Speakers on the Future Of Business Media conference’s advertising panel tended to agree that the pie for online advertising is continuing to rise, but certain slices are being sliced more thinly. Staci Kramer, executive editor for ContentNext Media Network, asked how the nature of online advertising is changing in the face of more sophisticated search functions and the impact on traditional measurements like CPMs (cost per thousands):
– Fork in the Road: Functional search is the fork in the road for advertisers, said Peter Horan, CEO, IAC (NSDQ: IACI) Media & Advertising. It lets people go from a question to an actual product. With respect to my competitor, you have a question, you Google (NSDQ: GOOG) it and get an answer. That will change how publishers allocate their resources, especially in terms of hiring journalists, said Tad Smith, CEO, Reed Business Information: “If you have three people to hire, do you hire three search engineers or editor? These days, you’d do better if you hire the engineers.“
– Video: Speaking on behalf of the ad industry, Rob Norman, CEO Global for Group M, said, “We’re really, really good at producing $1 million hunks of video, but not so good at producing $20,000 hunks of video. The demand to produce ad content is off the charts from where it was a few years ago.”
– Growth: In the case of revenue, the pricing on print is higher than online, said Smith. However, you don’t have to pay postage or, sometimes, as in the case of some, you don’t have to pay for the content… Smith continued: “We’re seeing huge increases in search marketing. The dirty little secret of a lot of online categories is that there is very little or no ROI. It’s a classic commodity market, and Google is helping move that along, because they’re bringing more inventory all the time.
– Horseless Carriage: When publishers get good at creating differentiated online content, that’s when it will grow enough to supplant print. Gloria Scoby, SVP, Group Publisher, Crain Communications, reiterated past comments on the necessity of producing an individual brand, separate from the print product, but you need to be able to price it in a similar fashion.
– Ad Auctions: “Clients instinctively think it’s a good idea, but they then find it’s just a way to pay more for something, Norman said. “It’s not particularly efficient. My customers — P&G, for example — does not want a level playing field. They want the biggest hammer.“
– Google/DoubleClick: Horan said he believes that if Google’s purchase of DoubleClick goes through, it will have far-reaching changes on how ads are priced by diminishing the value of CPMs. Instead of casting about for thousands of eyeballs, they will sell audiences one off: someone will be able to pay for ads looking specifically for 35-year-old men shopping for a car this week. “It does away with buying ads with thousands in mind.”