3 steps to salvaging the online display industry

(Originally published in iMediaConnection, February 2011) by Eric Picard

Every mature media has one thing in common, and that is scale. Whether we discuss television, radio, newspapers, magazines, or out-of-home, they all have locked down their basic planning, buying, and selling processes in ways that enable a new employee in the space to learn the basics quickly, and everyone in those spaces has agreed on currency, methodology, and KPIs. Any two media planners in television can understand each other’s approach quickly, and can explain their goals to a sales person quickly, and can execute a media buy quickly. All with common knowledge within their industry — that is broadly available. This leads to scale — the ability of a marketer to reach large audiences in these media types at reasonably low costs per thousand impressions, and without a huge amount of work or cost to execute.

I’ve written before about the problems facing the online display industry, and how the early decisions made about ad serving technology are some of the drivers of the biggest problems we face. Essentially my belief is that because we took requirements from an emerging media — which are radically different from the requirements of a mature media — and locked them down at the heart of the inventory management systems behind the industry, we are screwed.

Emerging media have some common characteristics:

  • Small amounts of available inventory, with relatively high demand, thus driving high prices
  • Small overall budgets because they are coming from experimental media budgets, which are highly scrutinized and optimized during the life of the campaign
  • Technical people are usually involved (i.e., experts with arcane knowledge of how to tweak the emerging media for maximum value extraction, across all phases of a deal, including sales, service, production, operations, and analysis)

Every emerging media type that I’ve touched, studied, and participated in over the last 15 years have all had these characteristics. From online display itself, to mobile, to in-game, to paid search, to rich media, to real-time bidding, I’ve seen this happen over and over. So why do I say we’re screwed in online display? Well, mostly for effect — to get your attention and see if we can dig our way out of the problem.

We built all of the original ad serving platforms, created all the processes for buying and selling inventory, set in place the KPIs, and invented ways of planning and measuring the effectiveness of the campaigns when the amount of available inventory was low, average deal size was quite small, and differentiation from other media was the driver of all the decisions. Not a bad thing in itself, but a horrible thing when we locked all those requirements down in software right off the bat. Because now it is nigh impossible to change the way those systems and processes function. And we really need to if we’re going to scale the industry.

I bring this up now because we’re going through the biggest revolution we’ve seen so far. Real-time buying and selling could solve all our problems. But the players in this space are falling into the same trap that all emerging media have fallen into, and if we’re not careful, we’ll have the same problems later that “standard” online display has today.

    1. We need to reduce the amount of arcane knowledge needed to successfully execute on a real-time media buy. The market feels a lot like paid search in the early part of this industry, where only a small cadre of experts could really pull off anything interesting. Those people are all the ones leading paid search practices in the industry today. Good for them, bad for the space.
    2. We need to optimize for efficiency over effectiveness. By this I mean that in an emerging media that is trying to prove itself, much of the effort is applied to a small frontier of effectiveness gains that will show numeric advantage over the competition. “We achieved 30 percent better results than competitors” sounds great until it is understood that the actual value created was miniscule. The big opportunity for the real-time space is scale, which is why I like the term “scale display” for this emerging space much better than anything else. Efficient (and effective) buying and selling is what the industry needs to solve. Not squeezing an extra 3 percent of yield or ROI — with 30 percent more effort. That’s an emerging media type approach. We need to see “scale display” as the way we help online display move beyond an emerging media and become a mature media.
    3. We need to understand the metrics of traditional media and how they play with the metrics of online. What can we change? What can we give up? How can we make it much simpler to spend much larger amounts of money on our media?


Rich media advertising is a great emerging media type to look at and understand when we talk about scale. Back in the early days, every company had its own proprietary ad formats; some companies were the “expanding ad guys” and others were the “interstitial guys,” and others were the “video ad guys,” and others were the “floating ad guys.” Each company had their own ways of buying and selling the media. Each had their own way of measuring the effectiveness of the media. It was a complete disaster.

It wasn’t until PointRoll figured out how to sell the media at scale, and all the other providers copied its model, that rich media became a mainstream media type within online display. All the providers began offering all the formats and functionality that their competitors offered. The big issue is that they made it easy to buy efficiently, and quickly the percentage of media sold as rich media grew.

Scale display needs to be easy to buy and efficient to manage. We need to make sure that the complexity of an emerging media doesn’t block the success of the entire market. Because I believe that scale display is the way that online display becomes a mainstream media.


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