Digital Media Issues: What to Watch in 2008
Consumer behavior is shifting. The merger and acquisition market is active. Media budgets are shifting dollars online. All this adds up to a time of rapid change for digital marketers. Here’s 10 important online issues to consider this year:
The move beyond media buying.
The digital media business is no longer simply about buying ad space. It’s about distributing experiences through social networks, videos, widgets and applications; branded content; and ad placements. The traditional practice of media buying is still a critical component of online marketing, but to view ads as the only way to promote a brand or product is to ensure that the brand is seen as stiff, commercial and inward-looking.
The impact of a recession on online advertising.
In difficult economic conditions, the most accountable marketing channels will be best insulated from cuts in spending. This bodes well for online advertising. However, there will be an impact, even in the most efficient digital channel, search. In a recessionary environment, consumers will search, shop and buy less frequently. While a marketer may keep the same cost-per-click during a recession, it’s quite likely that a difficult economic environment will lead to fewer commerce-driven searches and fewer clicks. The end result is less money being spent in search.
The redefinition of online media measurement.
The long-accepted notion of the “last click” or “last view” of an ad receiving all of the credit for a subsequent sale or conversion is dated. Custom attribution research (attributing value to several ad exposures, not just the last one) improves performance significantly. As marketers start to see results, settling for the last-view methodology simply won’t do.
A limited increase in average CPMs.
With an ever-increasing number of advertising choices, it will be difficult for publishers to raise advertising rates. In a January survey of 75 of our media planners, 37% forecasted a pricing increase of 1% to 5% in 2008, while 38% expected a rise of 5% to 10%. Nearly 20% of the media staff felt prices would fall year over year.
The fallacy of the “digital upfront.”
Despite regular calls for a digital version of the annual television upfront, there is little interest in such an event from the buying community. While advertisers regularly commit in advance for valuable advertising, these commitments represent a minority of overall online media spend. Marketers and agencies have come to realize that digital media should be constantly analyzed and optimized because online audiences can be reached in an endless number of places, not just on a select few major properties.
The slowing of ad network acquisitions.
With spending on ad networks concentrated with the largest players, it will become increasingly difficult for small networks to break through. The bigger and more efficient the large networks get, the more ad dollars will be directed to them. It will become more difficult for second-tier players to earn ad budgets, and therefore less necessary for the larger players to acquire them. One related area to watch closely is the growth of vertical ad networks. It’s a reasonable extension for brands and helps the smaller sites and blogs within a vertical network gain exposure with large advertisers.
A breakout year for mobile—but not for mobile advertising.
The mobile industry is poised for tremendous growth, and we may see carriers become more flexible. Mobile advertising is sure to gain momentum in 2008, but we are still a year away from seeing it break out and become a staple for marketers.
Nokia’s emergence as a key digital marketing player.
Nokia made two important moves in 2007. It acquired mobile advertising and marketing services firm Enpocket, and navigation data and systems software Navteq. Nokia now has assets that may accelerate the adoption of smart devices that use location-based services. The potential benefit for marketers is the ability to deliver relevant, geographically contextual advertising.
The continuing lack of video ad standards.
2008 should be a year in which significant progress is made in video ad standards. But the industry is still at least a year away from having a mature, established video advertising marketplace. The challenge becomes how to value the overlays in the one-to-one environment. There will continue to be interest and investment in video advertising in 2008. As with many new-media advertising channels, consumer attention, engagement and traffic will ultimately determine whether overlay advertising on broadband video will become the next great revenue stream for platform or producers, or simply the next step in the transition away from 30-second commercials.
The 2008 presidential election.
The Web will be the most influential medium in the 2008 presidential race—who wins will be determined by candidates’ abilities to galvanize supporters online. Still, online ad spending by campaigns will continue to lag well behind television spending.
Dave Friedman, president of the Central Region for Avenue A | Razorfish, is a monthly contributor to Chief Marketer. He may be reached at [email protected].
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