Even by the standards of an industry everyone describes as fast-moving it’s been a busy few weeks. As we outline in our Agenda piece on page 26, the past month has seen a series of deals struck worth over $10bn (£5bn): Google bought online display advertising technology company DoubleClick; AOL bought DoubleClick’s European rival Adtech; WPP bought 24/7 Real Media; and last week Microsoft joined the feeding frenzy, buying US online advertising group aQuantive in the software giant’s biggest ever deal.
The result of all this has been to transform the online advertising market and blur the boundaries between buyers and sellers of online advertising in a way that’s disturbing to those used to the strictly defined roles of the offline industry. Part of this has been driven by the desire among the big players to stake their claim in online display advertising. Search has dominated online advertising in recent years. According to figures from the respective countries’ Internet Advertising Bureaux, last year search accounted for 56% of the UK market and 41% in the US. But there are suggestions that packaged-goods advertisers are about to move large amounts of their advertising budgets online in the next couple of years, and they are far more interested in display than search. What’s more, the search market is currently in a period of consolidation. While the industry waits to see the effects of AdCenter and Panama, the new battleground has become display, or rather, the technology behind serving, tracking and analysing online display ads.
Web pages are created on the fly every time they are viewed, with the individual’s browser pulling elements from servers across the Web. As a result, a group of companies have emerged that specialise in hosting display ads, making sure they appear on the right pages and tracking the response to them. The controversy arises when these companies cease to be independent.
In the case of Google, advertisers worry that the search giant will simply possess too much information about their business. Microsoft, meanwhile, is bidding to be seen as a media company, selling ads on properties from Hotmail to Xbox games. Again, advertisers will be worried about the amount of information Microsoft might have about them, but they’ll also be concerned that the standard of service is the same no matter where the ads are placed. WPP will see this as an extension of its media-buying operations, but again the uniformity of service levels will be important.
Advertisers, of course, would like to see greater standardisation, particularly in terms of tracking and measurement. It seems unlikely that these recent moves will bring that goal any closer.
Michael Nutley, editor in chief, NMA