IAB: Google Toasts to Science

The tagline for this year’s IAB annual meeting is Brands Battle Back. But Tuesday morning’s theme might have been Revenge of the Tech Guys.

After several days of debating the merits of art versus science in the online ad industry, during which the ad network side of the business took a consistent pounding, Google stepped in in support of technologists.

Former DoubleClick CEO, David Rosenblatt, who’s now Google’s president of display advertising, kicked off Tuesday’s session with a keynote address that defended the role of technology and ad networks, saying they were being unfairly blamed for the industry’s recent pricing woes.

“Technology and networks appear to be at risk of becoming dirty words,” he said—a sentiment he referred to as “delusional.”

Instead technology is here to stay, according to Rosenblatt, and it should be viewed as a friend to traditional brand advertising, not as a threat. The clash between art and science is an “absolutely false dichotomy,” he said, particularly given that the Web is a technology by definition. After all, “you access the Internet over a computer,” he said.

The reason that prices for online display ads are slipping isn’t because ad networks are undercutting prices, argued Rosenblatt. Rather, it’s the simple fact of rapidly supply growing.

Just a few years ago, Rosenblatt estimated that the top portals on the Web commanded roughly 75 percent of total online ad impressions, and now that number is 25 percent, as blogs, niche publishers and social networking sites have exploded. “This is the reason that pricing is under pressure,” he said.  “If you ad a lot of supply, prices are going to go down. That is no reflection on the quality of inventory…but it is hard to buy when there are one or two million publishers in this world.”

Rosenblatt’s comments came toward the end of a conference that saw many leading executives urging their interactive brethren to fight harder to protect the value of their brands, and push harder to stave off pricing declines. On Sunday night, Martha Stewart Living Omnimedia co-CEO Wenda Harris Millard delivered a lively keynote during which she lamented the fact that the Web was too often characterized as a direct-response-only medium. See related Mediaweek story

To help the industry better monetize its flagging ad inventory, perhaps not surprising Rosenblatt used the keynote opportunity to tout Google’s ad exchange as a solution. He cited the airline business’ long-standing practice of selling first class and economy class tickets for flights as an example of how not to selling premium and non premium inventory. “That still produces a sub optimal yield,” he said.

Instead, an exchange like Google’s which enables publishers to control pricing, control which buyers can see which inventory and employ varied pricing models will result in sites “selling each piece of inventory at the highest price possible,” he said.

“We think we’ve created something that addresses the absolutely legitimate concerns of publishers.”

The end goal is to redistribute ad dollars in proportion to audience– “ That is a major priority for this industry,” Rosenblatt added. “We believe that premium sales and premium inventory is the bedrock of the industry. But it cannot live in isolation from networks…the issue isn’t pricing, it is yield.”