Internet Advertising - What's Going On??

Hi Anat,

You raise some good questions. One impression (no pun intended) I get from doubleclick is that they deal in quantity moreso then quality. They want the larger sites because they want larger advertisers (like Altavista who purchase millions of page views). I guess they want to be sending out bigger checks to fewer people rather then smaller checks to tons of people.

And also, when you have large audiences you can attract bigger advertisers, it's easier for them. Advertisers normally want to advertise in bulk so, they would go to doubleclick and say, this is what Im looking for and doubleclick will go, ok we have it take a look at this site and tell us what you think. It's also comforting for the advertiser to know where the ads are being shown, where as smaller networks just run the ads across the network and yes the advertiser can find out which sites are serving their ads but...do they really have the time to run through hundreds of websites?

It just seems to be more convenient to except sites of only one size or bigger.

Ravi

Yeah, I can see why it's better for DoubleClick and even why it's better for advertisers, but do you think it's better for us site owners as well? Do they get better rates? Do they sell more of your inventory? Do they take a smaller commision?

I wonder if anyone here uses DoubleClick so as to tell us...

Hi anat,

I'm not sure what's going on with doubleclick. Funny during this whole period where publishers have been complaining bitterly about the ad networks they are in, I haven't heard anything about doubleclick. It would be nice to hear from someone who is actually in the doubleclick network itself and not with a dart.

Ravi

i've heard mixed reviews from affiliates with doubleclick. some say they pay more and some say less. all in all, no matter if it's more or less the differences have never been more than $1 cpm, usually 25 cents up or down.

i do understand that they give more personalized service though.

Doubleclick, 247media and the other super high ad rollers all follow the same idea; that is they want as many high content, large sites as they can get. By having large sites on their network, the cpm rate goes way way way up, which is great for them, great for the site, greate for everyone.

Why do the rates go up for big sites? Well, a company like altavista or ebay or such has guarenteed content. Advertisers know what they are getting, they know the demographics, they know a lot more so they can pay a lot more.

However this idea doesnt always work. One of the companies I work for is a huge gaming network that serves between 30 and 40 million banners a month! Doubleclick is our primary ad company and at first did a deceent job. For a while our cpm rate was around a dollar over all for run of the network sites, but then double click changed their default banners. Now when Joe the 13yearold kid comes to our site, he sees a visa banner. Needless to say, Joe can not apply for a visa card and will never click that banner so the ctr goes down. The lower the ctr, the less ads double click will pay us for and the worse the ads get.

In the end, our site is selling a few million banners for a horrible cpm at best. Things aren't ALWAYS this bad, every now and then some advertiser will buy half a million banners are a $10/20 cpm rate, or doubleclick will get a popup advertiser that pays great. However, it's relaly turned into a vicious cycle. Doubleclick gets tens of millions of free banners and then only serves junk banners of which get almost no clicks, allowing them to pay us even less, and on and on and on.

In conclusion, if you have a nice niche site (scuba, webmasters, ect...), with good content and a few million page views a month, Doubleclick will probably make you a good chunk of change. But if you get to big or stray away from their specific campaigns into the realm of run-of-the-network, you end up taking up, well, you know where

btw, isn't it time to get chane your signature fairhousing? after all, you were hacked, what 2 years ago

Thanks Ted for letting us know. Seems as thought doubleclick is having the same problems as everyone else.

Ravi

Exactly, it's a depression in the advertising industry. Rates are as low as ever, CTR's are still lowering, and finding advertisers is becoming increasingly difficult. I think there's still life, though.

I happen to have the advantage (or disadvantage depending on how you look at it) of working for many big companies and therefore I get to personally deal with large advertising accounts.

What I have found is not some slump of money, but instead a back door. Internet companies that use to have 4 or 5 million dollar banner budgets every quarter are gone, but that means virtually nothing. Brick and mortar companies, along with the surviving internet startups have pleanty of money to put into advertising. However, they also know what the market is like; they know what the demand is and they know what deals they can get. Therefore, companies are undercutting doubleclick, 247, flycast, burst, everyone left and right.

Every week these ad companies set new contracts and every week they scream and yell (litterally) as advertisers rip them off more and more. However, because there is so little unity in the internet, no one can stop them. If burst or flycast puts up a fight, they will go down in flames while everyone else keeps geting ripped off. Advertising budgets are indeed high, people do hav emoney to spend but they know the system too well. They know they can pay nothing, demand everything and they're getting it.

Talk about total BULL

It's a free market I guess, but it's really bad for us. This is a fascinating thread. Ravi - feel free to change the name to - "what's going on in internet advertising" or something. I'd love some serious discussion about that...

I've been discussing the issue with my boyfriend for the last couple of weeks and that's what we've got so far -

* Up until last spring things were great because there were plenty of internet start-ups with lots of money. They weren't profitable but they had too much money from investors and they basically wanted to make a name for themselves so they spent a large cut of their budget on advertising.

