When Virginia Woolf said: “I am growing up – I am losing my illusions, perhaps to acquire new ones,” she was not talking about a career in Internet advertising – but she should have been. Advertising models, like illusions, are constantly changing, especially in new media.
At the end of 1997 it is perhaps timely to consider how the UK Website market may be different in 1998. 1997 was the year of the banner ad, priced on a cost per thousand (CPT) basis. It was also the year which saw the standard buying and selling currency switch from hits to page im-pressions. Both were improvements on the anarchy and uncert- ainties of previous years. Yet, in an emerging market with inventory oversupply, these have arguably commoditised the medium before content owners, agencies and advertisers have had the chance to learn what it contributes to the media mix.
Equally, there was the background noise of barter deals or cross media deals, with Web advertising thrown in for free. These only served to depress the monetary and perceived value of the medium.
Next year looks like being different. Firstly, it will be bigger, with revenues depending on the data source up from 4m-5m to 15m-20m. Secondly there will be more “glocal” superdeals: outline volume/rate agreements between global ad agencies and worldwide brands, particularly the search engines, within which the respective local representatives will negotiate on a campaign basis.
Equally, there may be an increase in the number of individual UK client/sales house deals, where a brand guarantees long-term revenues across a portfolio of Websites in return for preferential costings and assurances of sector exclusivity. Buying and selling consolidation of this kind will contribute to the projected market growth.
CPT may also become a less crude leveller. Significant investment by the sales houses and publishers in proprietary ad tracking and fulfilment software such as NetGravity will allow better audience targeting and thus differential pricing with more closely defined groups commanding a higher CPT.
The advertising model itself looks like changing. While banner ads will never die, there will be a growth in alternatives such as microsites, sponsorships and joint ventures.
But the false god of “pay per click through” could raise its ugly head again. Driven by a combination of risk-averse advertisers and content providers desperate for a slice of the advertising action, the UK 1998 market could see a number of deals based on guaranteed click through rates.
Yet next year offers an opportunity for the medium to build ad revenues, with greater accountability and more innovative relationships between host and sponsoring brands. It could well be our medium’s coming of age.