Nielsen Online CEO Calls on Publishers to Cut Inventory

Web publishers must do a better job of serving brand advertisers and that includes reducing the amount of inventory they hand over to ad networks. That’s according to Nielsen Online CEO John Burbank.

Burbank, in his keynote speech at the Advertising Research Foundation’s Audience Measurement 4.0 conference yesterday, said today’s online business models cannot continue to support Web publishing. Excessive inventory, he said, is diluting ad prices.

“Web publishers need far more brand advertising revenue to keep the lights on. Sending tons of inventory to ad networks is just not working,” said Burbank, a former brand manager at Procter & Gamble, AT&T, and AOL. “All the things you love about the Web…they will go away or they will have to find new ways of funding [them].”

Burbank joins a growing chorus of people, especially online publishers, who are sounding an alarm over the drop in prices for ads sold through networks. Critics are concerned that ad networks sell ads at pennies on the dollar; ad networks counter that their targeting technology ensures that the right ad gets delivered to the right audience — at a lower cost.

In addition to curbing the amount of inventory handed off to ad networks, Burbank advocated that publishers enable brands to tell stories through “bigger, better ad units,” endorsing the Online Publishers Association’s push for larger ad units. He pointed to splashy ads that recently appeared on NYTimes.com’s homepage for Apple and Microsoft’s Bing, including one that hid “The New York Times” branding at the top of the page.

An NYTimes.com executive, speaking during another panel, said the publisher works with some ad networks and exchanges. “We recognize it’s a good complement to the vast majority of our revenue, which is unique, high [impact] placements for brand advertisers,” said Ben Monnie, director, strategy and business development, at NYTimes.com.

Burbank, for his part, suggested publishers establish new metrics to measure the success of brand advertisements. He said the use of direct-response metrics — such as impressions delivered, click-through rates, and search query volume — is not appropriate for brand advertisements. In 90 percent of instances involving online brand advertising, he said, “people will never visit the product Web site, won’t engage in search in the category, and never click on an ad. But that doesn’t mean the ad failed.” Metrics, he said, should address assessing whether a dollar spent online is better than a dollar spent on television.

Instead, Burbank said brand advertisers should be more concerned with whether their ads reach the desired targets, change the way consumers think about their brands, or help sell products. Measuring how much time consumers spent with an ad, and what types of interactions they took with it are good places to start.

To determine whether an ad changed the way people think about a brand, advertisers should apply metrics used for offline advertising, such as brand awareness and purchase intent.

And to measure how well an ad converts, Burbank pointed to his own company. Nielsen recently completed post-purchase studies for consumer-packaged goods products, and plans to do comparable studies for other product categories.

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