Wednesday, March 18, 2009

OnlineSpin: Display Ads Do Have A Future -- We Just Can't See It Yet

Last week Cory wrote "Traditional Brands Are Winning The Race Online."

Richard Monihan wrote in response, "It was inevitable that the old brands would catch up -- but winning?

I think part of the problem of the new brands was their inability to think 'outside' the realm of the Internet. I spent 4 years at AOL and I remember being told consistently that I was a 'dinosaur.'

Why? Because my background in TV was not considered complementary with this 'new media we invented.'

It's been 6 years since I left and I'd say that psychology hasn't morphed much at AOL, and it seems to have infected other pure Internet brands.

Today, in selling both digital and TV, I keep reiterating to people who look for reach online that online is NOT a reach vehicle. You get reach on TV, and use online for awareness and direct contact with consumers.

It seems to me that the brands that are 'getting' this best are the ones who come from OLD media, particularly TV.

Will AOL, Yahoo and MSN go away? Unlikely. As TV expanded into cable, we constantly heard about the impending doom of the 3 broadcast networks. However, today there are 5 broadcast nets. So the portal strategy and scheme will survive, but it will have to adapt, change, and improve.

I foresee more partnerships/mergers/takeovers in the online world as consolidation takes place between the new media brands."

Wednesday, March 18, 2009
Display Ads Do Have A Future -- We Just Can't See It Yet
By Cory Treffiletti

Over the last few months there's been much speculation regarding the present and future of online advertising. No one can seem to agree on the direction that online -- specifically online display -- is going. Some think it will be up this year, while many feel it will go down -- but almost everyone agrees that the current formats and iterations of online display are not long-term solutions.

We started with the 468x60 pixel banner ad, which, while it may have had a good run, has been shoved aside over the last five years or so to make place for skyscrapers, leader-boards and "large rectangles" (most commonly in a 300x300 or a 300x250 pixel size). Along the way, we figured out that search and video were the most enticing formats for online advertising. So display has taken something of a backseat in regards to interest levels, while still commanding a majority of the online ad spend. It's inevitable that we'll be fixing this issue soon enough. It's inevitable that we'll work toward a more impactful and widely accepted unit in the coming years.

But what will that unit be?

That's the question plaguing any number of online publishers, especially Yahoo and AOL, who've begun radical management changes in recent months as they look forward aggressively to the future. What type of units will be examined and reviewed in the coming months, and how will they impact the online display landscape? How will the online ad industry compete with the Google model and the video solutions that are dominating the discussion, if not completely dominating online budgeting?

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I can't profess to know the answers to those questions, but I do feel the answers come from a re-evaluation of the way that users are focused on the Web and content is delivered to them. Increasingly we see sites that are dynamic and tailored to the user (the beginning stages of the "semantic Web"). Many dollars are being spent against targeting technology and the second or third generations of behavioral targeting, which integrates social graph data and additional points of reference. Yet while these innovations are certainly necessary and will absolutely improve the delivery of creative messages, in what format will these messages be delivered?

My instincts say more full-page units and interstitial efforts will be integrated into the experience. The interstitial unit has been with us for quite some time, but has never been in vogue as much as it has of late. I did an informal poll of family and friends, and more people recall seeing these units in place on their favorite sites recently than in the past. These types of units can be intrusive and annoying unless frequency-capped and managed in a way that reduces exposure. I also feel the leader-board unit is being considered a starting point for larger, over-the-page units that resolve to a leave behind, but without the typically required user-initiated action. The homepage of ESPN has experimented with these ads lately, most prominently with Apple, and I find the ads to be engaging and very impactful. I also see more sites using larger units like the 300x600 that appears on the IGN homepage.

These units are still indicative of a print-esque model, though, and they are reliant on the standard appearance of the Web as a flat, two-dimensional experience. I think the excitement will begin when the Web becomes more three-dimensional in its experience -- glimpses of which can be seen in how some sites offer image slideshows and other points of access via the "coverflow" presentation made famous by iTunes.

As the Web becomes multi-dimensional, users begin to navigate through a customized environment where eyes can move in multiple directions, and advertisements can take on more of a three-dimensional billboard appearance and be inserted into the content itself. I've seen glimpses of these techniques in the mobile space, especially in iPhone applications that are being developed by players like Microsoft. The constant innovation and movement from HTML to Flash and AJAX, as well as other programming languages, leads me to believe that the appearance of the Web will continue to change in the next 10 years, and the advertising component will change with it.

It's an exciting time for the Web, and display is not going to be squashed by search and video. Display will continue to be an important part of the Web -- just not in ways that you would currently imagine.

Do you agree with my point of view? Click through and tell me why or why not on the message boards!

Cory is president and managing partner for Catalyst SF.

Online Spin for Wednesday, March 18, 2009:

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