overviewprimaryimpact.com/stateofdigitaldisplay2.pdf · by kathryn koegel prepared for october 27,...

By Kathryn Koegel

Prepared for

October 27, 2009

With data collaboration from:

Compete

comScore

Dynamic Logic

InsightExpress

Microsoft Advertising

The Nielsen Company

Overview

Online display – though much maligned in the early days of the recession – is not in the dire straits once predicted:

Spend has not decreased as much as in other media in the current economy according to both Nielsen and CMR. CMR data, which includes performance-based campaigns, shows YOY spend growth.

Online ad spending overall has experienced declines – primarily due to the continued troubles of online classifieds – but site-reported display spend is stable, according to the IAB.

The majority of categories such as consumer goods, finance, health, telecom, entertainment, B2B and travel are increasing spend in Q2 YOY according to Nielsen.

Impression volume has grown YOY in categories such as B2B, Finance, Consumer Goods Web Media, Health and Entertainment according to Nielsen.

Due to various industry initiatives, there has been a greater push on creative:

It remains the greatest variable for online display performance.

Best practices are known – they just need to be employed.

New mega interactive units introduced exclusively by top publishers offer promise – but little adoption so far according to Nielsen data.

Ad networks are now copying the formats so the uniqueness has been short-lived.

Social media is capturing the attention of marketers and consumers, but ad spend on social sites is still in a testing mode with majority of categories experiencing YOY declines in spend in Q2 but positive trends in the summer months.

Reach & Frequency -- a metric to connect display with media such as television – is being made easier to use for online and could increase spend of companies like packaged goods online.

Networks continue to present challenges to publishers and publishers as they offer reach at efficient CPMs.

o Networks have created a world of data-modeled audience information that publishers could learn from.

The market is stratifying into three tiers: premium sold directly through publishers, audience targeted and pure DR:

o Publishers could gain larger revenue share by wresting control of the middle ground back from networks by managing their own inventory through ad exchanges.

Commoditization of the online display market is well established, with the largest agency holding companies building their own media exchanges to compete with ad networks and exchanges such as Yahoo’s Right Media, Google’s AdExchange and ContextWeb’s ADSAQ.

o Expect the online display market to become much more like a financial commodities exchange over the next five years and this trend towards technologically automated buying, selling and arbitraging of impressions to impact all of media – especially television and radio.

© Kathryn Koegel 2009

2

Premise and Road Rules: The Story Behind the Data The State of Digital Display II is a follow up to a paper

published in May 2009 that argued that digital display

was misunderstood by industry analysts and reporters

who inaccurately predicted its imminent demise. Using

available data on trends in spend by category and

information on new measurement techniques, the paper

provided insights into an ad format in transition. Six

months later, we take another look at spend, formats,

effectiveness metrics and industry trends to help

marketers, agency executives and publishers make the

most efficient usage of what is now a well-established

advertising form.

The aim of this paper is not to promote online

advertising over other types, but to separate the hype

from the reality. There is no company or trade

organization backing its publication. Instead, research

companies that have been tracking the space since the

1990s, have contributed data and insights. The data has

been analyzed by an independent media researcher and

consultant who has held prominent marketing positions

in the three leading media (print, TV and online).

While the numbers reported here by research sources

vary, this paper will not engage in any kind of

methodological shoot outs. At this point in the state of

online advertising, these companies have so much data,

and data collected over time, that they produce useful

insights into trends in the market.

Crisis in Confidence Continues to Rock Media World! This quasi-tabloid headline is the understatement of

2009. The only thing certain about media as we know it

is that we don’t know precisely what the media world

will look like even one year from now. We will likely be

living with fewer daily print newspapers and fewer

magazines. One or two of the TV networks may have

become cable channels. The biggest social networks may

continue to take share from the portals as they become

the consumer-preferred home page – or some other

technological idea or advance may make them the Geo-

Cities of the Internet pan.

What we do know about the online portion of media is

that search will only increase in impact as it further kills

offline directories and grows in usage on mobile devices,

and that online display – graphical images of varying

formats with tracking codes associated with them – will

continue to be the lifeblood of content online. While

early in 2009, the most common media conversation was

the death of newspapers, the second half of the year has

been devoted to debates about paid content models –

once again. The talk rages on, but few publications have

taken definitive action. The media world is coming to

terms with now finite notions about advertising growth

and the limitations of what advertising can support in

terms of content.

In the midst of these headier concerns, it’s hard to get

too worked up about banner ads. But that indeed is the

point: in other media, there is little discussion of the size

of the units, the arcana of targeting techniques or

whether something is a branding or DR-based ad.

Instead, marketers and agencies focus on creating the

most memorable and compelling messages and finding

the appropriate audiences and context for that creative.

In a period of such crisis, it’s time for online display to

stop searching for the “new and different” and actually

implement best practices based on the myriads of data

available. The following “story behind the data” reveals

key trends in the first six months of 2009 and into the

early fall.

The Winter of our Discontent, the Summer of our Comeback? When we last reported on impression volume based on

Q4 2008 and early Q1 2009 data there were some

interesting trends: Nielsen said spending on display was

down 6.4% YOY (3/16/09). Q2 ’09 data on overall media

spend has been the jaw-dropping Armageddon of our

worst nightmares [see Figure 1, next page].


3

Figure 1

But even in this horrific situation, online posed glimmers

of hope: Nielsen reported display down 1% YOY for the

first half while TNS/CMR reported it actually grew 6.5%.

This set off another firestorm of navel gazing in the

online world (“Online Ad Spending Estimates are Bogus,

Some Say,” ClickZ, 9/25/09). Media researchers know

that spending data is a highly variable science (and not a

science at all) in ANY medium. In TV and print, it’s

politely considered “directional” and whenever anyone

hears the term “rate card value” they take it for what it

is. Online is more complex to capture this kind of data for

due to the number of formats and technologies involved

– and the basic fact that nobody really tells what they

pay for anything. It should be said, however, that there is

one very simple explanation for why TNS and Nielsen

numbers would be headed to the opposite ends of the

street: TNS’s methodology does include deals that are

performance based, Nielsen’s does not. In a recession,

there’s less demand and thus more content providers

willing to sell based on performance. The IAB’s first half

2009 Ad Revenue Report noted that performance deals

gained 4 share points YOY to encompass 58% of all online

revenue. TNS is dealing with a broader data set and

reflects a piece of the market that has grown over the

past year.

A closer look at Q2 reveals some of the very same

misconceptions that contributed to the “death of

display” notion that was prevalent early in the year. The

IAB released Q2 online advertising spend data (which is

publisher-reported based on top properties) on October

6, 2009. The headlines of most pick-up, including those

in MediaPost and Paid Content, focused on the overall

negative number. Various journalists and those in the

media industry did not make it past the first paragraph of

the release.

“Online display” is typically used interchangeably with

“online advertising.” It was not online display that was

down, but classifieds that shrunk from 14% of the online

total to 10%. But once again, display, the bastard

stepchild of the industry, got slammed. Display actually

increased its share of online revenue by 1 point (from 21

to 22% of total in Q2 YOY). Digital video also showed a 1

point share gain and search increased 3 points. If you

look at the IAB data broken into component categories

you can see just what a drag on the online ad market

classifieds have been [see Figure 2].

Figure 2

Craigslist can be blamed not only for destroying print

newspaper revenue, but for cutting into that revenue

online as well.

Nielsen AdRelevance Q2 YOY numbers showed a

cataclysmic drop in volume (-25%). When queried about

how volumes in their system could have decreased so

strongly when other reports were indicating stability,

they noted that it was completely due to the fact that

Yahoo had eliminated the majority of their “compound

image text ads”: a text link with a 20 x20 pixel image

associated with it that often appeared on Yahoo Mail

pages. Their clean-up process began in Q3 of 2008. This

-14%

+6.5%

CPM & CPA / CPC

Two Ad Monitoring Sources: Display Advertising for CPM -1%; CPM+CPC+CPA +6.5%

Nielsen

-15%

-1%

CPM Only

TNS/CMR

Total Ad Spend

All Media

OnlineDisplay

Ads

Percent Change in Dollar SpendH1 2009 vs. Year Ago

Internet Ad Revenue Share by Major Advertising Format – 2003 – 2009 1H

*Format definitions may have changed over time period depicted, both within the survey process and definitionally by survey respondents.

