The Internet advertising business is at an odd juncture in its history. Revenue is growing by more than 20 percent, and concern about the still-shaky economy has diminished—at least based on conversations among attendees at the Interactive Advertising Bureau’s annual leadership meeting, which concluded on Tuesday.
Yet, there was still a sense of dissatisfaction among attendees who wondered why they weren't getting TV money. The industry seems to be taking two radically different swipes at the TV gold mine, and these approaches bookended the conference.
On Sunday night, the IAB rolled out a slew of new high-impact creative units, the organization’s first major changes to its ad standards in nearly a decade, and invited several top creative executives on stage. The theme was clear—banners are lousy brand-building ad units, and the industry needs something better.
“Our standard ad units are woefully uncompetitive,” said Peter Minnium, former head of Lowe Worldwide who now leads the IAB’s brand initiatives effort, Internet Advertising Bureau.
“Consumers have fallen prey to banner blindness,” said IAB CEO Randy Rothenberg. The Web, he said, must become a “more hospitable medium for brands.”
Added incoming IAB chairman Peter Naylor, NBCUniversal’s digital head of sales: “[Banners] haven't moved hearts, minds and bodies unless you count the .02 percent of clickers, God bless them.” Naylor essentially implored those in the industry to quit whining about waiting to get their “fair share” of ad dollars, noting that fairness “doesn't really mean anything to a marketer.”
Thus, expect lots more intrusive, eye-popping and even full-page ads taking over a website near you. But are all these splashy creative units enough? They might be more desired by brands than old-school banners. However, unless the Web seriously reduces its glut of supply, even more demand won’t do anything about the pennies-on-the-dollar prices the Web has endured, according to comScore CEO Magid Abraham.
During a presentation on Tuesday straight out of freshman-year economics—titled ominously “Reversing the Curse of the Unlimited Impressions Economy”—Abraham laid out what he sees as a dire situation facing the ad market. “It’s a pretty depressing situation,” he said. That’s because, in the online ad world, even if demand goes up, prices do not, because supply is unconstrained."
ComScore’s answer? Eliminate the staggering number of nonviewable impressions. That approach is gaining some traction, as companies like AOL and Microsoft look to reduce the number of ads they run on a page.
But IAB veteran Dave Morgan, CEO of Simulmedia, threw some cold water on the theory during a presentation on Tuesday, describing how a property like Tumblr is responsible for generating billions of impressions in a few short years “backed by just 65 people.”
Web consumption and pageview generation only seem headed upward, which is why ad technology companies are seemingly here to save the day. During a lively presentation near the close of the conference, a group of top ad tech executives justified their place in the online ad ecosystem, even as they promised to improve it.
The group was a who’s who of ad tech entreprenuers, including Frank Addante, CEO of The Rubicon Project; Rajeev Goel, CEO of Pubmatic; Brian O’Kelley, CEO and co-founder of AppNexus; Bill Wise, who previously ran Yahoo’s Right Media; and Joe Zawadzki, CEO of MediaMath.
One attendee, Diaz Nesamoney, founder of the video technology firm Jivox, framed the difference between Sunday night’s creative showcase and Tuesday’s focus on real-time bidding, stacks and "protocols" as stark. The goals of the different groups appearing on stage “felt diametrically opposed,” he said.
Indeed, it was worth asking the question: If IAB members are so convinced that banners are ineffective and click is worthless, why are so many companies inserting themselves into the buying process, talking about optimizing inventory yield and performance in milliseconds?
As one veteran ad network salesman put it: “Brands just don't think of ad networks and think, branding. They just don’t.” Yet most of the ad tech companies at the IAB meeting spend much of their time working with numerous ad networks.
At least, that is what they seem to do. The industry still struggles to understand what role supply-side platforms, demand-side platforms, data-management platforms and the rest play. Even as Rothenberg introduced the acronym-spewing panelists, he said, “I’m confused.”
Naturally, the ad tech guys preached efficiency and automation before a sometimes charged-up crowd. One attendee, toward the end of the panel, directly criticized these companies for operating businesses flush with venture capital but short on profitability.
“Brands will pay more if advertising works better,” argued Zawadzki of Mediamath. Yet according to comScore’s earlier presentation, that is unproven, and it’s also awfully hard to find many Web publishers who say they’ve gotten very rich by employing ad technology platforms.
Most publishers, like Rothenberg, remain uncertain about just how big a role automated ad buying will play in the digital media world and what role these companies ultimately will play.