Online advertising is the marketing success story of the past decade and a half. From zero in 1993 – the year most people now accept that the first banner advertising appeared on a website – the amount spent in the UK on website advertising has grown to an estimated £3bn a year in 2007.
However, although pay-per-click (PPC) search advertising is highly automated, online display advertising is still booked offline.
But that is going to change this year, with the launch of a number of online trading systems that allow media agencies and publishers to move many of the time-consuming back-office functions online.
The online trading systems being developed offer a combination of functions, such as adding campaigns and inventory, adding and managing placements, a full audit trail, client and publisher approval, insertion orders, delivery reconciliation, and billing and payment, with the promise that they will be able to offer all of them at a later date.
A range of trading systems are also in development, including Adazzle, iDesk from Donovan Data Systems, FatTail Solutions, Fivia, IMD, Delta from Mediatel, Operative, Solbright and S4M Solutions. In addition, some online ad networks, such as digital marketing technology and adserving group DoubleClick (now owned by Google), have created their own systems.
The problem is that with so many potential competitors in the market, the big online media owners are faced with the possibility of having to deal with a slew of different systems.
Help is at hand, however, in the form of the Internet Advertising Bureau UK (IAB UK) and the Institute of Practitioners in Advertising (IPA), which have been exploring ways of addressing the problem of multiple platforms.
One solution – which has already been adopted in other media, such as radio and television – would be to select a single platform and impose it on the online display industry. A second option would be to work with the vendors to promote common standards, system compatibility and seamless data exchange between platforms.
Both options have been discussed at length, and at a meeting of the IAB UK’s Ad Ops council on February 27, it was decided to support the common standards route.
Jack Wallington, programmes manager at the IAB UK, says: “We’ve decided on leaving the market free so it will be competitive. Hopefully, that will help on pricing. We will work with the producers so the platforms will have a common application programming interface (API).”
But not everyone is convinced about online trading systems for internet display advertising. Andrew Burgess, managing director of media buyer Equi=Media, argues: “The introduction of online buying will have virtually no impact on how online advertising is bought and sold.”
Over the phone
He believes that even if the trading platforms are adopted, negotiating will always have to be done over the phone. “A new online system would only remove the faxing element.”
But if the buying of online display advertising does move online, is there a possibility that the sector will end up like PPC search marketing or even online affiliate marketing, where easy-to-use computerised systems have allowed some clients to take their PPC buying in house and cut out media agencies altogether?Most of the experts dismiss such concerns. Search, they argue, is a highly technical area which benefits from computerisation and automation: buying online display advertising is more of an art, and cannot be reduced to a pure numbers game.
Adam Sefton, head of interactive marketing at Reading Room, says: “Media planning is a far more sophisticated and subtle process than basic search planning, which revolves, in principle, around one core engine. The ability to place display advertising in locations relevant to the targeted demographics requires more in-depth planning that agency experts are best placed to provide.”
Glenn Batty, group information technology director of the Bezier group, adds: “Generally, media buyers will know the client and will offer advice that is relevant to them, but sometimes their agenda is to increase their commission threshold, rather than offer advice that will benefit the end client. One of the deciding factors, between buying online or trough a media buyer, will be whether online systems can offer the same level of discount that media buyers can.”
As Reading Room’s Sefton concludes: “If media agencies are concerned more clients may go the DIY route, I could envisage a situation where agencies agree to drop their rates to retain or attract clients to using their services.”