I recently attended OMMA Global in New York. The last OMMA event I attended, OMMA Global Hollywood was in February. I am blown away by the huge leap the industry has taken in that time.
I recall walking out of the morning keynote back in February shaking my head, everyone was still clinging desperately to banner ads despite the fact that they weren’t performing well. There was talk of needing to create new metrics in the wake of tanking CTRs, with insights like “hey, it’s still branding” - despite the clearly contrary eye tracking research. I am happy to report that the advertising industry seems to be beginning to realize that there might be better ways to reach people online. It’s like they’ve just woken up from a long sleep.
As someone more on the marketing/PR side than advertising, it was a refreshing environment to be in, and I suspect that, just as marketing, branding, customer service and PR are beginning to blur as a result of social media, online advertising is finally getting on the ball and joining the great blurring of communications fields. There was a great sense of optimism regarding the opportunities to create a more consumer-centric advertising model that works on the social Web. ‘Bout time!
The question on everyone’s mind seems to be “Will the recession hurt or help the Internet?” According to an ANA survey, there is a massive shift in ad budgets. Ad budgets are shrinking; 53% of respondents expect a reduction of ad budgets over the next 6 months. The growth rate for total US media spending has slowed to 1.9%, and that’s in an election year, and an Olympic year! Newspapers are taking a nose dive, radio is taking a nose dive, but there is hope somewhere. Can you guess where? I’ll give you a hint, you’re looking at it. Online advertising grew 25.6% last year and is expected to grow by up to 17.4% this year.
The morning keynote, delivered by Geoff Ramsey of eMarketer provided an excellent overview of the state of the industry. I have to say it was encouraging. It sounds like many in the online ad business have finally acknowledged that traditional banner ads simply aren’t as effective as they would like them to be and are attempting to figure out a more effective model. This brings us to the question: is there a more effective model? And if so, what are the best and worst case expectations we can have regarding the future of online advertising? Does advertising have a place on the social Web? As the Web becomes more and more social this is a question the industry will need to answer. At the moment, it appears that they’re doing a pretty poor job in regards to social networks. But some are starting to catch on by socializing their advertising units and incorporating content and interactivity, a nice departure from more traditional passive ad units.
Geoff, along with many of the speakers I saw at OMMA seemed to indicate that video ads were showing promise, with 27% of Internet users watching full length TV shows online (source: eMarketer 2008). Online video viewers are also 25% more engaged with content and 47% more engaged with ads according to a recent study by Simmons.
Geoff also brought up ads-as-content. Personally, I think this model shows tremendous promise. Here’s why: the Web is becoming more and more social. It’s been my experience that the brands, and people, who are most successful on the social Web are those who contribute. Communities on the social Web cannot be sold to, but that doesn’t mean they won’t embrace a brand. The social Web is about Community, Connections, Contributions and Conversations, not Convincing and Conversions, which has been the role of advertising up until now.
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In order to be effective on the social Web, brands need to learn to contribute. The question is: can a contribution take the form of an ad unit, and if so, what does that ad unit look like? Is it a unit that can be bought and sold, or do we need to forget about media buys and ads all together and start focusing more on content, participation and most importantly, listening. I was glad to hear Geoff ask the audience to “Look, Listen, Lounge and Learn.” In order to contribute, they need to participate in the communities that they wish to be a part of and listen to the conversations that are taking place there.
So what does all of this mean for the online advertising industry? I think the industry still has a long way to go, but at least there is movement in the right direction and many seem to be focused on finding more effective, consumer-centric solutions. Newer options like video ads, ads as content, behavioral targeting and widgets are all significantly outperforming traditional banner ads. I think at a minimum agencies need to step up with better, more targeted and engaging ad creative, and networks and platforms need to step up with more relevant, contextual inventory that’s easy to buy across some of the smaller, but more specific and relevant properties like niche sites, social networks, podcasts and blogs. This is a nut we will need to crack if we want to create a sustainable eco-system where publishers, brands, technology providers and online products can thrive.
Jackie Peters is Founding Partner of Heavybag Media
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