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15/02/2009 by
2252 views

The Future Of Online Advertising Explained

At conferences I frequently speak about disruption and disintermediation in the online advertising industry. Here’s my scope on the future of online advertising. Some of you will not like this future- it might impact your business models severe. But as former IAB chief I can tell you: Change Can Happen…

ad exchange diagram The Future Of Online Advertising Explained

Disruptive models in online advertising will keep coming. And these disruptive models with keep disintermediating companies. Can I make it tangible by some examples we all know? Yes I Can!

Remember all the classified ads in the newspapers 5 years ago? All these weekly Millions of Euro in classified ads have vanished from traditional publishers- the classified ads have all moved to sites like Craig’s List, eBay, Marktplaats and more. Gone by the wind, vanished, and vaporized.

Not convinced yet? Yahoo! failed to develop a solid search strategy 5 years ago. Next they lost hundreds of Million Euros in search engine advertising and several Billion Euro at NASDAQ.


Still in denial that Change Can Happen? Okay, fair enough! In the search engine advertising (SEA) field Google disintermediated media agencies and search engine agencies by creating a disruptive direct sales machine. When Google reached their ‘monopoly’ status in many markets they simply stopped their Best Practice Funding (BPF) which carved out a large chunk of the SEA revenues at agencies.

That same Google launched an incentive program in some markets for buying display and video ads at it’s YouTube one month after they had stopped the BPF in SEA. I’m the crazy one here? Fully and totally ignorant? Or completely missing out on the Unique Buying Reasons for agencies or the Google consistency here?!?

Big publishers like i.e. Yellow Pages and many others try to sell online advertising spaces through their expensive sales forces at high prices. Most cannot sell all their inventory, so they send the leftover, or “remnant,” space to an ad network.

Will disruption and disintermediation stop here? Don’t think so. How many traditional advertising agencies do you think that have fully missed the opportunity of tapping into online marketing? Many ad agencies still create banners that are 150mb and need to go up your building by the elevator! And what do they know about integrated approach, databases, e-mailmarketing, eCRM and e-commerce?

Most brands and their media agencies have missed the trend of online video and social media marketing completely. They keep discussing the fragmented media landscape and how difficult it is to reach modern consumers. If they would simply look at consumers behavior they would just switch their media mixes towards online and the problem would be solved.

Simple question to traditional marketers and their traditional agencies. If the Vatican knows that screenagers can’t be reached and engaged with newspapers and TV stations anymore and Pope Benedictus XVI has embraced a YouTube channel, what the hell are you doing? Under what rock have you been the last couple of years?

If Oprah knows she needs a YouTube channel and Barack Obama knows he needs a YouTube channel, how can you keep diving your responsibilities? Stop complaining about fragmented media if you have not tried to tap into large online trends like video and social networks.

How many brands have launched online listening or conversational tracking programs yet? Starbucks and Dell did it smart, but only when their brand was close to peer destruction. Can somebody explain me why 5% of the large brands are doing conversational tracking or listening programs and not 95%? Why wait till it’s too late?

Innovate, measure, brand track and learn. Do it fast, because it’s innovate or die. If you don’t start today, you will not even make it to the next rounds.

Next round in online advertising will be the rise of Online Ad Exchanges. Online Ad Exchanges, let advertisers buy online ads directly, like at a marketplace (banners of the day?). So direct online media buying at hundreds of websites at once, at lower fees and less labor intensive.

How many sales reps will publishers fire this time? Why have expensive sales forces if you know Google is doing most of its revenues through direct online sales?

Will online advertising changes finally stop at Online Ad Exchanges? I think not. I think the future of online advertising will go into another phase after that.

Brands, publishers and media agencies will finally understand advertising is all about changing consumer behavior. So eventually we will all fight to build databases that store consumers likes, topics of interest, online click behavior and online buying behavior. So building consumer knowledge, insights and eCRM will be the needed next step.

A big step. Since most brands and publishers have not really thought about the importance of opt-in databases and e-mail marketing yet.

And a big step for advertising and media agencies, since they have been focusing on the last 30 seconds of the marketing value chain: advertising through shouting TV commercial and GRP’s. They have neglected the power of opt-in databases, eCRM or consumer contact improvement programs for a decade.

So if the future of online advertising will be: serving relevant ads to relevant consumers based on their database profile, what will be the future of advertising and media agencies?

If you explain to them that online advertising within a few years will change from buying online ad spaces at umfeld sites into buying relevant ads only served at the right consumer profiles, they get lost in translation completely. Media planning will never be the same anymore, when we enter this phase.

Brands and publishers that have not built extremely smart eCRM or Consumer Contact Improvement architectures will be gone at that stage.