IAB site-reported #s: Classified decline drives overall number down

-32% YOY

Q2 ‘09

+40%

stable


4

Nielsen adjusted numbers tell a different and positive story

The Nielsen AdRelevance service takes into account image-based technologies and advertising sold per CPM. Above data does NOT include compound ads. It does not reflect house advertising activity, strategic partnerships between publishers and advertisers, or text units, paid search, sponsorships, email, units contained within applications (e.g., messengers and pre-rolls) or performance based advertising.

% Change in Impressions and Spend Q2 YOY 2008-2009

-25.3%

1.5%1.5%

11.7%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Including Compound Ads Excluding Compound Ads

Change Impressions Q2 YOY 2008-2009

Change Est. Spend Q2 YOY 2008-2009

Compound image text links from Yahoo were limited starting Q3 ‘08; they account for a 25% YOY drop in image-based ads

speaks to a couple of interesting industry trends: Yahoo

still generates a ton of inventory, and when one

company like this decides to alter their ad inventory

strategy (reduction of clutter was a strong trend early in

the year) it can impact an entire data set. When these

compound text ads are taken out, the impression

numbers tell a different story [see Figure 3 for reported

and adjusted spend and impression numbers].

Figure 3

On other positive notes, by the end of Q2, even some of

the greatest skeptics in the online display world issued

upbeat quasi-retractions. Nick Denton, the always

colorful wizard of Gawker, noted that YOY ad revenues

for first half ’09 were +35% (Paid Content, July 9, 2009)

and two days prior, Henry Blodget, who had been eager

to dis’ display, noted: “Hey, display ads don’t suck after

all”– and he begrudgingly acknowledged that his own

display-supported business wasn’t half bad. Jaguar ads

rotated with Land Rover ones on that page of content.

Paid Content reported on July 1 that women’s centric

sites had 4.7 billion ad impressions in April vs. 2.2 on

auto, 1.7 on travel – clearly Consumer Goods advertisers

had jumped on the online bandwagon. For Google,

display Q2 revenue grew 3 percent to $5.5 billion.

McClatchy’s Q2 earnings report noted that online ad

revenues slipped 2.9 percent, mostly due to falling help

wanteds. But, “if job ads were excluded, online ad revs

would have been up 24.7 percent.”

The display revenue health of significant online

properties such as The New York Times, are leading

indicators of the high end of the market – 2008 numbers

were positive for display with classified dragging down

the larger online number. In the Times Q2 earnings call,

Martin Nisenholtz, founder of the Times Online,

remained cagey about whether Q2 display had held up

and they did not break out the numbers in their earnings

report. When asked for comment, a Times rep cited the

strong numbers from Q2 last year as to why they did not

break them out and once again confirmed that classifieds

were behind what had driven the overall number down.

According to Nisenholtz:

I mean Yahoo just announced a 14% decline in display. I think, while we’re not breaking out the numbers, I think our display performance overall at nytimes.com and across the News Media Groups was better than that. — Martin Nisenholtz, NY Times Earnings Call, July 23, 2009

His less-than-enthusiastic report generated the following

from the Wall Street Journal:

All of this sounds right to me (for the record, last year the Times’s Web ads grew 18.3 percent in Q2). But if the Times wants to keep investors optimistic about the company’s prospects, it’s going to need a better pitch than ‘we’re doing better than Yahoo.’ — Peter Kafka, All Things D, July 24, 2009

As The New York Times reported in an article on the

health of newspaper online revenue (Online Rally May

Sidestep Newspapers, 10/25/09) when the Times

released Q3 data, they once again attributed the decline

in online YOY (-18.5%) to online classifieds, and declined

to break out display, but said that “the performance is in

the positive territory.”

Trends by Category Nielsen AdRelevance ad category data – adjusted for

those text ads with a tiny image – shows that B2B,

consumer goods, health, travel AND finance (the

category that was truly responsible for the recent “death


5

of display”) all experienced YOY growth. Automotive,

Hardware, Software and Retail all showed significant

declines in both volume and spend – some of this is likely

due to the slowness of the overall economic recovery

[see Figures 4 and 5].

Figure 4

Figure 5

Top Spenders: 2009 is like 2008, Another Year of Phones, Loans and Finance In May, we noted just how powerful telecom and

financial services were in terms of impression volume the

previous year. While there are no clear trends up or

down by the top spenders, it’s still a list dominated by

phones, loans and the stock market with one auto

company making the top 10 list [see Figure 6].

Figure 6

Cost Conundrums: Up, Down, All Over the Place Pubmatic (a company that helps publishers manage their

inventory through a multiplicity of networks) released

data in Q4 that showed CPMs were about as healthy as

John McCain’s campaign ($.26 in Q4 down from $.50 in

Q1). This was the press release that launched a thousand

negative articles about display and the info persisted into

Q2 of ’09.

Pubmatic did not publish the data in Q1 and it safe to

assume that in this instance, no news was good news. By

Q2, they were able to issue a statement that showed this

specific portion of the market had gone off life support

and was even trending positive [see Figure 7, next page].

By Q3 they reported that the “premium” publishers (they

do not qualify what they consider premium) represented

in their data set had seen a 32% YOY increase in CPMs –

they wisely now release this as an index rather than an

absolute number. They attributed the increase to better

targeting and more brand advertisers using network

services (partly due to the brand protection guarantees

that many of the networks are putting into place). The

numbers need to be taken for what they are: a reflection

of one piece of the market, but if mass network business

is picking up, so much the better for all of display.

Nielsen: Half of ad categories show + YOY impression growth

Source: Nielsen AdRelevance US, Home & Work, excluding compound image text ads, Q2 ‘09 vs. Q2 ‘08

30.4%

20.7%

17.7%

17.1%

12.0%

8.6%

-0.2%

-3.4%

-16.5%

-20.4%

-28.6%

-31.3%

-42.3%

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40%

Business to Business

Financial Services

Consumer Goods

Web Media

Health

Entertainment

Travel

Telecommunications

Public Services

Retail Goods & Services

Automotive

Hardware & Electronics

Software

Q2 YOY Impressions Change

Q2 YOY Impressions Change

Spend grows for majority of categories; Software/Hardware, Auto show greatest decline

36.4%

32.8%

30.1%

27.3%

21.3%

19.2%

13.2%

5.9%

-0.3%

-12.3%

-16.7%

-18.1%

-38.8%

-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%

Web Media

Entertainment

Financial Services


Health

Consumer Goods

Telecommunications

Travel

Public Services


Automotive


Software

Q2 ‘09 Spend YOY


Nielsen Top 10 advertisers in Q2: Mixed performance of Phones & Finance

Rank

2009 Company Industry

Q2 2009

Impressions

(000) YOY Growth

1 Scottrade, Inc. Financial Services 21,207,878 58%

2 Experian Group Financial Services 16,708,812 -73%

3 AT&T Corp. Telecommunications 14,659,426 15%

4 Deutsche Telekom Telecommunications 14,427,719 26%

5 NexTag, Inc. Web Media 9,344,045 -85%

6 E*TRADE FINANCIAL Financial Services 8,729,552 81%

7 Vonage Holdings Corp Telecommunications 8,256,759 -76%

8 Verizon Communications Telecommunications 7,974,557 -39%

9 Sprint Corporation Telecommunications 7,171,915 352%

10 Ford Motor Company Automotive 6,488,039 9%

Source: Nielsen AdRelevance US, Home & Work, Q2 ‘09 vs. Q2 ‘08


6

Figure 7

Adify, whose numbers represent data from nearly 200

vertical networks (networks that sell based on content or

audience affinity like women, sports, finance, etc.) show

a pretty rational take on pricing: a median CPM by Q2 of

$7.71, a minimum of $3.63 and a maximum of $19.89

[see Figure 8].

