Good News for Advertisers: Important Changes are Reshaping Online Marketing

While financial markets are tumbling, you would expect advertisers to turn to the more cost-effective ways of advertising. For online advertising, that has long meant search advertising over display, as search is often seen as a more targeted and lower cost way of getting measurable results. Search marketing is bought on an auction basis, thus the market sets the price, not the media owner and you can focus your campaign on as small a niche as you like, whether you’re a local or a global business, vertically oriented or horizontal in nature. The challenge for display advertising has been to prove that it can offer the same value as search for advertisers.

Second key challenge and opportunity of online advertising is to build a complete picture of a company’s online marketing by being able to integrate your campaigns across search, display, affiliate and other tactics in a measurable manner. For example, being able to re-target a person that has searched on either Google or Yahoo! on a laptop purchase when they next go to the Times website. It has been talked about for years it seems, but this type of behavioral targeting has been hindered by being offered on a publisher by publisher basis. As a result, behavioral targeting has not been scalable, thus becoming unprofitable for the individual publishers to sell due to low volumes and for advertisers to buy because of the low return vs. effort ratio.

Well, it seems that both challenges are finally being addressed by the online industry, and changes are afoot. The cost effectiveness argument is being addressed as auction pricing model is being introduced to display by existing ad networks. Advertising.com by Platform A has just launched their BidPlace auction platform and new, auction based ad exchanges have launched, such as Adjug. Other portals and search engines are in the game too: Yahoo! announced the launch of Apt, 18 months in the making, in the US at the end of September. Apt is a platform that allows auction based bidding on behaviorally and demographically targeted inventory on the Yahoo! properties and its network of sites and partner publishers.
For advertisers, today’s online developments mean more choice, as well as increasingly targeted, integrated and potentially cheaper advertising to come. And that’s good news in the midst of the financial market turmoil.

And that is not all: even without behavioral targeting, advertisers are being offered much more by the display ad networks of today. No longer is advertising on a network just about the rather untargeted reach and frequency, which is sold as a commodity on low CPMs. New, more targeted ad networks are mushrooming everywhere, whether launched by individual publisher in the tech, business or green spaces or by entirely new companies monetizing social and peer-to-peer sites. The ad networks are launching also across various types of advertising, for example in the mobile and video space (Utarget.FOX), thus scaling the more innovative ad formats across publisher properties. Thus, advertisers are offered more choice and targeting than before.

The biggest talk in the industry is however about a company called Phorm which has made a deal with three ISPs in the U.K. (BT, Virgin and TalkTalk) to implement its behavioral targeting technology for their customers. This would solve the biggest challenge of all, how to offer integrated, big picture display advertising on a targeted basis. The technology catalogues the type of content a visitor views online, wherever they go during their internet journey, including search engines, portals, social networking sites etc and starts to build a picture of the interests that the person has. This information can then be used to target relevant advertising to the individual. As soon as the type of content viewed is catalogued, the actual site and page data is destroyed by Phorm and neither do they link the personal customer data of the individual to the targeting technology. The advertising is sold on an auction basis, thus cost-effective and offers the answer to the scalability challenge of the past for behavioral targeting. The technology is available to ISPs, publishers, ad networks and of course agencies and advertisers. The idea is that niche audiences can now start to be sold in an integrated manner, wherever they are online, thus not only matching, but beating the capabilities of search advertising on a stand-alone basis.

But not everyone is comfortable with the idea of being tracked and advertised to in the way that Phorm’s technology suggests. The European Commission’s Information Commissioner is still investigating the legalities of a test BT conducted using Phorm technology in 2006 and 2007. The key issue is that the users were not informed of nor consented to the test. In the meanwhile, the U.K. government has backed Phorm and BT has recommenced their trials on the technology at the end of September on an opt-in basis. A similar company to Phorm, NebuAd in the U.S., has had to already back down on its ISP strategy due to Congressional and privacy advocacy concerns opposing the ad network’s opt-out policy.

Hanne Tuomisto-Inch hails from Helsinki, and is the Online Communications Director at Banner, London. She was recently named a 2007 Agency Innovator by this magazine.

Hanne Tuomisto-Inch can be contacted at hanne.tuomisto-inch@b1.com