Despite the hype about social media and other emerging platforms, Publicis-owned interactive agency Razorfish has yet to invest to a degree that matches the excitement. A mere 4 percent of clients’ 2009 media budgets went toward social media display ads last year, and even less went toward social media non-display formats.
And social isn’t the only buzzy category to pull comparatively meager spending. According to Razorfish’s Outlook Report 2010, its annual breakdown of client media spending, a variety of emerging technologies like mobile, data reselling platforms, ad exchanges, and digital out-of-home signage each achieved well under 5 percent of overall media spending last year.
Meanwhile old standbys continue to dominate media spending. Site specific buys commanded more than 30 percent of client budgets, search and directory buys held 25 percent, ad networks had 20 percent, and portals had more than 10 percent.
One reason for the lagging spending in social media is a simple glut of inventory. Facebook, YouTube, and other sites in the “social” bucket are saddled with far more ad space than they can sell, and as a result impressions come cheap. Premium inventory meanwhile is hard to come by. For example, YouTube’s volume of homepage impressions is limited by the fact that most people navigate directly to videos, bypassing the front door.
In any case Razorfish says media is not at the heart of its social marketing strategies. According to Jeremy Lockhorn, VP of emerging media at Razorfish, labor-intensive activities like Facebook page development, community management, and blogger outreach are more important.
In a meeting with ClickZ earlier this month, Razorfish CEO Bob Lord confirmed that the company is urging clients to invest more in content strategies on Facebook.
“We’re starting to say to clients, you have to spend more on content,” he said. “With Facebook, people are realizing they’ve got to participate in it. And participate in a much more substantial way.”
The dynamics are dramatically different in the case of data sellers and ad exchanges, which captured an estimated 5 percent of all client ad spending combined. Lockhorn points out the shift in spend to audience-based buying tools such as ad verification platforms, demand side platforms, and data aggregators may not seem so slow when you consider that the category hardly existed before last year.
“There wasn’t even a breakout in last year’s report around ad exchanges and data brokers,” he said. “It’s not quite up there yet without some of the other categories that we’re looking at, but I don’t think it’s anything to sneeze at.”
And mobile, ever the bridesmaid, continues to fight for every dollar in part because the medium is still ill-suited to display advertising and is hard to measure, he said. However Razorfish has high hopes for the channel’s revenue potential, especially with regard to local search.
A few additional details from the Razorfish Outlook 2010 report:
The recesssion. As expected, Razorfish clients reacted to the recession by offering more discounts in their messaging, reducing overall budgets, and shifting budgets to search and other measurable channels. Average client spending rose in 2009, after suffering a 13 percent drop in 2008. In 2010 the agency expects “tremendous growth.”
CPM buying dominates. Forty-eight percent of Razorfish media spending was channeled into CPM buys, and 10 percent went to time-based ads and sponsorships. As a result, approximately 58 percent of all spending went to impression-based media vehicles.
Search pricing. In 2009, average cost-per-click prices on major search engines were between $.56 and $.88. This year, with rising competition for keywords, Razorfish said search prices are up sharply. It declined to say how much.
The portals. Still a powerful force, the search/portal category won 45 percent of client media dollars in 2009. Razorfish says Yahoo dominates impression buys, while AOL and MSN jointly rule over performance-based buys.
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