Figure 8

They show Technology, Automotive and Travel at the

high end of the spectrum (logical as these categories use

higher levels of targeting) while more mass products like

Clothing & Beauty and Food are at the lower end of the

cost scale. They make a fair correlation of the growth of

real estate CPMs to the housing recovery and note the

seasonal rise in Entertainment and Sports CPMs – it’s an

intelligent report that actually makes sense in marketing

terms.

When taken overall, comScore data on volume vs. CPMs

shows stability in volume but erosion in price – but you

have to think of this in terms of overall CPMs, the high,

low and in-between portions of the market. It’s clear

we’re still not out of the hot water yet. comScore derives

this data from what publishers provide them with, and

not all contribute cost data, so the information should be

considered directional [see Figure 9].

Figure 9

Top Publishers Fight Back with Mega Motion-Filled Units! At the beginning of the year, one of the surprise

announcements was the OPA introduction of new mega

units designed to be sold only by their member sites.

(The standardization of ad units is typically in the

purview of the IAB and agencies have long complained

about the proliferation of ad sizes as an impediment to

the online buy.) It was an attempt to wrest some level of

control and interest back from ad networks which would

not be able to scale these “out-of-the-box” units. The

units are not only bigger, but are rich media, push down,

practically serve-the-consumer on a plate. Thirty-seven

of their member company sites committed to introducing

them by July 1. Frito Lay, Bank of America and Mercedes

Benz were among the advertisers announced in the June

30th

press release. They’ve been seen on FoxSports,

WashingtonPost.com, msnbc.com and the New York

Times sites, but as of the end of August, Nielsen

AdRelevance has not been able to capture any of these

Pubmatic Ad Network data shows CPM increases

Source: Pubmatic Ad Network Report, First Half 09

Other stories about the $$$$ — Adify Vertical Network CPMs

Affluentials, Auto & B2B command highest CPMs, Food and Beauty lowest

CP

Ms

in $

Source: Adify Vertical Network Gauge Report, First Half 09

comScore: Volume up modestly, Average CPMs hover around $2

Display Volume Is Growing Modestly

Overall average CPMs decline from around $2.50 to $2.00

Source: comScore Ad Metrix, Impression Volume in (000,000s)

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Display Volume

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Display CPM


7

units in action and the OPA has not archived them on

their site. It should be noted that when the IAB

introduced large rectangles and skyscrapers in 2001, it

took at least a year before they started making a blip in

the DoubleClick ad serving trend reports.

Ad Networks Counter With More Big Ads – With Even Cuter Names Ad networks, always a scrappy sort, fought back and said

they were launching their own mega units. It’s another

brilliant move in an industry sector that never seems to

make it easier for advertisers to actually use it. Social

network Meebo introduced a 900 x 400 pixel-sized unit in

July. In September, Federated Media introduced OPA-

influenced units that they hoped would attract more

advertisers to run on Facebook and Twitter (as reported

by Paid Content 9/10/09). They got downright wacky –

and probably added another level of chaos to the market

-- by coming up with creative naming: “The Pushdown,”

an expandable 970x418, that collapses to a 970x66, “The

Tower,” a 300x600 ad unit that lives in the side-bar as

the user scrolls down the page and the “Conver-

sationalist,” a 600x250 unit designed to run on social

media. All of these can be run as an “AdSTAMP”: which

basically means a home page takeover where no other

ads will run on that page that day [see Figure 10].

Adify, the vertical ad network, also jumped into the game by trumping the OPA’s three new units with even more and talked to MediaPost about it:

The six new ad units include a push-down unit, a floating ad, a sliding billboard and an ad that appears when a corner of the Web page peels back. The larger, flashier formats are intended to let marketers run roadblocks and other high-profile placements on Adify's 200 niche networks, as they can on major sites like Yahoo or NYTimes.com. "If you're doing a promotion or product launch, you can't afford to put your best creative on only a few sites," said Joelle Kaufman, Adify's vice president of marketing. “You want to extend your campaign across a network of quality sites where your audience is." In short, the ability to run premium display units on Adify's 12,000 mid-tail and long-tail sites.

— MediaPost, 9/21/09

Figure 10

The new unit bonanza also attests to the fact that you

can’t really patent an ad size or the technology behind it.

DoubleClick/Google will likely add the new types of units

to the full complement of what can be built within their

“Studio” rich media system (formerly Motif – what’s with

all the names?) – that basically enables advertisers to

create any of the “branded” rich media types like

Eyeblasters and Pointrolls. Will the IAB ever sanction

them as a standard? – or are we doomed to just keep

introducing more sizes and rich media formats as we

repeat the chaos of pre-standardizes ads?

Clutter: How Can it Be Getting Worse! Have We Learned Nothing?! It’s impossible to discuss ad sizes without discussing the

issue of clutter: the number of units on each page of

content. One of the positive stories in the first State of

Digital Display was that clutter actually went down

during Q1 – and various research from both Dynamic

Logic and Nielsen showed the recall lift of clutter

reduction. comScore’s latest data reveals a depressing

story [see Figure 11, next page].

When you look at this data in combination with Nielsen’s

information on ad sizes in the market, you see what

actually happened. Small buttons are back as long tail

publishers are likely eager to increase their revenue by

adding more units per page [see Figure 12, next page].

It’s the Mega, Motion-Filled Ad Size Bonanza! Introducing…

The 900 x 400

Push Downs

Fixed Panels

XXL Boxes

The PeelbackThe Floating

The Sliding Billboard

The ConversationalistThe Tower

The adSTAMP

The Pushdown


8

Figure 11

The ad size story does have one very positive

development: the biggest decrease in usage was of non-

standard IAB sizes [see Figure 12].

Figure 12

Since 2000, the IAB has been trying to simplify the online

world into four sizes (the Universal ad package) and it

appears to be working. The medium rectangle triumphs

as the most common ad size and as Dynamic Logic data

(as cited in Media Post, 8/20/09) shows: ads placed

within content rather than bordering it − which is where

these typically are placed − tend to work better.

The leaderboard: which was easy for publishers to

integrate into their pages, but has proven less than

stellar even in direct response rates (DoubleClick Year in

Review 2008 Benchmarks) may be going the way of the

original 468 x 60 pixel standard banner.

But Size Itself is Not Innovation Great creative will work within any form, no matter its

size limitations. At a recent conference hosted by

Pubmatic, Joe Mandese of Media Post lead a discussion

on innovation vs. standardization which in this instance

boiled down to ad sizes. The panel was made up of

publishers and an IAB representative. Publishers

complained of constantly being asked (on every RFP!) to

do something out of the box, but they believed that “out

of the box” had to be something that flew, shook or spun

and could not have any relationship to a standard banner

size or doing something within one of those units that

enhanced the type of content they produce or related

more specifically to their valuable audiences.

One of the publishers noted that “everyone knows large

rectangles don’t work anymore.” Well, as comScore,

Dynamic Logic and InsightExpress can refute with data,

they most certainly can work – but it’s not the frame, but

what’s in it that counts and where it is placed. Ken

Mallon of Dynamic Logic talked to Media Post and Ad

Age about the size non-issue in July. Even lowly small

sizes can work:

The study, which was based on 2,390 online display campaigns running over the past three years, found that so-called "half banners" (those measuring 234 x 60) and rectangles (180 x 150) were more effective than ads that frame the page such as high profile leaderboards and skyscrapers. — Media Post, 8/20/09

A little perspective from other media is in order here.

