trend line a directional pointer or a cliff? Online ad growth continues to increase at a higher rate than that of the economy. The challenge is that a welter of service providers trying to help advertisers make sense of it (and make a buck for themselves while doing so) has been contributing to the fear that the spending is, at best, inefficient, and at worst, misallocated.
Business is learning more about what it needs as experience with the various new media grows. Service providers have begun to offer specialized solutions to help make sense of the changing online market. Simplification is the keyword. With so many channels and offerings - and the economy still far from healthy - budgeters have to be surer than they have been about targeting and impact. This is a universe in which bigger decisions have to be made faster - and with less information. Help wanted. JL
Emily Steel reports in the Wall Street Journal:
"Seeking to milk the huge growth in online advertising, a rush of technology firms have emerged in recent years pitching an array of techniques for buying, targeting and measuring digital ads. But the raft of newcomers has created a complex landscape that has left marketers confused. Now a series of specialized companies are pitching products to simplify the landscape by helping marketers navigate the online-advertising world.
WPP Group PLC online-ad firm 24/7 Real Media recently started promoting a product that helps marketers determine which ad-technology start-ups to work with to make the best use of ad spending. Several other companies that had specialized in one segment of the business, such as buying search ads, are broadening their offerings to other areas, such as social-networking sites and mobile advertising.
Digital-ad shop IgnitionOne, a unit of Dentsu Inc., is rolling out a service that lets marketers buy, measure and boost the performance of ads that appear on search engines, along the border of a Web page and on social-networking site Facebook.
"Ultimately, advertisers should just have to answer two questions: Who is the audience they want to reach, and what are they trying to accomplish?" says David Moore, chief executive at 24/7 Real Media.
Simplifying the process is likely to spur growth in digital ad spending, ad executives say. Marketers spent $25.8 billion on Internet ads last year, up 15% from the previous year. The Internet ad market is expected to grow 11% this year to $28.5 billion, according to research firm eMarketer.
The new offerings are starting to gain traction among major marketers, such as La Quinta Inn & Suites, Microsoft Corp. and Walgreen Co.
La Quinta, a unit of LQ Management LLC, devotes about half its marketing budget to digital media and is working with IgnitionOne to figure out how to measure the impact, allocate spending and tailor ad messages on search, display, Facebook and La Quinta's website.
The hotel chain previously worked with a series of different online-advertising firms to buy ads on a variety of digital media. As a result, the company had a hard time judging which ads spurred hotel bookings. "We took it at face value that they all produced off-the-chart results," says Ted Schweitzer, vice president of e-commerce at La Quinta.
Ad executives across the industry say marketers can waste money by testing out working with the hundreds of new technology companies, many of which are backed by deep-pocketed venture capitalists. Their products often overlap and specialize in a relatively small piece of the market, executives say. Nearly a dozen companies, for example, offer an easier way to buy ads on Facebook. Meanwhile, the technologies don't talk to each other, making it difficult for advertisers to understand which services perform best.
"It's a huge, complicated web of offerings that are out there," Mr. Schweitzer says. Still, investors continue to pour money into a host of hot new technology firms. Online-ad firm OpenX Technologies Inc. last week closed a $20 million round of funding led by SAP Ventures, bringing total investment in OpenX to more than $50 million.
After investing in search and display ad technologies, the target now is starting to shift to the social, online-video and mobile markets, says David Pakman, a partner at Venrock, which has invested in several online-ad tech companies.
But it's not clear that many of the new services will capture a significant share of ad dollars and prove to be fruitful investments for venture capitalists, experts say. Out of 38 major ad-technology acquisitions last year, less than half sold for a positive return, says Terence Kawaja, chief executive of Luma Partners LLC, a boutique investment bank specializing in media and technology firms.
Bankers predict it's an area that's ripe for a shakeout and consolidation.
"Wouldn't it just be better if someone brought together a bunch of these companies to make it simpler?" Mr. Kawaja says. "That's the Holy Grail."
0 comments:
Post a Comment