Online Advertising: Waiting for the Click Trick
Online advertising is still struggling to bring big bucks for media
players and agencies. Now with the ongoing recession in the global
markets, the situation can go from bad to worse. However, research firm
Gartner suggests 10 measures for digital advertising transformation.
Creating effective digital advertising operations, says Gartner, is
crucial for media companies regardless of the current adverse economic
climate.
“While
the Internet still accounts for a minority of overall advertising
revenue at most diversified media companies and media agencies, the
qualities that make digital advertising disruptively different are
rapidly spreading to television and other devices and channels,” said
Andrew Frank, research vice president at Gartner. “This makes it
imperative that media companies master these qualities.”
Frank
said the most important asset that media companies must protect is their
relationships with advertisers, and the best way to protect them is to
take the lead in offering new, more-strategic products in the form of
cross-media bundles and “engagement packages that come complete with
data and real-time optimization capabilities.
Gartner
has identified 10 priorities for digital advertising transformation:
These are:
1.
Re-Evaluate Pricing, Packaging and Inventory Management Strategies:
Media companies must recognize that solving the challenges of online
advertising is not an isolated exercise, but a critical step in
preparing for the day when digital advertising is the dominant source of
revenue for the business, regardless of which device or channel it’s
being delivered to. This should make acquiring the skills and tools to
make informed pricing decisions across any form of addressable
interactive media a top priority.
2.
Make Data Available, Internally and Externally: Data is the
lifeblood of any digital advertising operation; the key to effective
pricing, inventory management, targeting and sales. Advertising data is
often associated with consumers to support demographic segmentation, but
at least as important is data about the performance of advertising. Also
essential is real-time inventory status data that can supply a snapshot
of forecast fill rates and revenue issues for management decisions.
3.
Prioritize Strategic Relationships With Top Customers: One of the
greatest threats to the media business is the commoditization of
advertising as sales relationships become more transactional and less
strategic. Media companies must look to their existing advertiser and
agency relationships as a key competitive advantage. For Web
intermediaries, a lack of long-standing relationships represents one of
the strongest challenges to expanding market share with established
advertisers and publishers.
4.
Sell Audience, Not Just Placement — Sales training is an essential
part of any product structure transformation. In the case of digital
advertising, sales forces also need tools and data to generate proposals
based on audience guarantees and options. The source of this data is a
topic of major concern for media companies that do not necessarily have
extensive CRM resources to draw from. This suggests a need to partner
with alternate sources, specifically social and behavioral targeting
networks or communication service providers, subject to privacy
considerations.
5.
Invest in Yield Management Tools and Dashboards: Yield management (YM)
aims to maximize revenue for perishable inventory under dynamic
conditions of supply and demand. In the digital advertising environment,
YM is further complicated by the overlap problem, which results from the
ability to price and sell a given spot based on any number of parameters
— its contextual placement, the demographic or geography or behavioral
history of the current visitor, or relationship considerations given to
a particular advertiser or agency. Online publishers need to develop
tools and expertise in acquiring and routing traffic to high-demand
yield zones in response to spikes in order volume and pricing, and
respond to low-demand periods with inventory reductions that may enhance
consumer experience. Furthermore, they must understand the dynamics of
price elasticity at each of their yield tiers to optimize pricing models
in response to market conditions.
6.
Reach Beyond Your Web Site: Many media companies have realized that
they can extend their inventories through select third-party
partnerships with smaller sites and blogs that lack their access to
quality advertisers. This approach addresses a key challenge of the new
media landscape for incumbent media companies, which is the
fragmentation of the audience and its distribution along the long tail
of sites and pages. This results in more-limited reach and frequency (at
least within a given market) for media-owned Web sites and gives rise to
the ad networks and exchanges that attempt to satisfy the need for scale
by aggregating this fragmented audience and creating liquidity for
advertisers and publishers.
7.
Increase Video Inventory — While there may be a great deal of
undersold display inventory on the Internet, the same can't be said for
quality video inventory. Video has the advantage of being more
measurable, more impactful and more likely to produce results without
taking users off a site. Moreover, video advertising sets up a clear
path to cross-media traffic, because the same or similar content can
work on multiple devices.
8.
Integrate Sales Teams and Track Across Platforms: Segregating sales
teams (or buying teams on the agency side) is a significant impediment
to achieving strategic cross-media relationships. Advertisers need a
holistic view of the effectiveness of their media efforts, and only an
integrated approach can deliver this. Cross platform sales can be
optimized by tracking pricing and sales data across channels, and
sellers can add value to their bundles by offering expertise on media
mix optimization gained from such tracking experience.
9.
Optimize the Use of Intermediaries: Online publishers of any scale
should look to platforms to optimize ad network use. These platforms
provide ad network optimization capabilities that can save money and
resolve channel conflicts.
10.
Create a Digital Advertising Road Map and Governance Structure — A
governance structure is essential. In particular, forging and
negotiating new relationships with portals and communications service
providers will be crucial in reconfiguring the digital advertising
chain.
Gartner
offers to provide more information from its report “Making Digital
Advertising Work for Media Companies."