Would Les Moonves, president of CBS, stand up at an

upfront presentation and argue that :30 second spots

don’t work? Do magazine publishers spend time saying:

we’ve just got to dump the P4C FB (page four-color full

bleed)? Executives in other media worry about pod

position and clutter, or in print, contextual placements

and how far in front of the book ads run. They rightly

note that an ad size is literally a framework that has to

contain a powerful message and image – which the

agencies are responsible for creating. Even in one of the

most creatively constrained media: outdoor, they get

comScore: Clutter is Baaack…

0.60

0.61

0.62

0.63

0.64

0.65

0.66

0.67

0.68

0.69

0.70

200,000

220,000

240,000

260,000

280,000

300,000

320,000

340,000

360,000

380,000

400,000

Ad

s P

er

Pa

ge

Dis

pla

y Im

pre

ss

ion

s (M

M)

Total Display Ad Impressions (MM)

Display Ads per Total Pages

Source: comScore Ad Metrix, June 2009

Nielsen: Non-standard ad sizes on the decline; Medium Rectangles rule

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Q2 2008

Q2 2009

Source: Nielsen AdRelevance, Q2 ‘09


9

over the fact that people are speeding by in their cars

and listening to the radio and get on with it.

While doing creative for skinny long units or tiny ones

has always been a challenge, the ongoing size discussions

take away from the larger issue of what is compelling

creative. Online is an easy medium to test in and

companies like Compete are contributing to an overall

increase in sophistication of creative measurement and

optimization that goes well beyond an immediate click.

Compete has completed a series of analytics on the

performance of varying formats – including the new

mega ads – on The New York Times. AirFrance used the

new OPA Push-Down unit on the homepage for one day

(9/21) and tested its performance against smaller

standard units that ran adjacent to the logo and rotated

on the homepage for a one week time frame [see

Figure 13].

For the one week execution, the view-through lift was

254%, for the one day push-down, the one week view-

through was 494%. The units achieved similar reach. For

this instance, the larger, more dynamic unit did perform

significantly better – though cost was not considered as a

variable in the analysis: it performed about 2X as well so

would not have justified a 5X premium.

Figure 13

Another test was done using an OPA Push-Down for

Banana Republic that ran on the homepage of The New

York Times on 9/10/09. Its performance was compared

to standard leaderboard and rectangle creative for sister

company The Gap that ran in audience targeted

placements for the month of September [see Figure 14].

Figure 14

Once again, cost was not considered in the analysis but

this time, the view-through achieved was nearly

identical. If the advertising objective is to drive visit and

purchase rates, then reaching a ready/motivated

audience (targeting) will matter more than the size of the

ad. A performance gap appears only when evaluating

through the narrow lens of click-through or short-term

view-through. If the objective is to change attitudes

within a broader audience over time, then the focus of

measurement should fit that objective.

Credit Where Credit is Due: It’s the Creative… The IAB started an important initiative of working with

creative directors of agencies for the first time this

winter. There have not yet been public reports of their

initiatives and progress.

Dynamic Logic normative data has pointed out the

massive delta between best and worst performing

creative [see Figure 15, next page] and decided to do

something about the problem.

They have just issued (10/21/09) an excellent report on

“Creative Best Practices” that shows with dummy and

de-branded creative how to make ads work better

online. It is a meticulous examination of the results from

over 4,800 campaigns (broken down by industry

AirFrance: Standard Units vs. Push-Down

Standard ads ran in homepage rotation for five days in September

Lifted one-week view-through by 254% (.79% versus .22% for control).*

Lifted one-week view-through by 494% (1.59% versus .27% for control).*

Push-down ran for one day: 9/21/09

Pushdown ads can be more effective than smaller/quieter units –

but not 10X more – take this into account when budgeting.

Source: Compete *Units achieved similar reach

BananaRepublic push-down vs. Gap standard units

BananaRepublicused a pushdown homepage ad on

9/10/09

Gap used traditional banner/rectangle units with a more targeted audience during the month

Lifted one-week view-through 63% --(9.0% versus 5.5% for control), very respectable for a segment leader.

Achieved nearly identical view-through rates toBanana Republic.

Source: Compete


10

category) of issues like logo presence, use of types of

imagery, messaging complexity and a very important

step forward for the industry.

Figure 15

InsightExpress has also issued a document and most

principles they cite line up precisely with what DL has to

say. We all know the challenges of budgets and lack of

training in the agency world: the research companies

have issued primers on how to make it better. It’s up to

agencies to make sure their creative employees

understand these. See Figure 16 for an example of their

approach to creative best practices in the automotive

sector.

Figure 16

Ad Effectiveness Trends: More Click Dissin’ Online has worked beautifully as a DR medium because it

offered marketers that wonderful, easy to grasp and

track “click.” This year the anti-click contingent gained

traction. Arguably the most significant research of the

past year was comScore’s “Wither the Click” paper,

issued in December 2008. It reinforced what has been

discussed since 1999 (when conversion tracking and the

view-through metric were first implemented) by

introducing a tool that enabled broad-based rather than

campaign-specific view-through metrics to be assessed.

The tireless evangelistic efforts of comScore’s Gian

Fulgoni have generated a lot of conference fodder and

digital ink. The OPA followed up by commissioning a

version of this same research (“The Silent Click,” June

‘09) which focused on the campaigns of some of the

largest advertisers online and the impact on site

visitation and offline purchase up to four weeks after

exposure. This research also builds on Atlas’s work of last

year “The Long Road to Conversion: The Digital Purchase

Funnel.” (All of this “view through” research was first

substantiated publicly by a control/exposed study

produced by DoubleClick and Grey Interactive called:

“The Latent Impact of Online Advertising: Introducing the

View-Through Metric” — 7/04.)

The comScore/OPA study then extrapolated the data into

focusing on how their member sites performed for view-

through vs. portals and ad networks. It doesn’t precisely

prove the point that media brands do have some higher

level of connection to their audiences that rubs off on

the advertiser (the elusive halo effect) but does show

that media plans for big brands that take into account

type of content do seem to be delivering a more

engaged, responsive consumer – and is a good

justification for an agency or marketer to spend the

premium on professionally-produced content sites.

By October 1, 2009, comScore and Starcom had issued a

brief update to their “Natural Born Clickers” stat of 2007

that noted that in the past two years the number of

people who actually click is down to 16% by March from

32% two years before [see Figure 17].

Best performing creative vs. norm vs. worst: Massive room for improvement

8.7

13.6

8.9

7.56.9

2.3

4.7

2.5

1.51.2

2.3--1.6 2.0-

-5

-3

-1

1

3

5

7

9

11

13

15

Aided Brand Awareness

Online Ad Awareness

Message Association

Brand Favorability Purchase Intent

Top Performers Average Bottom Performers

-3.6 -4.1

Source: Dynamic Logic MarketNorms, Last 3 Years, Q1/2009, N=2,390; n=3,806,527

Dynamic Logic has issued Creative Best Practices by Ad Category: Template for success!

Automotive: common goal is to build awareness of a new or redesigned model Must connect parent brand with the new/redesigned vehicle name In the example, the tested vehicle name (“auto brand X”) only appeared within the

logo and in the final frame; the parent brand logo is ubiquitous and overshadows the specific model

Source: Dynamic Logic Creative Best Practices 10/09


11

Figure 17

comScore has kept on message and now even the

confirmed DR camp, including the performance

networks, talk about KPIs (key performance indicators),

view-throughs and appropriate conversion tracking – but

yes, they’d still prefer to pay on clicks, because it’s just

that much cheaper.

On October 19th

, the company that made billions – and

lots of billionaires – off of the click metric, announced

that they too were looking beyond when it comes to

measuring display. Google launched a new tool for its

content network:

"Campaign Insights compares two data sets: a large group of users (many thousands, minimum) who saw a particular ad, with an equivalent, large group that did not see the ad," explains Austin Rachlin of Google's Inside AdWords crew. "It then measures whether there is any significant difference in searches and visits to your website between the two groups. Doing this, Campaign Insights can determine the incremental change that is directly attributable to the display ad campaign. With this insight, you can establish how well your display ad campaign is working beyond just clicks." – WebProNews, 10/19/09

Their press release stated it would capture how a

campaign has raised “brand awareness” (not precisely

what they are measuring) and that it would help

advertisers look beyond “traditional measures of clicks

and conversions.” The wording of the statement reflects

a lot about the Google-eye view of media: in their minds,

what they have been capturing over the last decade is

the tradition in the online industry, and so far, they are

right.