So the future of online advertising will change dramatically if you ask me. To influence consumer behavior in the future, we will need to start collecting consumer behavior now. So eCRM and database marketing and targeting the right consumers with the relevant and right ads will be crucial.

And if you look at the tangible examples I gave you earlier in this item, do you think I’m exaggerating or can things really change faster than we ever imagined? Should marketers embrace technology and innovation today? Can Change Happen? Share us your thoughts…

Source: The New York Times

 

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Comments (9)

  • Lee Henshaw 15/02/2009, 22:10

    Igor,

    This is what we argue, too, and, for us, the early signs are that 2009 is the year that more people than ever will listen.

    At Silence, an online ad agency, we use the CPE model.

    This week we launched 20 banner ads across 7 different European countries for Kings of Leon, and we’re about to launch a campaign in the UK for Fatboy Slim’s new band, The Brighton Port Authority.

    Our service is detailed at http://www.silencelondon.com.

    It was a struggle initially to get publishers, especially mainstream ones, to accept our model. Like us, they’re only paid if people rollover the ads.

    Thankfully, they’re starting to accept our argument – that banner advertising needs to match the performance based results of SEA – and using their different forms or tageting, they’re now seeing good rollover rates.

    Yours faithfully,

    Lee Henshaw.

     
  • Hi Lee

    Thanks for your clear answer. I really think you are right with the expanding willingness at publishers to listen.

    We use the CPE model as well within the social media marketing space.

    However I do not think we should compare all with SEA and Google: Google is a sales machine. Most online campaigns work very well for brand awareness and image reasons (likeability /preference).

    We know since we measure 75% of our campaigns with Metrixlab.

    There’s more than performance based online. That Google is a nice sales machines does not make the whole internet suited for performance and sales only ;-)

    Cheers

    Igor

     
    • Lee Henshaw 17/02/2009, 10:55

      Hiya Igor,

      Thanks for responding.

      I see that Metrixlab have a London office – they look interesting. I’ll give them a call.

      The brand awareness argument for online display is losing pace, I feel, and I’d like to see research that bolsters it.

      Why do you restrict CPE to social media?

      Yours faithfully,

      Lee.

       
  • @ Lee

    Yes MetrixLab has an office there. You should talk to them…

    We are very rigid in our approach: we don’t feel.. we always do 0 and 1 measurement studies on campaigns: or cross media or brand tracking.

    You would be surprised how good online works for branding. Due to the proof we deliver: we increase online budgets with 300% and more..

    We do social media marketing in any way: viral seeding, cpc, cpm, cpe and more..

    Cheers

     
  • RSW 17/02/2009, 18:24

    Igor,

    This is an inspiring post that really got me thinking about the future of online advertising. I do think in the model proposed in the original post there is not enough emphasis on the importance of involvement in social networking and the creation of viral media in the future.

    I have a full response at:
    Respinning the Web

     
  • Randy Shamak 19/02/2009, 15:11

    The content you have provided is pretty interesting and useful and I will surely take note of the point you have made in the blog.

    While I was browsing the Internet for ways to boost my website exposure, I read about how effective offline media is for getting additional exposure. Since online media advertising has become so competitive, I thought I will complement the online marketing efforts of my products with offline media advertising like newspaper and magazine advertising. This can be the best way to get a wider coverage for a website and draw additional traffic. I think it is a great marketing strategy to use both online and offline advertising to get more customers.

    I thought this information might be useful for anyone looking for solutions to get me-ore traffic to their website.

     
  • Bob Fitzgerald
    29/12/2009, 18:18

    One fact is that SEA is not going away. Reducing and migrating to social networks and mobile search for sure, but not going away. What may come full circle is the initial building of localized sites which are keyword rich and targeted by industry. In other words, will advertisers drill down to sites that are rich in content and value to the searcher? Will newyorkrestaurants.com or chicagorestaurants.com be a more attractive advertising vehicle than citysearch.com or yelp.com for the marketing of a restaurant? Where will advitorials come in?

     
  • Igor
    29/12/2009, 18:26

    Hi Bob,

    Yes, SEA will probably stay!

    I do only hope that more brands will learn to focus at owned and earned media first(like SEO / SMO etc), before they spend all their money on bought media.

    I do feel that online can still learn much from offline in many ways. To give you a few examples;
    Online advertorials have great impact on AIDA, however so many online publishers do not offer them (on their ratecard and/or portals).

    Next, most publishers complain about the lack of advertising revenues in social and online video. They think aggresive pre-roll ads are the solution, but hardly anybody tries going around the video….

    So great point about advertorials!

    Cheers

    Igor

     
  • anne jaa
    11/02/2010, 04:41

    Wow amazing!Advertising is just one part of a larger marketing effort to effectively promote your business and to use an integrated approach that combines advertising with public relations.I like your post and so i will keep visiting often for more information.

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