalent measure of those early print readership figures. But “lead generation” (48.7%) is hard on its heels, albeit much easier to measure for sales of expensive fishing poles than people opening bank accounts. When you do get to B2B though, I haven’t found many advertisers who are happy with either “a click” or even “a lead”, until and unless that lead can be quantified and progressed, beyond a website visit, for example. And this is true whether that click/lead is generated in the wide open spaces of Google, extended ad networks or much more precise and focused niche publications.

Marketing/advertising, in other words, appear to me to be struggling to firstly generate (or at least separate out of the masses), and then pass over, a decent, agreed-quality “lead” to their sales departments and colleagues. This may be acceptable in the big, wide, white-washy world of B2C, where a few metrics can obfuscate any wastage (or there are no sales people anyway), but it’s a critical pain-point in much of B2B, where individual punters, engaged in two way dialogues, make all the difference – often because you only need one a day/week/month/year.

This is all on a sliding scale, of course, because it might be that you are perfectly happy just to have impressed (with “an impression”) umpteen million business folk as you went along with the fact that you supply good-quality-but-low-priced office stationery, as you unearthed each new ready-to-buy punter. But the sums probably aren’t the same when you need someone to buy the £100K+ of international business consultancy advice that you’re offering.

And “premium inventory”, in the latter instances, are probably beyond the grasp of most “big number” or ad-network publishers anyway (as they probably also were when you got to The Times+ sizes offline). It looks more likely, to me, that the solutions here will involve those greater “levels of integration” you mentioned, where the combined presence of an advertiser-inspired compelling offer, within the warm and friendly community the (specific) reader(s) is happy with, will be producing the best results. So people “chatting”, online, with Rod Liddle in sundaytimes.co.uk is going to be the specific sub-community that appeals to whatever lefty product or service that might be, in competition with “all readers” of Red Pepper or whatever.

Or maybe we should be getting into targeting and delivering specific ads to profiled visitors, no matter which publisher’s content they are absorbing? But then surely it’ll be in everyone’s interest to agree that a “rare bird” has a far higher value than a “common or garden” one, no matter where it alights? And this is still just an extension of providing serious value by the sum total of specific individuals, rather than a “mass” audience. I include the advertisers in “everyone”, as soon as they appreciate that they wouldn’t take all of their “suspects” out for a nice lunch.

The final point being that it is this comparable speed-of-light learning curve, (covering what, 10 years maximum, so far?) that is giving us all sleepless nights as we try to figure out which mix of integrated online (and offline) advertising, marketing, lead generation, punter engagement and selling (new-business-with-account-development) is going to work best. Particularly in each of our specific and varied circumstances in B2B, where only a tiny percentage of advertisers will ever get anywhere near the $10m+ budgets that do indicate more of a B2C “acceptance” of the scattergun approach being valid.

Not to mention the final, final point that the B2B buyer surveys aren’t showing a lot of correlation with advertiser/marketer/seller activities - in the first place!

It’s fascinating stuff though and thanks, as ever, for highlighting it.

Regards - Neil

about 6 years ago

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nik

definitely a place for both. however, this is why vertical networks are particularly interesting as it offers the best of both worlds...site specific capability with trusted sites and audience targeting

about 6 years ago

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Eric Simon

At [x+1], we feel like the title of this article should have been... Attention Publishers: Audience Targeting Is Now Your Best Friend!  Nobody is in a better position to sell audience than the experienced publisher.  And with access to existing DSP technologies, publishers can finally leverage all the years and money that they have invested in building these audiences.  If Ad Networks were nervous about DSPs eating into their piece of the media plan they should be scared to death of the publihsers.  Publishers can now respond to an RFP with the exact same sophistication the ad networks have been using for years.  You will have multiple line items of on-site and off-site media placements, selling contextual, sponsorships, and audience reach all at the same time while lowering the effective CPM of the buy.  The time to disintermediate ad networks is now and all the tools for execution are right there in front of you. 

about 6 years ago

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