UGC and Social: Cat’s Out of the Bag, but is this the Advertiser’s Bag? This was the era when your mother asked you what

Twitter was and the people you really didn’t want to see

from grammar school – you successfully avoided them on

Classmates in 1999 – managed to tell you too much

information about their recent divorce and employment

challenges. With monthly growth numbers still in the

high single digits (8.7% growth in usage as compared to

other online activities including communications and

content, OPA, “Internet Activity Index,” August ’09) social

network personal pages are the new home page. This is

really bad news more for Yahoo, AOL and MSN than the

pure content publishers. Facebook is the new Yahoo with

a more social demeanor. In Q1, Cowan & Company

reported this connection:

Yahoo display was down 13 percent, Microsoft (NSDQ: MSFT) dropped 16 percent and AOL (NYSE: TWX) display fell 17 percent. Cowen finds a direct connection between Facebook’s successful growth and the portals’ downward trends, even as the companies exit the recession. The basic trend is that users are spending more time with Facebook—an average of 3 hours per month on the site—than with portals. Facebook had 200 million active users in April, up from 150 million in January. If that growth trend continues, Facebook’s user base will be larger than Yahoo’s in about two years. — Paid Content, May 22, 2009

Social does not appear to be posing the huge threat to

content sites that was predicted as recently as Q1 – and

the numbers by category for Q2 YOY show negative

trends in spend and volume YOY for all categories except

B2B and Financial Services [see Figure 18].

Non-Clickers

84%

Clickers16%

Non-Clickers

68%

Clickers

32%

comScore: Clickers nearly extinct: Half as many in 2009 as in 2007

July 2007 March 2009

Source: comScore, Inc. custom analysis, Total US Online Population, persons, July 2007 and March 2009 data periods


12

Figure 18

More recent numbers show growing promise: by

September 1, comScore reported that in July, 21% of all

advertising online was going to social networks (and 80%

of that was on Facebook and MySpace) but at very low

rates as that large impression volume equated only to 3%

of total spend. Nielsen released August numbers that

are also positive from a YOY perspective. Once again,

there is a story behind these numbers: July and August

are slow months in advertising for most product

categories, but a big one for entertainment with

upcoming TV premieres and a lot of theatrical releases.

These advertisers need cheap reach and 18 – 34 demos:

a perfect combination delivered by the top social

networking sites.

Advertising on social also does not seem to be generating

the level of positive response that it has achieved on

content sites according to Dynamic Logic and

Insight Express data show [see Figure 19 and 20].

Perhaps ads on these pages are just not reaching

consumers in the right mindset and are akin to ads that

appear on email pages: lost in the communication

activity the consumer is focusing on. Could this change

over time? It’s an issue we will continue to track.

Figure 19

Figure 20

But advertising on social is not the predominant way that

marketers are using it; anecdotal evidence suggests that

– especially in the absence of spending benchmarks and

best practices – experimental budgets are being thrown

at viral campaigns including Facebook and MySpace

pages and Twitter feeds. After all, it’s relatively cheap:

get the new kid in the marketing department to do it.

She’s 25, she understands it better. What social media

has absolutely transformed is the earned media sphere:

generating online word of mouth through social media

programs has become a key component of PR activity.

Legions of mommy bloggers are being consolidated and

catered to – all for the purposes of influencing the

influencers, albeit in a new way.

Social declines in spend and volume in Q2 for all but B2B and Fin Serve

17.8%

8.1%

-18.7%

-25.1%

-29.7%

-33.0%

-40.4%

-46.4%

-59.6%

-62.4%

-65.3%

-71.0%

-84.7%

11.5%

2.0%

-19.4%

-12.1%-28.8%

-22.2%

-38.0%

-40.0%

-46.5%

-57.7%

-65.6%

-79.5%

-84.0%

-100% -80% -60% -40% -20% 0% 20% 40%


Financial Services

Consumer Goods

Entertainment

Web Media

Travel

Public Services

Telecommunications

Automotive

Health


Software


% Change in Impressions and Spend for Social Network Sites YOY Q2 2008-2009

Spend YOY Impressions YOY


2.2*

4.6*

2.4*

1.5*1.2*

2.4*

4.9*

2.1*

1.1* 0.9*1.2*

4.1*

3.4*

0.8 0.9*

1.8*

2.7*2.4*

1.9*

0.8

0

1

2

3

4

5

6


Online Ad Awareness

Message Association

Brand Favorability

Purchase Intent

MarketNorms Overall Portals Social Networking Sites UGC Sites

Source: MarketNorms Q209 Last 3 years, Portals: N=1,139, n= 1,043,565; Social Networking Sites: N=123, n= 47,491; UGC Sites: N=90, n= 66,644

Perc

ent I

mp

acte

d

* Significant at 90% confidence level

Dynamic Logic: Social Media mixed performance for brand metrics

Q4-02 to Q1-08; N=61 Studies

Q2-08 to Q1-09; N=37 Studies

Unaided

Awareness

Aided

Awareness

Online Ad

Awareness

Message

Association

Brand

Favorability

Purchase

Intent

InsightNorms: Social Over Time – High levels of awareness message association, lower levels of brand favorability

Source: Insight Express Norms


13

But Can It Sell Soap? Cross-Media Metrics are Hot…Once Again Since the dawn of this century, packaged goods have

been the big piece of the spending pie eluding online.

And in a recession, just as “Buy Kraft and P & G” was the

only thing consumers would believe out of the lips of

James Kramer, getting the people who make our floors

shiny and our bodies soft use a medium with challenges

in efficient buying and more limited creative than TV and

print has been the holy grail for some media companies

and researchers. “TV gets too much!” has been the

industry rallying cry since the IAB engendered the

“XMOS” studies in the early ‘00s. Econometrics, cross

media survey research, communications planning

research and reach and frequency all play important

bridging roles to shape cross-channel budget allocations.

Of these, reach and frequency is once again the hot

metric discussed.

Microsoft Advertising has a new take on adapting online

metrics to make them more palatable for packaged

goods – AKA “brand marketers.” It’s an admirable effort

to continue the fight to get beyond the concept of

impressions and push towards the idea of reach of an

audience. An ANA study from April of this year cited

“metrics to properly allocate the mix of traditional and

digital media” as the key impediment to shifting spend to

online. Online display planning and buying are a

disjointed process where buys that go through agencies

are typically planned using a tool like Nielsen’s @plan

and comScore’s PlanMetrix that show audience

composition of various sites. Post buy, an agency

receives reports on impressions and unique users – but

not an idea of who they have actually reached.

comScore audience information is being overlaid on the

Microsoft Advertising/Atlas impression data [see Figures

21 and 22 for an example of the kind of data the Reach &

Frequency Planning Initiative produces].

Figure 21

Figure 22

Sometimes good ideas take awhile to percolate. Perhaps

now is the time for reach and frequency. It should be

noted that this has been a research geek “hot” discussion

since 2002 with Dave Smith of MediaSmith and Young

Bean Song of Microsoft Advertising/Atlas early

champions. In 2005, DoubleClick released results of

three trials aimed at essentially what is going on now:

one with comScore, one with Nielsen, one with IMS.

