Digital Has an Ad Problem and Lots of Solutions

But which technique is best for the online environment?

It’s Advertising Week, which means it’s time for a barrage of panels full of questions like “Are banners dead?” and “Native advertising: the wave of the future?” And while some will dismiss this chattering as manufactured drama, the proliferation of these existential questions is a solid indicator that the digital publishing industry needs to change, especially if it ever wants to cash in on that brand advertising everyone’s been waiting for.

The problem is, everyone has a different opinion on how to do it, ranging from way bigger banners to customized ads in lieu of banners (i.e., “native ads”) to more video to Web pages that look nothing like Web pages.

“It’s an evolution, not a revolution, and now publishers have embraced the change,” said IAB head of brand initiatives Peter Minnium of the growing acceptance that digital needs real reinvention.

For the IAB, the way forward is bigger, better ad offerings for brands like its collection of rich media Rising Stars units. Minnium notes that by year’s end, over 70 percent of the IAB’s portfolio will be made up of Rising Stars avails.

But for some, the medium needs a much more radical rethink. “We’ve done a disservice to ourselves in digital,” said Larry Allen, Real Media’s svp of business development. “We haven’t taken brand attention and put that at the forefront of how we design our websites and apps.”

Pushing back against the static display experience are companies like Appssavvy, which talks a big game about the reinvention of the digital advertising with its Adtivity platform. The idea behind Adtivity is to deliver customized ads during natural breaks in the browsing experience based on users’ natural activity, like sharing an article or making a comment. Adtivity works great for games (ascend a level on a social game like Disney’s Sorority Life, get a congratulatory message and a rich 600 x 300 center screen brand message), but it hasn’t caught fire in traditional browsing experience, though the company is in talks with The New York Times Co. and USA Networks.

The native advertising concept (ads that are designed to look and function like the rest of a site) is sexier and boasts high engagement rates, but it’s hard to scale and demands much more of publishers’ time and money. “These niche companies [like Appssavvy] hit a core agency and marketer need to get ad experiences in a viewer’s activity stream; however, it’s still a niche product, only 7-10 percent of the whole market,” said Minnium.

Yet some like Ogilvy & Mather’s chief digital officer Brandon Berger believe that a single advertising tactic is simply unrealistic and that each digital environment requires its own approach. “Brands have to be aware and be relevant to the audience’s environment,” he said. “It’s not about the units but the scalable audience and platforms that allow us to participate.”

The lack of consensus is to be expected as the digital landscape evolves. But the need for answers is starting to feel more urgent.

“Brands need more,” said Real Media’s Allen. “We’d have seen a quadrupling of ad spend in digital if this was really working. TV budgets continue to grow, but right now digital is adding complications every day to its buys.”