(Originally published on ClickZ, March 2001)
The outlook for online advertising is good; we just need to fix the problems. A typical Web site publisher runs an ad on every single page of the site. If it has unsold inventory, it either runs a public service announcement or it runs a house ad.
Jupiter Media Metrix just released the report “Online Advertising, Market Perception vs. Reality.” It was very enlightening.
While growth has slowed since online advertising’s meteoric rise over the past few years, the industry is still developing at a healthy clip. And as I’ve been saying since first noticing this dip, it’s not like people have stopped going online: There was a 22 percent increase in the number of unique users online between 1999 and 2000. More important, the amount of time users spend online went up 31 percent in that same time period.
With the consolidation of sites as dot-coms fail and the resultant concentration of user traffic, we’re going to see more value placed on those sites that survive this dip. This is very good news for the long term.
One point made by Marc Ryan, director of media research at AdRelevance, really caught my attention. He said, “Publishers should run house ads more sparingly, surgically, to reduce clutter and allow clients’ ads to have more impact.”
Publishers are selling less inventory, and the inventory devoted to house ads on their sites is increasing. One of the greatest problems online ads face is user information overload. Ads appear over and over in a site’s design in exactly the same static ad space. The theory is: If we leave it empty part of the time, it will draw more value out of those ads that do appear.
This notion hit me pretty hard; it’s basic stuff, but I hadn’t thought about it this way. And as is my wont, I started thinking about the problem from a technology standpoint.
The first step is to validate this theory — it sounds logical, but so have lots of things that haven’t been proven to work. So how would we validate our theory? If publishers can figure out what the effect of NOT running house ads is, then they can make intelligent decisions about best practices. But…
The majority of publishers and even agencies haven’t invested in analytics solutions — and I’m not talking about a roomful of people looking at campaign stats. That kind of analysis isn’t helpful without a good tool to sort the vast amounts of data before the human eyes start looking.
Part of the problem is that these solutions are extremely expensive and require a staff of people who are experienced analytics specialists. Virtually no agencies have this kind of staff. And the scary part is that the vast majority of publishers don’t have this kind of staff, either.
Yet analytical tools would solve many problems for publishers. They would be able to quickly and easily see value across their properties — and they could actually optimize their inventory differently. They could build new pricing and inventory plans. Imagine what would happen if publishers could show a value proposition to media buyers that leads them through their buys, AND the end result shows a greater ROI.
For example: Traditional media planners are used to buying broadcast media in time slices for specific channels, whether it’s a radio station or a television station. For the most part, we haven’t done this online, partly because of technical reasons and partly because of the absence of a value proposition showing that it works. If the publishers could make this work technically and run some tests, they could analyze the results and see if there’s a business case to be made.
Without analytics capabilities, publishers can’t possibly know what works and what doesn’t. Essentially, most have been flying blind.
So what’s the answer? Publishers need to dive deep into analytics over the next year. It isn’t a critical issue yet — but expect it to start looming soon. And they need to start doing research into what kind of questions they need answers to.
My advice: Please don’t make the mistake of thinking it’s about click rate. And do include rich media ads in the mix when doing the analyses. This is another reason tools are needed, because if you can’t figure out what’s happening with GIFs, how are you going to figure it out for rich media, with exponentially more data to crunch through?
While the industry is not doing nearly as poorly as some fear, it’s time to start cutting through theGordian Knot to solve some of the problems that clearly do exist.