Papers were published, talks were talked, but it never

went anywhere due to lack of market interest. What is

important is that R & F is no longer being talked about by

the online daterati as if it were this plague from “old”

media that just has to die out. It’s actually a pretty simple

way of looking at media that is so commonly used and

understood within the global ad community that if it can

18 million total audience

27

0 m

illion

imp

ressio

ns

50 100 150 200 250 300

5

10

15

20

Impressions (MM)

Re

ach

(MM

)

Reach curve + demos

18 million total audience2

70

millio

n im

pre

ssion

s

50 100 150 200 250 300

5

10

15

20

Impressions (MM)

Rea

ch (M

M)

Reach curve

Male

Female

Ad Serving Census Panel

From cookies to target demos with Atlas’s updated Reach & Frequency inititiative

21

Site Cost CPM Imps Target Reach Target % Freq TRP CPP

Entertainment $120,000 $7.00 17,142,857 1,798,595 4.4% 6.1 27.0 $4,436

Shopping $200,000 $10.00 20,000,000 2,736,842 6.7% 3.8 25.6 $7,800

News $140,000 $5.50 25,454,545 1,134,387 2.8% 9.2 25.7 $5,441

Arts/Crafts $40,000 $2.75 14,545,455 1,975,986 4.9% 5.3 25.8 $1,549

Campaign $500,000 $6.48 77,142,857 6,116,648 15.1% 7.8 117.6 $4,251

“I have a budget of $500,000 and want to maximize reach to women 18-49 at an average frequency of 8. And I won’t exceed a $10 CPM.”

RFP from an Agency

What percent of

impressions

reach my target


14

be adapted for use in the online world (even though the

universes of usage and the ad experience are different).

It could simplify the process of creating a cross media

plan that focuses on non-network buys. R/F metrics for

online fall short when networks are included: most

inventory is not fully transparent. For agencies and

marketers, it continues to be “caveat emptor." They are

told what ingredients may go into the network soup but

there are no guarantees of what sites they precisely are

getting, and no way post-buy of proving that those

impressions actually reached women, age 18-34, etc.

Soap Will Not Save all Sites The recent champions of R & F as a way of getting the

last of the big hot spending companies to put more

online, should temper their enthusiasm with the reality

of packaged goods and their relationship to the

media world:

These companies buy in bulk, in advance and they want it really cheap; in cable, they can spend similar CPMs to what is paid for online banners and some of them are moving to a quasi DR model where they pay per “TRP” or targeted rating point: they pay only for the portion of the audience they find relevant.

Packaged goods are about mass reach, and using offline as a guide, publishers should be realistic about their chances. Dove doesn’t really need to buy placements on The New York Times or even a highly targeted women’s site: they need tonnage of women – and they need it cheap. The reality is that the use of GRPs may move more of this money online, but it may push it to networks that guarantee transparency but can provide efficient reach [see Figure 23 that illustrates the online reach buying challenge that tips the scales in favor of networks].

They are insanely protective of their brand – as their brand is what separates them from the virtually identically grocery store generic. Online poses a billion worse- than-hell experiences for packaged goods to be near the wrong bare breast at the time when one of their loyal customers in Wichita happens to see it.

One area of packaged goods spend that could and should be transitioned to online is promotional activity, especially couponing. Much of it currently goes on through FSIs in Sunday newspapers and marketers are getting less than what they used to as circulations

plummet. There were some nice large rectangles offering discounts on Klondike Bars all over content sites in the dog days of summer. Expect to see more of this type of creative.

Figure 23

The “Emergence” of a Middle Tier: Audience Any discussion of reach inevitably leads to the issue of ad networks. We’ll overlook clichéd discussion of how many there are [see Figure 24 for how many comScore now reports in their system] or whether they are good or bad for the industry: what they are is inevitable.

Figure 24

In a medium with such infinite content sources and

dispersed usage – and I would argue a really crappy way

of valuing inventory – ad networks play a valuable role of

aggregating inventory and actually making the medium

more efficient to buy. What they have negatively

produced is a layer of confusion to the marketplace with

no one really sure who is representing what inventory.

Ad Networks rival Portals in online reach, and far exceed vertical Publishers’ reach

Source: comScore Media Metrix, US, June 2009

91.5%

85.3%

81.9%

83.1%

77.4%

74.4%

76.6%

72.4%

71.7%

86.7%

% Reach

Top 10 Ad Networks

Platform-A

Yahoo! Network

Google Ad Network

ValueClick Networks

Specific Media

FOX Audience …

24/7 Real Media

Traffic Marketplace

Microsoft Media …

Tribal Fusion

% Reach

77.0%

76.4

%58.0

%55.7

%46.5

%36.8

%35.0

%18.1%

11.1%

5.5%

Major Publisher Sites

Google

Yahoo!

MSN-Windows …

AOL LLC

YOUTUBE.COM

MYSPACE.COM*

FACEBOOK.C…

CNN

ESPN

NYTIMES.COM

77.0%

76.4%

58.0%

55.7%

46.5%

36.8%

35.0%

18.1%

11.1%

5.5%

The popularity of Ad Networks has skyrocketed over the past 5 years

With profit margins of 45 – 60% (MediaPost 7/29) it’s a hot field

7

16

27

46

70

0

10

20

30

40

50

60

70

80

2004 2005 2006 2007 2008

# of Ad Networks Reported by comScore


15

Inventory is being sold and resold which results in deals

that do not deliver or latency in the ads actually showing

up on the page.

On the positive side, in their quest to differentiate their

offerings, ad networks introduced principles of data

modeling long understood in the direct response world

to online. After all, there is only so much contextual

inventory to go around and since advertisers have to pay

a premium to get it, ad networks created a value out of

all the rest. They’re even responsible for some great new

terminology around what they are doing: Some are

calling their business “The Second Channel” or “Non-

Guaranteed Inventory.” It’s better than “remnant” but

not much.

Ad networks have put their principles to the test by

creating elaborate profiles through their cookies – and

since the publishers have for so long provided the sugar –

gazumped them of their audiences.

Questions abound about who owns a Wall Street Journal

user once they are not on the Journal. But since that data

is out there, the Journal can argue to the IAB task force

on data ownership as long as they want with little result.

The data exists and the networks that have that profile

aren’t going to suddenly, completely and finitely turn it

over. Publishers should be especially wary of all of the

free tools for measurement that have been introduced

over the past two years: read data usage policies

carefully whenever adding a company’s cookies to help

measure a site. Those cookies are veritable Trojan

horses that can and are being used to build behavioral

profiles that those companies are then selling

themselves.

Premium publishers should get into the game themselves

and model to their advertisers’ content, thus creating

value for their non-contextual inventory. After all, they

have audiences advertisers value, and can guarantee the

transparency marketers seek. Many of the top

publishers effectively use behavioral targeting tools like

Platform A, Tacoda and Audience Science to do just this.

Some media conglomerates are pooling all their

“remnant” cross company and have started elite

audience networks (e.g. Time Inc., Forbes, Martha

Stewart – in October, a group of magazines announced

their own network). There is no magic to building a

network. With ad exchanges and products like Google’s

Network Builder tool for publishers, anyone can pool and

sell inventory.

“Remnant:” A Way to Insure that the Bastard Stepchild Never Gets New Shoes Online is probably unique in having early on determined

that what was most saleable like home pages and

contextual placements was “premium” to be sold

through direct sales forces, and everything else was

“remnant”: Cinderella pre-makeover to be dumped on

an ad network who would do the “bibbety boppity” thing

they didn’t have time for. It’s often cited that 80% of

online advertising is remnant (latest example, MediaPost

10/7/09 article on the Rubicon company). Google’s Q3

earnings report noted that a much more modest 25% of

their network display went unsold. This practice – and

even the nomenclature – has held the medium back.

Think of how inventory valuation works in other media.

In TV the most premium is sponsorship with an ad

package around an event: in effect flat rate inventory

with a premium paid for association with something like

the SuperBowl or the Academy Awards. Next comes

primetime. Then day, latenight, and fringe. Yes, the

inventory is tiered for pricing purposes, but they’re

selling the various values of these audiences. They don’t

call Craig Ferguson: “Remnant.” The same holds true for

print: advertisers pay premiums for certain positions and

there are volume discounts but they are essentially

buying one audience for each publication: there is very

little “remnant” involved.

Now because networks and the behavioral targeting

companies that also built networks have been so good at

turning “remnant” into the hot chick who can make an

appearance at the ball – they are in effect delivering to

mass advertisers exactly what they have always wanted:

an implied demographic bucket or contextual relevance

on a broader scale at a better price.


