During a recent get-together with a few industry peers, I kicked off a discussion with a little pop quiz. Here’s the most intriguing question:
What’s the unique aspect of online advertising compared to other media?
The immediate answer was (you guessed it) interactivity. Online is the first medium that allows customers to instantly respond to you. Other responses included the ability to transact, microtargeting, and instant measurability.
All good points. And all are arguably correct. (Don’t you just love the subjective nature of this business?)
Let me throw one answer out there I bet you haven’t thought of. Online advertising is the first medium in which the predominant portion of all ad placements change when a customer revisits the content. Yup. Visit a page, go away, come back — and guess what? Same content, new ad.
How did we end up with this?
Imagine for a moment you pick up this month’s issue of Fortune. You dive into the magazine and while reading the main article about the economy see an impressive full page for the new Subaru WRX-STi. After glancing at the cool photo and eyeballing the competitive features chart, you flip the page to continue reading the content (you’re eager to learn when the “recovery” will really kick in). But a couple of synapses fire in your brain. You’re suddenly daydreaming about attacking a hairpin curve while staying glued to the road with symmetrical, all-wheel drive in your new silver STi.
It dawns on you — I gotta have one of those this summer! So you flip back the page and guess what. You now see an ad for a sleek, twin-engine 427 from Bell Helicopter. Nice, but not quite in your price range. Flip forward and back. Now you see the latest tablet PC from Toshiba. Pretty cool. But right now you want a new ride, not a new way to write. Keep flipping and you’re likely to see another 10 or 15 ads, but no Subaru. Oh well.
That’s the reality of online advertising today.
Next question: Why don’t publishers offer more fixed-position placements?
I think it’s great publishers can offer a number of advertisers access to their audience during a single session. But one wonders if this makes for the best user presentation. After all, some folks in our business estimate 60 to 70 percent of online ad inventory is unsold. Why do publishers rotate so many ads when they could offer paying clients more consistent placement?
When my agency implemented the very first surround session on NYTimes.com in 2001, then followed with the very first site session campaign in 2002, we could deliver advertising for American Airlines that kept the brand and the message right in front of the customer. We owned 100 percent of the inventory, as if they were fixed placements.
The results? We saw dramatic improvements in brand impact measurements over regular buys, such as brand and message association. Our target audience was persistently exposed to the message in a concentrated fashion. In other words, the message stuck.
I know, I know… I hear publishers everywhere proclaiming, “Don’t limit my ability to generate revenue by reducing the number of advertisers in my rotation!” But I bet advertisers would pay a higher premium if they could get dedicated placement. Let me play amateur publisher for a moment and see if this crazy theory pans out.
Say I run fastbreaknews.com and have a monthly ad inventory of 500 million impressions. I’ve got 20 advertisers that buy 10 million impressions, each at an average $20 CPM. I rotate those 200 million placements through the 42 slots on my site. So I’m getting 40 percent of my inventory sold and generating $4 million in revenue. Not bad, eh?
What if you tiered those slots so you assigned levels of value to the placements, sold them as fixed, and obtained a higher CPM level? Assume I have 2 home page slots, my 10 secondary pages have one slot each, and my 30 tertiary pages have one slot apiece. My monthly ad allocation and CPM pricing might look something like this:
|Slot||Impressions (M)||CPM ($)||Revenue ($M)|
|Home page (2)||50||28||1.40|
|Secondary page (10)||75||20||1.50|
|Teriary page (30)||75||18||1.35|
Now each of my 20 advertisers can buy 2 or 3 of the 42 slots and get consistent placement for 30 days. This is still just tapping 40 percent of available inventory. You could offer a 50/50 rotation and sell more slots. Clients would still “own” the page. And the publisher generates more revenue.
Perhaps this is all crazy math from an agency guy. But I have to think there’s an opportunity here. Let me know what you think — from both sides of the buyer/seller fence. In the meantime, I’ve got to find that STi ad. The road is calling!
Don’t miss ClickZ’s Weblog Business Strategies in Boston, June 9-10.
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