SpectatorBytes

The Google-Doubleclick deal announcement (see Google closes $3.1 billion DoubleClick deal) is a good time to share my current thoughts on the evolution of advertising: I have been talking to a few folks about display advertising over the past couple of weeks. Here are some of my findings to date:

- Majority of online revenues still come from direct response advertisers (and industry is dominated by direct marketing thinking rather than brand marketing thinking)
- Brand advertisers continue to do only “experimental” spending, and are choosing primarily targeted and custom solutions to do so
- The line between “premium” and so-called “non-premium” advertising has blurred (e.g., i think because direct response advertisers now perceive inventory from portals not very different from the one aggregated by ad networks)
- Large destinations are struggling to maintain levels of “premium” inventory given increased competition from custom solutions from vertical destinations and ad networks
- Brand advertisers seem to be embracing video advertising; Market momentum seems to be building for this product

This has led me to the following early conclusions:

- Display ad market (with the exception of video) will be split between “custom” and standard solutions (rather than premium and non-premium); Custom solutions will primarily be for brand advertisers and standard will be mainly for direct response/marketers.
- Video advertising is likely to be the most scalable solution for brand advertising - Creating premium advertising inventory will not be cheap for publishers; Premium advertising will increasingly be fragmented across the Web;
- Larger pools of premium advertising will become more valuable (same dynamics as Super Bowl ads) but few of them are likely to exist at a time
- Brand advertising business will continue to be fragmented as technology makes it cheaper to create custom solutions and because brand advertisers like to spread their spending across multiple vehicles
- Many display advertising networks will continue to exist, even in a post-Double click and Google world

This would mean the following for market players:

- Small and flexible ad sales forces capable of selling and supporting custom solutions will see success with brand advertisers
- Optimizing yield management of “standard” display advertising will be critical for publishers
- Vertical ad networks should focus on developing “scalable” customer solutions for brand advertisers and potentially helping publishers yield manage “standard” display inventory
- Advertisers and Ad agencies will need significant help managing a broad diversity of solutions - both brand and direct response; brand advertisers will require human-driven help while direct response will primarily use system-driven solutions
-Performance-driven ad networks need to invest in /acquire new technologies/solutions to drive growth and scale
-Portals will benefit from embracing a vertically-focused monetization approach for “premium” inventory and an yield optimization approach for “standard” inventory - matching premium content in verticals with custom brand solutions for advertisers
Clearly, the ad evolution continues and so does my thinking