16

The Arbitrage Play: Online Becomes a Commodities Market Top publishers have two shots in this change-or-die

environment: model your own data to increase its value

and participate in exchanges which are in effect

inventory management tools. There has been much

breast beating about the online world becoming a

medium of porkbellies (a famous Wenda Millard speech

from an iMedia conference last fall) but that is indeed

what technology has wrought with online and is likely to

wreak of all other media before long [see Figure 25].

Figure 25

There are no reliable figures on how successful the

various online exchanges are, but as agencies and

publishers begin to realize the power of controlling and

moving blocks of inventory without intermediaries, the

volume of inventory that runs through them should

explode. The biggest losers in this could be the ad

networks themselves as their intermediary services are

no longer required with this new form of “direct” selling.

Agencies like WPP, Publicis/VivaKi, and Havas are also

making a play to turn the buying agency into a fully

automated commodities exchange. (For a vision of the

ad future as the arbitrage camp would like to see it, read

adexchanger.com.). As this paper was being completed,

Google released their Q3 earnings which reported that

“over half of the top 25 ad networks are already using

the Google Exchange.” There was no mention of number

of agencies or publishers in the system.

Early publisher reaction to exchanges has been

somewhat tinged by fear: they either don’t want Yahoo

or Google anywhere near their inventory or simply don’t

have the personnel to deal with the technology. The

head of AdMonsters, a long time online industry group

devoted to ad trafficking, delivered an articulate

roadmap for the position that needs to exist within most

publishing organizations. Traffickers typically are on the

lowest scale in online ad sales organizations: the guys

who sit with their headphones on and dump lines of code

on ads to make sure they did run in the right places. So

much of that job can now be automated or outsourced.

What publishers need is inventory evaluation experts

who can use insights gleaned from analytics tools to tier

inventory. There will always be a human element to

pricing in online: in relationships with the direct

salespeople who have the relationships with the clients

and agencies who are working on the bigger or more

creative buys. But, technology can enable this person to

manage inventory more effectively and eventually make

instantaneous decisions about where that inventory

is sold.

The hot topic in the ad network/exchange arena is the

notion of RTB: or Real Time Bidding. The process of

moving inventory, data matching it and disseminating it

is becoming so automated that some estimate doing this

in near real time will be the reality of 2010. Online

publishers have always been challenged with how to

amortize dramatic but unexpected spikes in usage: Real

Time Bidding is the solution. We have all learned that

those who deny technology are doomed to be crushed

by it. It’s time for the big media companies that own the

top sites to wake up to the reality, simplify process and

embrace it.

I’ve Lost My Mojo! Over the past year, display has been something like the

long-in-the-stained-tooth Austen Powers when he lost

his mojo. It’s just not sexy anymore: the media has

certainly dumped it in favor of the ingénue allure of

mobile and social. Thus, we’re in danger of losing the

attention of marketers. For those who work in online

Porkbellies are in all our futures…

Arbitrage is the business

agencies will be in.

Get a seat at the exchange now!


17

advertising, this is a very dangerous thing. Many of early

promoters of the medium – who were all determined to

solve the measurement challenges and prove its value –

have moved on to more stable careers or just the next

big thing. (Here is my “Where have you gone Joe

DiMaggio” Internet Display Hall of Fame: Dave Morgan

of Tacoda is now focusing on bringing behavioral

targeting to television advertising; Richy Glassberg of

CNN.com and early IAB and ad network initiatives is

safely ensconced in cable; Kevin O’Connor, who

dreamed up the whole idea of an ad network – and built

the technology to serve it – is running a venture capital

firm; we haven’t seen enough lately of Greg Stuart,

evangelistic former IAB CEO; Charlie Buchwalter is

running Nielsen Online initiatives in Tokyo; Evan Neufeld

of Jupiter is the mobile measurement guru at comScore.)

The IAB is now a big established organization focusing on

the serious issue of data and targeting regulation in

Washington and other than their vital spend reports.

Primary research on display is not among their larger

current initiatives.

But in display, the next big thing is not what is important.

Helping great content and great interactive functionality

survive, with freedom of access to all, is. Those in online

display need to fix what we have now and take it to the

next level. There’s almost a kind of embarrassment in

talking about display. Many of the biggest public media

companies do not break it out in their quarterly earnings

reports and allow classified decline and search growth to

dominate coverage of online advertising. What does it

say when the company that took over the search market

with a better product (Google) vocally turns to display for

growth but the logical places that should own the market

turn their back? See Figure 26 for a four-step “Bring Back

the Mojo” plan.

We Have What We Have – So Now Make It Better:

In Planning I continually hear about the lack of training of planning

personnel. Research that comScore has done for some

of their clients shows just how often plans overreach

heavy users of various sites (home page takeovers are

particularly guilty of this) and a giant chunk of many

Figure 26

campaigns reach entirely the wrong demographics. In his

recent paper “Does Online Advertising Deliver the Target

Audience,” Jon Gibs, VP Analytics at Nielsen, gives two

examples of failed planning, one based on household

income criteria, the other on age. The first campaign

only delivered 25% of targeted households and delivered

fewer target audience members than a general run-of-

network buy. The second campaign did over index

among the targeted age groups, but 62% of impressions

still went to consumers too old for the target.

Gibs argues that the entire online paradigm of rewarding

publishers based on impression numbers needs to be

scrapped in terms of rewarding them (through higher

CPMs) for “dwell time” or the amount of time a

consumer is exposed to an ad. The argument goes that if

publishers were rewarded based on time, they would

likely do beneficial things for the ad market such as

eliminate clutter and use one, well-placed, larger unit per

page. This thinking demands a pretty big change in ad

practices – time will tell how much traction it gains –- but

it is a compelling idea.

Initiatives like Microsoft Advertising/Atlas’ updated

Reach & Frequency Planning tool could go a long way

towards increasing the true effectiveness of reaching

specific audiences through various campaigns. Research

that was done five years ago on how different types of

sites cume their audiences (“Internet Audience

Getting the Display MOJO back…Implement creative best practices

Measureappropriately and test executions

Pay attention to clutter, audience dynamics

Support cross media and cross online research


18

Dynamics,” by Lynn Bolger, comScore with DoubleClick,

September 2004) is as relevant today as it was then.

Planners need to understand the distinct dynamics of

audience builds and take this into account when they

flight impressions. It’s not rocket science – and it’s

something understood in offline media – let’s make sure

it’s used in digital.

In Creative There’s an enormous amount of bitching about “belly fat

ads” which is to this era what the “X-10” was to the last

recession. We don’t have enough focus on the great

creative that is being produced – especially that within

standard units. I applaud the efforts of both Dynamic

Logic and InsightExpress in bringing to light creative best

practices – and showcasing some of the good creative

out there. The OPA should immediately archive and

promote examples of their Push-Downs, Fixed Panels and

XXL boxes. The IAB started its first task force with agency

creative directors: what are the specific tasks they will

work to achieve? Award shows can be silly and

gratuitous, but let’s get as much mileage out of what

OMMA and now DPAC are doing with their creative

awards. If I’m allowed one wish for the beginning of

2010, it’s that it becomes the year of true creative

innovation – not of a push to new ad sizes and formats.

The High Road is the Road Not Taken The best media research seeks to inform and enlighten:

not to sell. Instead, trade organizations are cranking out

SOS (same old stuff) analysis that makes a quick headline

but goes no deeper than a bullet point. Of course the

Magazine Publishers Association will come to the

defense of magazines at the expense of other media, of

course the TV Bureau of Advertising will use Nielsen data

on the overall rise in TV viewership to overcome other

shortcomings of the medium.

