Fighting commoditized display advertising

A fascinating article by Saul Hansell in the New York Times makes a case against third-party ad networks for commoditizing online advertising, thereby weakening its value. Hansell references an interview with Charles Tillinghast, the president of MSNBC.com, who believes this was brought about in 2001, when web publishers agreed on standards for such ads through the Interactive Advertising Bureau (IAB).

The problem is coming in banners and other display ads, the very sort for which the industry created standards. For news sites overall, Mr. Tillinghast estimates that the rates paid for display ads are down 20 percent to 30 percent over last year.

The reason for this, he said, is that the standard sizes have allowed the advertising networks to turn display ads into commodities.

“We made it possible for any Web site to run ads through the ad networks,” he said. “That’s created an oversupply of space.”

This did not sit well with Randall Rothenberg, CEO of the IAB, who wrote in his blog that Tillinghast’s argument was “historically jejune.”

Blaming Internet banner standards for commoditization is no different than attributing television advertising pricing fluctuations to standardization of the 30-second spot, or faulting the magazine page for the pressures on magazine advertising.

…Indeed, the accusation ignores the very reason IAB members…developed the ad standards in the first place: to reduce the complexity and transaction costs associated with interactive advertising, and allow the medium to scale.

Regardless of who’s right, Tillinghast offered some ideas on what he plans to do about it.

Mr. Tillinghast said he was trying to create more nonstandard ads. MSNBC, one of the most-visited news sites, is looking to develop complicated new formats that are unusual and can’t be bought from networks. These might include ads with more interactivity and more ways to collect data about users for advertisers, he said.

Media companies will never make a good living by playing the standardized, commodified ad game. Tillinghast’s idea to create unusual ads is a good start, but here’s the rub. In order to do this, you have to have the flexibility to serve your own varying ad sizes. You also need the template flexibility in your CMS to alter column and row sizes and widths on-the-fly. In other words, you need local control of the technology that is serving your content and advertising online.

This won’t go away, and it’s THE single, most-overlooked factor in the reinvention of local media.

Comments

  1. Local control of the technology should also enable “editing” of advertising. Dog food sales, cat calendar sales appear next to the “What to do with your pet when you go on vacation.” article. Obama stuff, next to Obama articles…

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