A media revolution is underway. Last time, I discussed how Google may be leading the charge, testing marketers’ willingness to purchase print advertising with Google acting as the broker, trafficker, and, with the test ads, the production agency putting together the layouts.
Today, I’ll look at ways search network platforms might evolve and the suitability of each medium for automation via a digital auction marketplace.
"Friction" is a term economists apply to markets, marketplaces, and economic systems. It relates to inefficiencies within a marketplace that result in mis-pricing of the assets being traded, bought, or sold in the market. Friction elimination makes a market more efficient. Many laws relating to the stock market regarding insider trading, disclosure of material information about publicly traded companies, and accounting statement accuracy are based on maintaining an efficient, fair information flow. Similarly, commodities are sold in an open marketplace because sellers feel it results in the highest commodity prices.
The search engine marketplace has proven that valuable search media can be auctioned for a high price. Those auction systems are being deployed for increasing amounts of online inventory. Aside from search, the most common online advertising to be auctioned are channel-based text or banner placements; contextually targeted text or banner ads; and behaviorally targeted inventory.
Though auction billing methods may differ, such as CPA (define), CPC (define), and CPM (define), auction management systems have one thing in common: they are designed to maximize publisher and network profit. Network targeting and ad-serving systems, such as Google’s AdSense, calculate in almost real time the highest predicted yield among all the ads in a large database, then serve those ads.
Valuable media assets other than online text and banners are likely to start showing up in the auction systems because:
Non-search auction systems for online media, such as Right Media, are also launching. Online ad auction companies and systems, such as AdAuction.com and AdOutlet.com, have launched and failed due to many factors, including timing, critical mass, and publisher-provided inventory being difficult to classify by a generally accepted value. Much of the inventory tended to be remnant inventory with poor overall quality.
One can easily imagine a new world of media auctions, in which the search engine networks with their active-marketer customer bases and deep pockets might attack major media markets. Below, some of the major media markets that might evolve into truly auction-based marketplaces (note: spending estimates are based on TNS Media Intelligence reports):
Will the ad spend managed by the search networks increase from $6 billion this year to $150 billion in the near future? Probably not. However, the search engines have some major advantages, should they choose to sell other media in an auction format. Those who love offline media because costs are completely fixed in the annual media plan and insertion orders are locked in by January may have to rethink how they buy media if the search engines have anything to say about it.
Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.
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Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.
Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.
March 19, 2014