Operative Blog

The end of a decade.  A time for prediction, review and a double dose of ‘best of’ lists.   So, let’s think… just what does the future hold?

Well, Spain will win the World Cup.  In the UK, Conservatives will win the General Election.  And, according to this Government commissioned report, we’re set for fewer butchers but more prosthetic limbs.

As for the Online Advertising world, it seems as if just about everyone has thrown their hat into the ring.  There was one announcement which caught my eye in Q4 I which feel might impact in 2010.  Google announced a new tool for advertisers called ‘Insights’.  This analytics suite is similar to Atlas’ own ‘Engagement Mapping’ tool and helps measure the effectiveness of display campaigns by examining the entire conversion funnel. This technology hasn’t quite hit its stride, so if you’ve not encountered this as yet: It’s time for a quick primer.  A ‘review’ if you will.

Since the online equivalent of the big-bang, the capacity for advertising on the internet has expanded into some boundless ether.  This constant state of change means that the cost of online ad space has also had to evolve.

Now there are a vast number of variables that determine the price of this inventory.  But despite what an Ad Sales Executive might tell you, this price is ultimately driven by the bar graphs on the advertiser’s report.  As the old adage goes – “It’s only worth what someone is willing to pay”.

The early adoption of buying a number of ad impressions (CPM) proved to be self-defeating in some respects.  As more web pages appeared online, advertisers witnessed diminishing returns and demanded more proof that campaigns were performing.  Establishing a cost model based on the numbers of user clicks (CPC) helps to validate an ROI.  But whilst this kept the acronym fanboys happy, it also raises as many questions as it answers.  Essentially this amounted to a glut of resellers tripping over themselves to get to the front of the queue to register your click and take your order online.  Cue the rise and rise of Search Engine Marketing (read: Google).

Post-click tracking has helped advertisers validate these clicks by identifying (anonymously of course) which users actually ‘converted’ e.g. went on to buy a book, sign up for the newsletter etc.  Here we can see a real correlation between the ad and the sale.  As a result online inventory is now commonly sold on a CPA basis (cost per action) i.e. a website will display your banners ‘for free’ but will take a payment based on resulting sales performance.  CPA deals represent a guaranteed return for your advertising budget.  Everyone’s happy right? <shakes head>.

This pricing scenario has thrown up its own unique conundrum.  When an online ad campaign appears across several websites, it’s possible that a user may see, or click the ad more than once.  Now should the user ‘convert’ (i.e. make the jump from clicking an ad to purchasing a product) which website should take payment for a successful sale?

Currently the general consensus is as follows: A successful sale will be acknowledged to the last / most recent click as this is assumed to be the most valid.

This ‘last click’ methodology is flawed as it ignores user engagement.  A user could see a banner displaying a ‘half price sale’ promotion on 5 different occasions – each in premium positions across several publisher sites.  It’s possible the promotional message has successfully registered with the user via highly interactive rich media ads.  If / when they decide it’s time to make a purchase, what do they do?  What would you do?  Well it’s pretty common to ‘google’ the advertiser’s website and purchase.  Payment for the conversion is therefore collected by Google/the reseller and not the websites who originally displayed the ads.

These new tools help calculate the value of all media exposure, allowing marketers to uncover deeper insights into each touch point.  Thus potentially giving credit (and by that I mean payment, not just a smile and nod) to the publishers displaying the ads.  Given that the analysis of user engagement is a complicated one, there will be no simple replacement for the ‘last click’ methodology.  I don’t expect Publishers/Advertisers/IAB to unanimously agree a ‘one-size fits all’ solution – but it does arm advertisers and agencies with more information to make purchasing decisions, and ultimately this will reflect in the price of the ad space.

So that’s it, a prediction, a review… I don’t have a ‘best of’ list.  There are too many of them anyway (but if I did Mamma Mia wouldn’t be anywhere near it!).

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Blogged by Jonathan Hall

Operative provides outsourced Ad Operations not only for publishers, but for a number of major Agencies across the globe. Jonathan Hall is one of Operative’s senior technical experts for all things Agency, providing advice to agency clients on a variety of subject matters including campaign planning and execution to report generation and troubleshooting.