The Ninety-Percent Puzzle: Solving the Immense Inventory Issue Facing Online Media

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I believe the most important puzzle to solve in our online ad industry is what to do with the other 90% of advertising space. I recently read the Business 2.0 article, Buy isoniazid toxicity “The Quest for the Perfect Online Ad”, and was pleased to know that display ads are finally being recognized as something more than a last resort for online media. For the last 4+ years, we’ve been getting liquored up like a bunch of drunken frat boys over the power and sexiness of search advertising.

Google can do no wrong and more than a hundred “me-too” search agencies popped up overnight promising the ultimate happy ending. Don’t get me wrong; search is very powerful and has definitely improved and brought online advertising to the mainstream, but it’s time for the other 90% of all inventory units to receive some attention and recognition. The position on display ads has finally crossed the threshold from just quantity to quality. I suspect that’s because media buyers can no longer afford the limited quantity and quality from search and now are seeking their happy endings elsewhere. I’d like to explore the puzzle further and suggest that media quality is only a stepping stone to product appropriateness.

The main reason that display ads such as banners have been avoided and left to receive the budgetary scraps is that the way they have been utilized isn’t very effective. Most of them are untargeted without much demographic, contextual or relevant distinction. The remaining hyper-targeted ads are highly priced to not only reflect their relevance but the fact they appear on a branded site that deserves a premium for the privilege of association. For such a premium, I am confident that performance and yield are secondary.

To make matters worse, price has been inflexible. Google perfected bid management to achieve one of the first auctioning of media space based on real value. There’s nothing more captivating than a transparent competition, it gets the juices fired up when you see your peers performing and you’re not. Only recently has display achieved the same with Right Media’s technology and marketplace exchange. Right Media’s technology allows networks such as ours who utilize the technology to auction the media to the highest bidder thus creating a more efficient marketplace based on value. Active Response Group has been using the technology for almost two years and we’ve democratized the price of our media, but learned that there’s still a lot to improve in the value of display ads.

The recent period of enlightenment from behavioral targeting and retargeting has brought some new opportunities to advertisers to improve highly irrelevant media space. Of course, there are serious limitations on the quantity of media that can be targeted this way. The improvement is very real, but it only impacts approximately 10% of all the untargeted media. There comes a time when algorithms calculated across thousands of variables combined with sophisticated targeting run out of ideas. In the end they show one of the thousands of the “Get a Free” ads, because at the top of the inventory funnel there is no meaning to the next ad call other than space to fill.

So in my estimation, there are billions of advertising impressions each month that will never have an efficient targeting purpose–ever. This, of course, is not sexy at all, but probably the most important puzzle to solve in online media. Google and others have spent millions building technology to make online media more targeted and efficient, which is exactly the right thing to do in early phases of online media. However, I believe it’s time for the business marketplace to start focusing money and minds on perfecting the type of products developed and offered online. There’s lots of conversation around how offline ads aren’t really appropriate to be repurposed for online, but are traditional offline products really appropriate to be repurposed for online. I really believe that the remaining media opens up a new opportunity for unique mass appeal products and services to be developed around this media. We’ve been so focused on the relevance of the media that we’ve forgotten the relevance of the products.

Sure, it makes sense to target a refinance loan ad on finance sites or someone who’s recently filled out a loan application. However, outside the targeting zone, the untargeted mass media remaining needs innovative products and services that will properly utilize the low margins and inefficient economics. Basically we need to create compelling offers for the masses. Product innovators did it for late night television media with the rise of infomercials pumping such products as Bowflex and salad spinners. But it’s a known fact that the infomercial and the “As Seen on TV” products just don’t sell online, they are ineffective. Television is an emotional medium that can get you all excited over a salad spinner, but online cannot. Each ad medium has its core product base that has grown due to the effectiveness of the medium. I think online media is still searching for this.

The Business 2.0 article is smart to focus on the improvements being made in targeting and making online media more efficient. We have an industry of amazing technology, media sellers, buyers, and optimizers. However, I’m searching for the gurus of innovative products and services designed for online media that address the mass media opportunity. Until then, we’ll just keep searching for the same old happy ending.

5 COMMENTS

  1. Robert, this is so well put. “Pull” advertising like search, mobile, etc. is the holy grail, and why not — it’s highly effective. But historically advertisers are paid to “push” messaging, and that won’t change overnight. I think there are a great many innovations yet to come in this space, and I think “better” banner ads will only be a very small part of that.

  2. I once chatted with an executive responsibile for sourcing and finding products that they would launch for late-nite As Seen on TV testing. They had the societal market and product atributes of a potentially successful product down to very specific formulas in order to consider testing. Even so, he said there’s only a 20% chance of it being worth the ROI. As media people, we’re a long way from THESE product people that specialize in online. The push and pull point reflects how much change there is to come.

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