The Open Agenda

There’s been a lot of buzz of late concerning Display advertising. This has been going for the past 18 months or so but it does seem as though this time the tone has shifted somewhat, to the point where we have 2 distinct schools of thought: People who believe display is doomed and people who believe it’s just the beginning for display. Here at Open, we’re strong advocates of the latter..

As recent study by PricewaterhouseCoopers predicts an annualised contraction in display revenues of 1.4% for the next five years. They even go as far as to suggest that the prospects for display are rated even lower than revenues generated by newspaper circulation (-0.4%) or terrestrial TV advertising across Europe (-0.9%).

Whilst I haven’t read this report I can tell you know with great confidence that this is a complete and utter load of crap. It seems to me a totally pointless exercise to extrapolate the revenue growth of display formats that will be for the most part replaced with display formats that are both performance-based and effective.

If we go way back to 1996 we can see where the troubles began and why in fact that existing display formats (banners, MPUs etc) never really stood a chance of success. I’ve long believed that the root cause of the problem is two-fold.

• Existing display formats are not fit for purpose. Applying ‘print-based’ advertising models online was an insane idea to begin with. We’ve been harping on about this it seems forever. But you needn’t take our word for it. Tim Cadogan, the chief executive of Open X has the following to say in an article that appeared in yesterday’s Guardian: “In 1996, as an industry, we just took the offline advertising model and slapped it online. Search was very different: in Gadogan’s view, it represented an ‘underlying revolution’ in advertising”. It’s little wonder that Google made it’s fortune from CPC – it was the first advertising model made for, you guessed it, the internet. Genuis or just plain smart? Jake Hird at Econsultancy had the following to say yesterday, “Examining the reasons behind display’s current weaknesses, the core issue lies with the industry-standard payment model, that of cost-per-thousand (CPM). In effect, this is an offline advertising format that was applied to the internet in the 1990s, and which has not really changed since despite other areas of online consistently evolving and adapting.”

• Existing display prcing models are not fit for purpose. It’s easy to say that one is a result of the other – but I think we should strip out the pricing model problem. And that problem is CPM. In an environment where every interaction can be monitored and evaluated, why the hell we have stayed with the impression based pricing model is beyond. I think it comes down to the old adage: familiarity breeds comfort. Performance-based pricing models are the obvious alternative. Making it a reality requires the co-ordinated efforts of advertisers, publishers and media agencies alike to come to the party and agree to try something new. From our experience, the biggest barrier is the media agencies.  They have vested interests in the CPM model and are tied to legacy reporting systems that simply don’t have what it takes to monitor and report on performance. Likewise with most ad servers – blindly chasing impressions and clicks – you know who you are.

So where does this leave us.

We’ll one thing is for sure – DISPLAY IS HERE TO STAY. New formats will emerge, bolted to new pricing models. Video Egg is just one example of a company with the foresight to move display forward. Their Cost Per Engagement model is a step in the right direction and we applaud them.

If you still think display is doomed, here’s further proof to the contrary, Here at Open, we are running campaigns with Fortune 100 brands using our innovative display media format – The Open IMU (Intelligent Media Unit).

Take a peek at the latest example created for the Vodafone McLaren Mercedes Formula 1 team. Placed at the top right MPU space.

All of the campaign we run have a performance-based pricing element, ranging from hybrid models right through to 100% performance.

The Open IMU format is averaging install rates (the purest form of engagement) far above that of average click through rates.

For us, we see display formats (and online media for that matter) as simply a paid means to distribute brand experiences. We you start looking down the rabbit hole, you too will see that as an industry you had it wrong for so long.

Till next time,

Josh

Tags:   CPA · CPE · CPM · display advertisingNo Comments