The Ian Bell Weblog

PaidContent.org links to a press release by 24/7 Real Media which addresses their Advertising Predictions for 2006. Here are the predictions; I posted my thoughts below each one:

1. Consumer-generated media will become increasingly attractive to advertisers

- This has always been true and will continue to be true. Podcasts and blogs are very attractive media types. The problem here though is that there are simply too many of them. There needs to be a blog network with the professionalism of Tribal Fusion (just an example) that uses IAB standards and accounting practices. A media buyer will never take a blog ad network seriously that uses their own proprietary ad forms and sizes.

Another problem with blogs is the sheer page views volume levels. We all love page views, but it is possible to have too many. Look at Engadget for example. Their typical reader probably gives them more than 10 page views per visit. This is bad because it drives the click-through-rate down, and I mean way down. The sweet spot here is 4 page views per visitor. You can argue with me on this, but a couple facts stand. Frequency capping on most ads are limited to 2-4 views per visitor, ask any media buyer and they can typically confirm this. I was told by a media buyer once that Engadget was selling their ads for dirt cheap rates, like $3/CPM or less and this was because their CTR (click-through-rates) were so low. You can also figure that out by the large number of network ads they are running on their site; they simply have too many page views per visitor. My opinion!

In regards to Podcasts, the potential is there, media buyers are having a hard way to track them and report the metrics to their clients, and it’s as simple as that. Another problem is that Podcasts are getting way too popular and are thus losing their initial appeal - an amateur show that is very personable to the listener. BusinessWeek and even Cisco have their own Podcasts, they either sound like a radio show, or an advertorial. Companies like advertising on the web because they can track their campaigns, it’s really the only medium that lets you track so precisely. Podcasting is something new, it’s hard to track, and might just be a fad. Why bother? I heard that Volvo is advertising on some blog Podcasts. People would have you think they are solely interested in the Podcast, but if you pay attention, it’s always added-value when it comes to Podcast spending.

2. Advertisers will continue shifting traditional ad spending to the Web due to increased Internet consumption and better targeting/reporting capabilities

- Very obvious here, print media will continue to lose to the web until online publications start charging readers for their content, only then will the playing field level. People want their information now, not 4 weeks from now when the latest issue comes out. The internet is like picking up the New York Times and being able to read every paper ever published, including their competitors in a single edition. People like second opinions nowadays and that’s what the web provides. I hit MSN, CNN, Wall Street Journal Online and other news site until my daily craving is satisfied. A single newspaper doesn’t do it for me.

3. Advertisers, cable providers and interactive marketing experts will collaborate to address “The TiVo Effect”

- Contextual television ads. Could the big networks lose out to the likes of Comcast? Either break the commercial skip button feature, or start paying for ads on TiVo. The cable providers would love to control the ad revenue here, but really it adds another layer that users can do without. There is simply no way we will be able to avoid those ads.

4. Brand advertisers will drive the next wave of growth for the paid search market

- No comment

5. Best practices in localized mobile marketing will be perfected overseas in 2006

- Then it will hit the U.S. Parents, time to hold off on buying your children a cell phone. The cell phone industry is fairly unregulated. For example, someone steals your phone and racks up $30K in calls to El Salvador. Tough luck, you now owe Cingular $30K, you just don’t get protection for your mobile account like you would on a credit card. Now give a full-featured phone to your kid who is in high-school. They have no idea that the ring tone they just downloaded for today cost $2 bucks, or that they racked up another $5 in SMS messages today. Add video games and video content and it’s a nightmare for parents - but hey, that’s what these cellular carriers want.

6. Online advertisers will employ holistic targeting methods to deliver better results and reduce reliance on high-profile, high-CPM ad buys

According to 24/7 RealMedia: Next year, advertisers are going to take a more holistic approach to reaching their audience. Rather than purchasing high-CPM ad buys on high-profile, heavily trafficked sites, advertisers will merge behavioral, demographic and geographic methods to generate better results across a wider range of niche sites. In addition, audiences will be segmented similarly to the offline market so that tried and true methods, perfected over decades, can be applied to the online world.

- This is ad network crap, don’t believe it. If your online publication is high enough profile, companies will advertise on it, and at your rates. Ad Networks will never replace the sales department for a large legitimate business. If you have a large online site and most of your ads are network ads, you are losing out big-time. Hire a good salesman (and don’t you dare try to get ours ) or build up enough confidence to call these companies and close the deals yourself. Most ad networks are a scam that depend on quantity instead of quality. I love Tribal Fusion, but I know they are using our Designtechnica brand for their Consumer Electronics channel to close these deals with IBM and other CE advertisers. Then they probably turn around and run IBM’s ads across their whole network, and eat up the profits. You can’t tell me that Verizon is really spending big money with Advertising.com to be on Dictionary.com. There is no such thing as a targeted niche channel; there simply are not enough impressions there to satisfy these networks appetites.

7. Technology and better data access will transform online advertising success to a formulaic equation

According to 24/7 Real Media: Online advertising will become a pure math equation in 2006 and see the emergence of a new “CPx” (Cost Per [variable]).

Only for ad networks. When you are competing with other networks for remnant crap inventory for your publishers, you are forced to adopt a model like this. For the rest of us, CPM works.

8. Japan will be the next frontier for paid search and interactive marketing

- You mean they actually have internet access in Japan? How will they be the “next” frontier? Stop listing the obvious here…

9. Mobile carriers will adopt new ad models to boost revenue beyond usage

- You mean other than sending SMS advertisements to our phones at 3AM in the morning? I will go back to smoke signals if my phone wakes me up in the evening with video commercials.

10. Performance-based pricing models will demonstrate the true value of search engine marketing (SEM) as a lead generation channel

- Big companies will eat this up and the little ones will be left with advertising to people in the Ukraine at 2AM in the morning because that is the only time slot where they can actually afford to pay less than $2/keyword on Google. Users will continue to get paid results on MSN and Yahoo, and these two companies will wonder why no one is using their search engines anymore.