So are Web publishers totally screwed or aren’t they?
That’s not the official theme at the Interactive Advertising Bureau’s Annual Meeting (it’s actually Revenue: the Next Wave), but it appears to be the reigning question at the event, which is being held this week in Carlsbad, California.
Based on the topics being focused on by various speakers thus far, the future of ad supported traditional branded sites is very much up in the air, and the ongoing commidization threat from ad networks, exchanges and demand-side buying platforms has many asking some scary questions—while others are expressing steadfast defiance.
During a session focused on mergers & acquisitions in the digital space, Tolman Geffs, co-president of the Jordan Edmiston Group, posed the question, “Is brand advertising in decline?—while pointing to dropping stock prices at companies like the New York Times and Yahoo. He showed an ominous chart for publishers who earn a living selling traditional, context-driven brand opportunities: it showed that in 2009 more money was spend on direct marketing and promotional advertising than was spent on branding.
For digital, he predicted that branding and direct response tactics were starting to blend “We think this is not just the economic cycle,” he said.
And according to Geffs, that means that advertisers are going to purchase audiences, rather than buying on a site by site basis. He estimated that today 80 percent of display inventory is sold directly, but by next year that will dip to 70 percent.
“Ton of players getting into the audience selling market,” he said. “Premium publishers are losing a key advantage.” That is, historically publishers have sold brands on premium content and premium audiences. “That second one is starting to fade,” said Geffs.
Of course, that’s not a trend that many traditional Web publishers are crazy about, but it’s inevitable, according to David Moore, chairman and founder of 24/7 Real Media. During a keynote address on Sunday night, Moore said that agency-led demand-side platforms are here to say, and publishers need to get used to them.
With more and more players involved in the display ad chain, from ad serving companies to exchanges to data companies–publishers margins are taking a beating, said Geffs. An online ad buy generated a $5 CPM may result with just a dollar going to the publisher that sold it, according to his data.
That’s leading many publishers to question whether all this high tech selling is good for business. During his keynote address entitled “I Didn’t Kill Newspapers, Eric Hippeau, CEO of The Huffington Post, said that a year ago the site was using ad networks with the promise of better selling the site’s news-junkie target using sophisticated data. But the site was earning a 40-cent yield from its indirect sales.
“No one can build a business, let alone a large one, with those kinds of numbers,
he said. Algorithms might work for search engines, but not for us.”
So instead, Huffington Post has spent the last year doubling its sales force. Currently, Hippeau said the site sells about 15 percent of it inventory through networks, and expects that number to hit zero in the coming years. “We’re doing it the old fashioned way.”
Meanwhile, several prominent IAB executives known for doing the old fashioned way have used their speaking opportunities at the event to urge publishers the industry to stand up for itself better–without directly calling out networks, exchanges and demand side platforms..
During Sunday evening’s awards ceremonies, newly elected IAB Founder Award honoree Jim Spanfeller, president and CEO of The Spanfeller Media Group said that publishers need to “respect” themselves better.
Similarly, the night’s other Founder Award winner Wenda Harris Millard, president and COO of MediaLink, spoke of the online ad industry needing to join the “adult world’ of the business.
To do so, the industry needs its members to assume responsibility for shaping its future. “Forceful and fearless leadership will help accelerate our beloved business,” Millard said.