But in doing runs of available research to boost one area

of the industry and denigrate another, it does little to

support the larger issue of how marketers can best make

efficient use of the medium and shift budget from

underperforming media. When the Wall Street Journal

focused on the OPA’s latest Dynamic Logic custom

analysis (“Improving Ad Performance Online: The Impact

of Advertising on Content Sites III”) they noted the

industry infighting:

For a time, Internet advertising was a rising tide lifting all boats. But as ad spending ebbs, there are more arguments about where on the Web advertising is the most fruitful. The fight over shrinking Internet ad dollars pits online publishers that offer premium content against major Web portals such as AOL, MSN and Yahoo. Portals and publishers, meanwhile, also have to compete with the ad brokers that sell often cut-rate leftover ad space on Web pages with less visibility. — Emily Steele, Wall Street Journal, 8/13/09

Think of how one article like this denigrates the entire

medium and leads to confusion in the market. For one

thing, Ms. Steele reports that dollars online are shrinking

– not true! She then goes on to focus on competition

between portals, publishers and ad networks, not noting

that this is a specious argument because portals are

content, much of it from top publishers, and networks

aggregate inventory from publishers and portals – and in

some cases are owned or operated by those publishers

or portals. The dog is truly chasing its tail.

This kind of research can also backfire as the attacked

entities offer their own spins of available sources.

Michele Madansky, PhD in Business & Econometrics,

former head of media research at Yahoo and early Grey

Interactive researcher (who also produced the first view-

through attribution research for DoubleClick) noted at

the Pubmatic conference that you can just as easily make

the point that ad networks work for branding – even

without taking into account cost efficiency as a factor

[see Figure 27, next page].

Her argument was fairly presented. Figure 28 (next page)

shows what happened to branding metrics when

bottom- tier network inventory was assessed. She

worked with available data from comScore, Dynamic

Logic and InsightExpress to produce her report.


19

Figure 27

Figure 28

Research Studies That Could Help the Market:

Online: What is the Proper Mix? When you ask a major marketer how they allocate their

online dollars, a common response may be 50% to

search, 50% to display with no discernable reason. And

then there is the growing interest in how to allocate for

mobile and social. We need best practices by industry

category. Does search make that much sense for

Packaged Goods or Auto Brands? Maybe not, but

who knows.

Cross Media Spend to Drive Sales in Packaged Goods comScore has done some interesting work with

dunnhumbyUSA and IRI data showing lift of TV vs.

Internet for packaged goods. Yahoo and Nielsen have an

excellent product in Consumer Direct and they have

expanded it with some modifications into the Net Effect

product. Any site can run the tests if they have enough

impressions in a campaign. The MMAs and IRIs of the

world are beginning to work with online data in their

models – it took awhile before there was actually enough

of it compared to traditional media for it to have an

impact in their econometric models. Members of the IAB

should pony up to spend for studies involving this type of

data – much like they did with XMOS – but this time they

should do it with a more transparent, replicable

methodology. Online display will not work equally well

for all categories of advertising. Let’s be realistic about

areas where it will surely balance out delivery –

especially to consumers less -and less-impacted by

broadcast television and print.

Engaged Usage Studies with Available Metrics Not all online usage is alike. Ad networks that represent

the extreme long tail of the Internet probably are serving

ads against sites that viewers are likely to come across

once through search but will never go to again. This

inventory is perfect for DR where the optimal exposure-

to-click ratio is likely “1” – it’s not perfect for long-term

brand building that demands higher levels of frequency.

There could and should be a way of scoring and

rewarding sites and their inventory based on how they

retain and continually engage their users. If you think of

the online universe as “accidental tourism” vs.

“purposeful viewing,” let’s value inventory based on this

criterion and price it accordingly. We may never be able

to get at the elusive “halo” effect of powerful media

brands, but we can cost differentiate pageviews based on

user engagement.

Top 20% of Campaigns on Ad Networks Far Surpassed Industry Average

2.2%

4.6%

2.4%1.5% 1.2%

10.0%

15.0%

9.1%9.9% 9.2%

1.2%

3.6%

1.8%0.7% 0.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%


Online Ad Awareness

Message Association

Brand Favorability Purchase/Behavior Intent

MarketNorms Average Top 20% Ad Networks Average Ad Networks

Pe

rce

nt I

mp

acte

d

Best/Worst Performers on Ad Networks

Source: Dynamic Logic MarketNorms: Last 3 Years, Q2/2009, N=2,371, n=3,718,839 Ad Networks: Last 3 Years, Q2/2009, N=439, n=187,614

…And this does not include cost as a variable.

While Bottom 20% Actually Harm Brands

2.2%4.6%

2.4% 1.5% 1.2%

10.0%

15.0%

9.1% 9.9% 9.2%

1.2%3.6%

1.8% 0.7% 0.2%

-6.7% -6.0% -4.3%-8.7% -9.2%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%


Online Ad Awareness

Message Association

Brand Favorability Purchase/Behavior Intent

MarketNorms Average Top 20% Ad Networks

Average Ad Networks Bottom 20% Ad Networks

Per

cen

t Im

pac

ted

Best/Worst Performers on Ad Networks

Source: Dynamic Logic MarketNorms: Last 3 Years, Q2/2009, N=2,371, n=3,718,839 Ad Networks: Last 3 Years, Q2/2009, N=439, n=187,614


20

Contributors The following individuals contributed to this report with

both ideas and data:

Kyle Johnson, Manager, Product Management, Compete

Lynn Bolger, EVP Advertising Services, comScore Ken Mallon, SVP, Custom Solutions & Ad

Effectiveness Consulting, Dynamic Logic Joe Laszlo, Director of Research, The IAB Joy Liuzzo, Director of Marketing and Research,

InsightExpress Michele Madansky, Michele Madansky

Consulting Young Bean Song, Senior Director and Morris

Martin, Senior Market Research Manager, Microsoft/Atlas Institute

Jon Gibs, VP Media Analytics and Corinna Chang, Senior Market Data Analyst, The Nielsen Company

Gerard Broussard, Premeditated Media Consulting

Additional Thanks: Alex Maiorescu, Principal, Primary Impact – supporting

data analytics

Resources: The following reports provided significant thought

leadership and market intelligence from late spring

through early fall ’09:

Adify: “Vertical Gauge Report,” Q2 2009 DoubleClick and Dynamic Logic: “The Brand

Value of Rich Media and Video Ads,” June 2009 DoubleClick: “2008 Year in Review Benchmarks,”

June 2009 comScore and the OPA: “The Silent Click:

Building Brands Online,” June 2009 Dynamic Logic: “Creative Best Practices,”

September 2009 IAB: “Internet Advertising Report” Q2 2009 Michele Madansky: “A Closer Look at Ad

Networks for Branding Campaigns,” October 2009

Microsoft Atlas, “The Power of Translation: Bridging the Language Gap Between Traditional and Digital Media,” September 2009, and “The Planners Digital Dilemma,” July 6, 2009

Nielsen, “Does Online Advertising Deliver the Target Audience,” October 6, 2009

Pubmatic, “Ad Revenue Report,” Q2 and Q3 2009

About the Author Kathryn Koegel is a principal at Primary Impact, a company that performs media research consulting and data insight development for agencies and marketers. She has created marketing strategies for

companies like DoubleClick, Gemstar TV Guide (Interactive Program Guides and the cable network), US News & World Report, The Online Publishers Association and one of the first Internet ad networks, Phase2Media. At DoubleClick, she was in charge of research and industry development from 2002 to 2005 and produced the first Digital Display Trend Reports. Her research work has been accepted and published by the ARF and ESOMAR. Contact her at: [email protected]. Links to her other research can be found at: www.primaryimpact.com/kathrynkoegel

This paper is part of a series written for publishers, agency and marketing executives that presents straightforward, media and

research vendor-agnostic status reports on emerging media types. Future whitepapers include: The State of Social Media

Marketing (winter ’10), The State of Television Advertising (spring ’10), The State of Mobile Marketing 2 (spring ’10) and

The State of Digital Display 3 (spring ’10).

.

“The Story Behind the Numbers”

www.primaryimpact.com

mailto:[email protected]

www.primaryimpact.com/kathrynkoegel

overviewprimaryimpact.com/stateofdigitaldisplay2.pdf · by kathryn koegel prepared for october 27,...

Documents