Ad spending is down. Across the board, there is less money in the market than there was last year. It was reported last month that online advertising spending was off about 7.8 percent for the first half of 2001 as compared to last year during the same period. For the rest of the advertising industry at large, the declines are even greater: as much as 22 percent in other traditional media. This is no surprise to anyone working in the business, and it’s especially tough for small, independent publishers.
But judging this year’s figures against last year’s is probably a bit disingenuous, as the business in first half of 2000 was still being driven by some of the remnant irrational exuberance that pervaded the advertising industry through 1999. It ‘s sort of like saying that rainfall was down dramatically the year after the biblical great flood. Yes, it’s down, but when compared to abnormal conditions, it is hard to gauge what constitutes real health in the marketplace.
Those of you in a Net-centric environment have certainly seen the downward trends in the market, as dot-com clients go belly up and I-shops continue to lay off employees, shuffle management, or close their doors altogether. Throughout the boom times, these were the sources of most of the activity and spending going on in the digital marketing space. So if spending is really only off by 7.8 percent, why all the suffering? Where is the money coming from, if not from these erstwhile Net-centric entities?
Well, as it turns out, a lot of it is now coming from traditional advertisers and their agencies. That’s right, it’s the dinosaurs that the industry had marked for history’s dustbin that are actually carrying the interactive advertising marketplace.
“We’re getting more business now from traditional advertisers, like General Motors, Intel, Hewlett-Packard, Jack Daniel’s, Sprint, MCI, etc.,” said a friend of mine in ad sales for an online ad network.
This is good news for an industry that has long been extolling the virtues of the medium and its applications for traditional advertisers.
What isn’t such good news for many online publishers is that the spending continues to be consolidated among only a handful of players.
Of the dollars that advertisers are spending, more and more of them are being placed with the big branded media companies. Seventy-six percent of all spending being reported finds its way into the hands of the top 10 media companies, up from 70 percent the year before. The top 50 online media companies see 96 percent of reported online spending.
Now, this isn’t terribly surprising — after all, network television still sees the lion’s share of dollars committed to broadcast when compared to spending on, say, The Golf Channel. But until the current shakeout, smaller publishers seemed to have a better chance on the Internet. Now they’re going to have to find a new way to survive, and many won’t make it at all.
Those publishers that fall in the 51 to 100 or 200 ranks are going to have to become either more creative or more practical about how they sell inventory and what kind of inventory they sell.
For these smaller publishers, looking to the print model for guidance might not be a bad idea. Though only a few magazines and newspapers pull in the really big dollars, many more do just fine as niche publications. And the Web is just about as niche as you can get. These publications do not survive by selling based on impressions from a cumulative audience garnered through pass-along readership; they sell their audience.
Say it with me, class, AU-DI-ENCE.
The impression-based currency for online media is a terrible way to be conducting business in the online ad space to begin with — many of you have heard me rant about this before a couple of times. And in light of the current marketplace, maybe it’s time for them to be creative with how they package inventory. Perhaps now instead of selling impressions, they can sell unique visitors in much the same way their brethren in the terrestrial plane do.
I want to see the Web survive as a wonderful medium full of incredible diversity. But some of the support that makes it possible has to be subsidized by advertising, and the dollars are only going to go to places where the audiences are desirable and the inventory can deliver it. Small, lonely, singular impressions are no longer the answer for the small, lonely, singular publishers.
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