Digital Media Strategies 2013: Is online advertising broken?

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Jasper Jackson, TheMediaBriefing Experts' Blog, Advertising

Is online advertising broken? For publishers the answer is yes - the shift to online with its low CPMs, the shift to mobile and its lower mobile CPMs and the widespread adoption of programmatic buying, are all making it riskier for publishers to rely on and survive on an ad funded model.  

But according to the panel on advertising at our Digital Media Strategies conference in London those changes are opening opportunities - they're just difficult to take advantage of.  

Online: Value shift

Don Amboyer, Europe managing director at adtech firm Operative, describes the suggestion from Google's Nikesh Arora that half of all advertising will be online in 2018 as "terrifying" for online publishers. 

He says that while traditional broadcasters will rack up delivery costs of around five percent of a campaign's value, costs can reach 30 percent online.  

Fabien Magalon, managing director of French media co-operative La Place Media, says there is a "value transfer from publisher to advertiser" involved in ads moving online, but described it as a challenge rather than a threat. 

He says: "When you create your own content you have the opportunity to create tons of value from quality data. Publishers need to find ways to extract new value from their unique proposition which is content."  

Duncan Tickell, commercial director at Immediate Media, says for publishers who don't measure their impressions in the billions the opportunity lies at the premium end of the ad market. 

"There is a commoditised space at the bottom, and there's a space in the middle where we have traditionally operated with banner ads," he says. "But at the top end there is an opportunity which requires deeper integration." 

"It's about saying where can you make the most impact. I do think publishers have it within their control, but they need to think how you can respond to a clients' complex commercial problems with integrated editorial, design and all the parts of your business. You have to invest in the infrastructure to  respond when opportunities come up." 

Mobile: Publishers and advertisers lag audience

Tickell says no one has got to grips with mobile effectively yet: "There's an awful lot of desktop inventory sold on mobile. The industry is behind users. we've got these terribly low CPMs for mobile specific - almost to the point of being meaningless. It's up to us to come up with some creative solutions."

Noel Penzer, MD of Huffington Post Media Company in the UK, says publishers need to catch up with where users are. 

"We are increasingly looking to put mobile and tablet at the heart," he says. "We've got to make it simple for ourselves - whether it be ad formats. It's not an extension, it is the audience."

One interesting contribution was tweeted from the audience: 

Programmatic: Not all upside

The panel had quite differing views on programmatic buying and it's simlar-but-not-the-same partner real-time bidding (RTB). Magalon says programmatic should cut out the friction in delivering online campaigns - potentially reducing the added cost of delivering them. 

"It will reduce signficantly the cost - on indirect cost RTB is just so brilliant," says Magalon. "It's also driving significant value to advertisers so theoretically it should drive value for publishers. It is also a great feed for driving audience data and better results for advertisers and ultimately publishers."

However, Tickell warned that programmatic could also drive up costs: "If the publishers are having to manage the yield, the costs associated with the planning is suddenly going to publishers. But it is the way the market is moving and you need to have a strategy in place." 

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