Marketing Brainstorms, trickles and drizzles

P.P.S. Online Display ad growth slowing?

Well, now that the experts say it... must be true. Of course, its October now and it was July then

Small is the new Big

Again, more context to my post about how one great opportunity emerging is automating the process for small, long tail advertisers to make display ad creative at no or low costs. He doesn't say that but he illuminates two aspects - one is that Google is the essence of long-tail economics (small advertisers make up much of the online search market) and two is that there is "incredible disruption and innovation going on" in that long-tail advertising market.

Average eCPM of $0.23 at AdBrite

Reading this article I ran the following numbers

384 million daily impresssions results in a projection of about 11.5 billion monthly impressions across 83,000 sites.

Flat 08 revenue over 07 means about $32 million in revenue - this is my guess.

So that means, on average, their performance network is generating about $32 monthly revenue per site at an average eCPM of $0.23. I would guess this means world-wide.

If you believe Alexa and attribute 25% of their traffic to US and guess that 75% of their revenue is US, then the number becomes an eCPM of $0.69 on 2.9 billion monthly ad impressions. 

And another thing

This article reminded that I haven't talked about this at all on the blog - although I've bored quite a few people in person with my pov. In case you're interested in reading more - here's another of the same.

The questions are "Why hasn't Google dominated the display ad business the way they dominate the search ad business?" and "Now that they own Doubleclick - are they going to?" (yes, I specialize in ending sentences with prepositions because my ninth grade writing teacher (Ms. Ashcraft from Alabama) told me never to).

I mean, you can run a display ad through the AdSense network just as easily as keywords. So, I guess there could be a couple of explanations

    1. Contextual targeting doesn't work as well on display ads as it does for keywords. In other words, somehow advertisers don't do a good job of assigning keywords associated with their creative so that when Google matches it with page content, its not a good fit (or not as good as just plain keywords). While I may seem cynical (I'm like those voters who ask hard questions at town hall meetings - being told I'm cynical because I ask a hard question - I'm like "I'm not cynical - I just would like you to answer the question"), I really believe there are smart people testing digital media and I think its not that hard to match some keywords with a display creative - worst case, you'd just reuse the same set of keywords you're buying. So, I don't think this is a reasonable explanation.

    2. Its more profitable for Google to always default to showing keywords-in-a-bunch (or whatever they call that technique of piling a bunch of sponsored results into a 160x600 pixel frame). Seems like the market would adjust pricing for this - in other words, it would be more expensive to buy a click using a display ad rather than as a text ad.

But is there really a limited supply of these ad impressions? My perception is quite the opposite (which is why there really is no such thing as frequency capping on Google - I can get the same pile of Google Adsense keywords in a placement on the page over and over and over and over ... - well you get the idea) - there are more impresssions that could be filled if there were display ads to show in Adsense.

It could also be that advertisers aren't tapped out buying keywords and the growth of search might indicate this. My limited exposure says that within an individual advertiser using SEM, there is a ceiling of traffic you can achieve with buying keywords - both in terms of number of keywords and pricing and you get there pretty quickly. After that its all optimizing the yield - getting another 10% uniques for 10% less cost. Of course, advertisers might be finding they don't get any additional lift (more leads/sales/customers) by spending more for a display ad click via AdSense or that other channels (like Yahoo or Ask.com) are more effective for their incremental SEM budget.

But combining Covario's assertion that average search CPC for their customers in Q3 '08 was $1.09 with Pubmatic's recent assertion that the average eCPM for network sales of display space was $0.27 (see yesterday's post) - a CTR of 0.025% is all that's needed to make display economically equivalent to search. So, this is plausible (just call me the online advertising Myth Buster) but its hard to make the numbers work.

    3. So what is it? How about the cost of the creative itself? Google's business really is the essence of long tail economics. They haven't really taken money from the biggest advertisers so much as from lots and lots of smaller advertisers. Look, I've been inside a company that spent annualized $2.4 million on SEM and we ended up on a couple of top 10 lists for search advertisers. I even got a free fridge with the Google logo on it from the company.

But, Google's total US search revenue is in the $9 to $10 billion range annually - they would have to have 4,000 companies spending an average of $2.4million annually to get to that number - so how did we get to be in the top 10? Because Google has maybe millions (certainly hundreds of thousands) of advertiser spending a lot less per year. And how do they do that? Remove the friction to getting online - automate the process to signup and buy - and provide a value proposition that combines PPC with contextual targeting.

