Home  › Marketing › Strategies

Is an Impression a Commodity?

  |  June 2, 2008   |  Comments

At what point does the delivery vehicle for digital advertising move from being a premium good to being a raw commodity?

Frequently I hear talk about the term "commoditization" when it comes to online advertising. Today, I'll challenge some of the assumptions behind the term. In the end, when people talk about the commoditization of impressions, they really mean that impressions are dropping in value. The term commodity is a financial term with a strict definition:

    A generic, largely unprocessed, good that can be processed and resold. Commodities traded in the financial markets for immediate or future delivery are grains, metals, and minerals. They are generally traded in very large quantities. --"Wall Street Words" (Houghton Mifflin Company)

However, it also has a more general meaning:

    Something useful that can be turned to commercial or other advantage. --"American Heritage Dictionary" (4th ed.)

So is an impression a commodity? That depends.

At its most basic, an impression is a delivery vehicle for a piece of advertising. But obviously there are differences between impressions. Some differences are contextual (publisher name, content associations, dimensions, creative types supported, etc.). Some are audience based (gender, age, location, psychographics, behavioral segments, etc.).

It's the juxtaposition of all these various parameters that make an impression valuable or not. So an impression seen by Eric Picard on MSN Money sold to a media buyer by the Microsoft Advertising sales force isn't a commodity in the strictest sense; it has a certain value and doesn't exist elsewhere. That same impression on MSN Money sold by an ad network blind (meaning no information about which publisher the impression was delivered on) in a finance category will be worth another price -- and perhaps is actually a commodity, especially according to the stricter definition above. Ad networks take bulk impressions and make them more valuable by adding data to them. Of course, the fact that they're bulk is because in a sense, they are distressed inventory. So perhaps that doesn't quite qualify as a commodity in the strictest sense -- only in the broader sense as -- we dig deeper.

The other issue here is that while the impressions are the same, the prices are different. That's because through one channel the buyer doesn't have access to some of the key data, such as the publisher's name and the site section. In a sense, the valuable premium impression was turned into a commodity by selling it in bulk as undifferentiated inventory.

What I'm getting at is there are a few ways to look at this.

What do we all mean when we talk about the term commodity? That commodities are low value? That's obviously not the case. Gold, after all, is a commodity. So when people complain about impressions being commoditized, what are they complaining about? That they're decreasing in value? That they're undervalued?

The simple fact is there are huge amounts of inventory on the market. There's a supply-and-demand problem. There's too much undifferentiated or poorly differentiated inventory out there, causing the whole market to drop in price. The more differentiation we can express against this mass of inventory, the higher the value of it.

The problem we're up against right now is that humans can't examine and make buying/selling decisions against more than a few parameters. Even if you had a bunch of differentiated impressions with lots of data points, you'd have a hard time buying or selling them in the old-fashioned human-to-human way, so we need the technology to automate the buying process to ensure that we can ultimately get to that promise of one-to-one targeting that everyone talks about. Today, even with lots of targeting parameters to choose from, humans simply can't match a buy to available inventory using more than a handful of parameters.

So back to the question at hand. Is an impression a commodity if it has lots of identifiers that cause it to be unique? No. But at what point does an impression move from being a premium and somewhat unique good to being a raw commodity? It almost doesn't matter. Our goal should be pushing data and, ultimately, value into every impression sold.

ClickZ Live San Francisco This Year's Premier Digital Marketing Event is #CZLSF
ClickZ Live San Francisco (Aug 11-14) brings together the industry's leading practitioners and marketing strategists to deliver 4 days of educational sessions and training workshops. From Data-Driven Marketing to Social, Mobile, Display, Search and Email, this year's comprehensive agenda will help you maximize your marketing efforts and ROI. Register today!

ABOUT THE AUTHOR

Eric Picard Eric Picard is the director of advertising strategy and emerging media planning at Microsoft Digital Advertising Solutions. In his role, he helps set corporate-level strategy for how Microsoft approaches advertising from a business and technology standpoint. His team manages long-term advertising platform and product strategy, emerging media strategy, and planning for incubation and research teams, and designs next generation advertising products. Formerly, Eric was founder and director of product management at Bluestreak, where he oversaw advertising products, such as third-party ad serving, ad analytics, and rich media and led development of many company technologies. He helped pioneer rich media advertising in the late '90s and has been active in most of the critical industry conversations related to technology, including the IAB's Measurement Committee and Rich Media Task Force. Prior to Bluestreak, Eric founded 9th Square Inc. and Waterworks Interactive Inc.

COMMENTSCommenting policy

comments powered by Disqus

Get the ClickZ Marketing newsletter delivered to you. Subscribe today!

COMMENTS

UPCOMING EVENTS

Featured White Papers

BigDoor: The Marketers Guide to Customer Loyalty

The Marketer's Guide to Customer Loyalty
Customer loyalty is imperative to success, but fostering and maintaining loyalty takes a lot of work. This guide is here to help marketers build, execute, and maintain a successful loyalty initiative.

Marin Software: The Multiplier Effect of Integrating Search & Social Advertising

The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.

WEBINARS

    Information currently unavailable

Jobs

    • Interactive Product Manager
      Interactive Product Manager (Western Governors University) - Salt Lake CityWestern Governors University, one of the 20 largest universities...
    • SEO Senior Analyst
      SEO Senior Analyst (University of Phoenix (Apollo Education Group)) - San FranciscoSEO Senior Analyst   Position Summary...
    • SEM & Biddable Media Manager
      SEM & Biddable Media Manager (Kepler Group LLC) - New YorkAs an Optimization & Innovation Manager at Kepler Group, you will be on the bleeding...