Can online advertisements deliver?

It seems more than likely that online display ad spend will drop over time. As Felix Salmon wrote recently “as the price of online inventory continues to fall, it seems just as likely that online ad spend will go down (because the ads being bought are getting cheaper) as that it will go up”.

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Fairfax’s AirLink technology has been used to link a print ad to a video ad when scanned with the iPhone

In other words, supply is increasing but demand is falling.

It’s not just a publisher problem. Media agencies are complicit in the lack of performance from digital. Agencies just aren’t delivering value to clients.

Publishers are doing their part, providing quality environments – albeit better information on customer usage would be valuable to clients. So why aren’t agencies delivering the same kind of service in the digital space?

It seems to come down to: what’s in it for them?

What has not changed, despite the disruption to the media industry over recent years, is

(a) readers’ desire for news and information and

(b) businesses desire to reach new customers.

Publishing is still a vital channel, but in an increasingly cluttered online market advertising effectiveness is diminished. The amount of impressions you need to get noticed by media buyers continues to increase proportionate to the amount of inventory available. It’s a lose-lose situation.

By the time you’ve paid for your journalists and your sales staff and all the other overheads, profits are skinny. So everyone is looking beyond advertising for other revenue generating activities.

‘If agencies don’t improve their approach they will only create opportunities for new players’

All the hard work publishers have done reinventing themselves for readers, convincing shareholders that the future is a smaller more profitable business, risks being undermined if the advertising dollars keep slipping away. And it’s not cyclical. Agencies are a key service provider in the relationship and we need to ensure that this service continues one way or another.

The answer for agencies is not cosier relationships with publishers and funding for generic “research projects” or other special jobs that don’t relate directly to delivering value for clients – nor is it agencies churning through young and inexperienced account managers.

The answer is to put the client first, always. Take a hard look at the agency business model and make the difficult decisions needed to reinvent that model.

And while you’re at it, check out Buzzfeed’s sponsored content (otherwise known as “native advertising”) and see if you can tell the difference between editorial and advertising. That’s a format that not going to solve the problem, even if clients think it’s worth paying a premium for in the short term.

If agencies don’t improve their approach they will only create opportunities for new players. This has been a hard learnt lesson for publishers, but one that seems to be producing changes.

Hugh Martin is CEO of Crown Content, publisher of ConnectWeb.

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