But none of this is a barrier to running display ads through the Adsense network. Same friction removal, same value propostion. Except for one thing - imagine you are an advertiser spending $10,000 annually on Google - what's easier to make - keywords or a display ad? Um, well, keywords require some literacy and intelligence but making a display ad? That might cost another 10% to 15% of your total annual marketing budget - and that's assuming you don't make many changes to the creative during the year.

So, the great new opportunity is to help automate the process for small, long tail advertisers to make display ad creative at no or low costs.

Wow - that took a long time for me to say. Now, you know why when telling this, over lunch, my lunchmates generally end up face first in their pasta.

Display CPMs down 21% in Q3 (from Q2!)

Here it is in black and white. Key takeaway is that Q3 08's average ad price for display ads sold through networks (remnant) is $0.27 - down 21% from Q2 08's price of $0.34. No clue whether this is recession pullback on the demand side or seemingly never-ending increase on the supply side. Like Forrest Gump says about whether life is destined or a chaotic chance - its probably a little of both.

Your Best Customers v1.2

More conversation that sounds familiar but with a new name - "Content Adjancencies". What's interesting here is Jeremy's comment that

>>>>

Through demographic and behavioral targeting, online media companies are asking advertisers to follow the user instead of following the content...In my experience, when the guys with the money [advertisers] want to do things one way, and the guys who want the money [media companies] want to do things another way, then it is usually the guys with the money who walk away happy.

<<<<

except that we keep hearing that those advertisers used to following content tend to be brand advertisers who are pulling back anyway. A lot of online spending (maybe most) is direct (aka demand fulfullment) in one form or another and targeting - demographic, behavioral, contextual, whatever - performs better for direct advertising. Otherwise, why is search the fastest (and maybe the only) growing segment of online advertising today?

Suddenly I support CMO's globally

So brand marketing is dead!

Believe it or not, I think that's pre-mature. My perception is that marketing is both about demand generation and demand fulfillment. Demand generation is what Apple does with its iPod commercials on TV. Demand fulfillment is what Apple (or some e-tailer) does when it buys the keyword "iPod" on Google.

My other perception is that demand generation is damn harder to do well - otherwise, Converse (Nike), Apple and Starbucks wouldn't stand out to us. Demand generation has been done with most media - magazines, TV, billboards (Unilever's recent Dove Soap campaign was launched on billboards) - but its not clear that there have been successful demand generation campaigns launched solely online. As part of a broader demand generation campaign sure (Apple's cool PC vs Mac ads on WSJ and elsewhere as a complement to their main TV campaign) - but not SOLELY online.

Does that mean online is only good for demand fulfillment using tactics like lead generation, keyword buying and CPC (performance)? I don't think so - I just don't think the media is mature enough - heck, most of the innovative marketers who innately understand how to use the Internet for demand generation are probably all under 18 right now. And, any marketers old-enough today who COULD do it probably fall-back on what media they know (TV, radio, magazines) when they produce the original ideas. I don't think this is bad - I just think its the way it is - and the way it is will change as new generations of original marketing thinkers grow up.

Btw, I think all of the same above about content. All of the original content thinkers now fall-back on media they know but, over-time, innovative online content ideas will come as the generation who is capable of doing them get old enough to have a regular job.

Your best customers - version 1.1

Look closely at this and look at how I've talked it here. Nice to have affirmation. That said, the operational and organizational challenges within the media buying community are large and will take a long time to overcome - which leaves a nice, fat business opportunity. At the end of the day, if someone delivers a higher performing platform for advertisers (more business at less cost) using a data/ad impression combination that is smarter than the old way - then it wins. Like the guy in the article said - media buyers are responsible for purchasing the most efficient media for their clients - what he doesn't say is that they don't always need to understand how it works - just that it does.

Reprise: Online display ad growth slowing

Another day, another deja-vu and another possible solution

Display ad down 6% YOY

Wow! Don't know if you can read this article without a subscription (Fox said WSJ content was going to be free but I don't know if that is true) but it says that Nielsen Online claims that the display ad market is down 6% year-over-year in the first half of 2008 while OVERALL online spending increased 11% over the same period. Wow!

Wait. This is deja-vu all over again.