* Then came the big fall. NASDAQ went down and the internet companies lost everything (well, almost). The internet advertising market changed all of a sudden. Suddenly we have lots of available banner space (previously occupied by those internet companies) and not that many buyers. SO - the prices go down. Like Ted said, it's a free market - lots of supply but relatively little demand means lower prices.

* The question now is what next?

Have we hit rock bottom? Is there still too much banner space? Maybe that means that some of the sites that sell ad space will shut down? After all, maintaining high traffic has its costs (esp. bandwidth) so....

What about those "brick and mortar" companies Ted mentioned? I don't see Coca-Cola advertising on the net. All I still see is other web companies. You said it - we all see AltaVista, Ebay and whatnot. Where are the non-web companies? Are they just too conservative? Do you see a change coming?

I do think this is a real crisis for the internet. Part of the enourmous growth we've see in the past few years was thanks to the money poured in by investors. Without that money, I think web sites will start falling one after the other. Communities/free personal web pages will also suffer because they're hosted (i.e. funded) by the larger companies.

I have lots more to say but this post is getting too long...

I'd love to hear some more opinions. Ravi - is there any way we can let people on other forums know about this thread? I think it's much more than an advertising issue.

I really hope a few more people jump in and give their oinions on the future, so here's my thoughts to start things off...

Right now not many major "brick and mortar" companies are advertising, but a few are and they're getting great results. I think that as these companies find the internet is truly a cheap and great way to get business, more of their competition will jump in and add t the ad market. This will, hopefully, bring money into the empty veins of the internet industry and pump around some blood.

The more money that comes in, the more money can go out. Weather its ecommerce purchases or ad budgets, I think the new league of advertisers will turn this slump around. The past has become the past and sadly I doubt we could ever go back. The days of geocities selling for 5.8 billion bucks are gone, there just isnt that much faith any more. However, the big boys have prooved themselves rather stable, companies are branching out to real, non-ad based revenue models and things are changing.

E-commerce will probably becomre an even bigger sucess due to the down fall of advertising. What makes this great is the more people buy, the more money we get back into the system and the more people put into advertising. My major work is for a scuba niche portal and I know we're pushing head first into e-commerce and so far, things look great. Every day someone asks us about listing their product or their ad and I truly think this idea will grow.

However, for things to really get good for most of the sites out there, espcially the small sites that live on burst's low cpm or value-click style 10 cent click throughs, some things still need to change. The ad industry needs to group together and start pushing for what they desrve. When you watch an ad on tv, you dont always remember you saw a commercial but you sitll might buy a computer @ frys. SO why is it that when you see a banner on my website you have to click it, have to come back form teh same computer and have to order something within 24 hours for me to get any money? This whole model of pay per result is just plain silly. Any econmoics student in college can tell you that branding is far more powerful than instant response.

The fact is, advertisers are setting 24 hour cookies and using ugly banners to intentionally make sure ctrs are lower, orders are lower and therefore they can pay less. And why do they do this? Because they know people sitll still remember them and come back, make an order and they wont have to pay 15% to Yahoo or whoever.

In short, I believe we have hit, or come close to hitting the bottom floor. But to start rising, a few things do need to change and net companies of all sizes do need to realize that basing your rent on doubleclick or what not is not a good idea any more. Those companies able to to stand up and get better rates or find other ways of making at least SOME money will thrive and will be able to light the fire we need to get rolling again.

But who knows, I'm a political science guy, not some econ junky

Ted, I really agree with you. I'm actually considering not to join any ad network and instead to offer ad space directly to advertisers in my field. This is all in the future as I don't have any pageviews stats to speak of now. But when I have them - I'm not willing to sell cheap.

My .02 cents:

While more brick&mortar companies are joining the web they're finding it isn't the pot of gold they thought it would be. They still believe "if you build it they will come" and as we all know that isn't so.

If net marketing was so easy and so effective why do dedicated e-commerce businesses (Priceline, travelosity, Cars Direct, Amazon, etc. etc.) all have TV and radio ads?? Wouldn't a banner or sponsorship campaign be better?

As to banners, they work well for specialty subjects. But when was the last time you visited some site fo who-knows-what and clicked a banner for say a new credit card? Or exercise equipment? Or a mortgage? Or to buy a car?

Which leads to my final point: Inspite of the growth in e-commerce there are still vast numbers of people (retail and wholesale) who say they won't shop online. They have fears of privacy, fraud, etc.

I think if you look closely at much of the growth of e-commerce you'll find it's mainly traditional sales and marketing that gets the business and the net is just used to deliver the service which is usually some financial service (brokers, traders, research info etc.)

Hey guys,

There are some really good idea's here. Anat, tell people about this thread, people who would be interested. Tell them to come give their points of view. I have changed the name of the thread, I hope its ok with you.

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If net marketing was so easy and so effective why do dedicated e-commerce businesses (Priceline, travelosity, Cars Direct, Amazon, etc. etc.) all have TV and radio ads?? Wouldn't a banner or sponsorship campaign be better?
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The one issue that plays a big role in internet advertising is Privacy. At first the internet was a place where you could go on and noone knew who you were, why you were there and what you were doing. This isn't something advertising companies like. They want to know who you are, what you like, where you live and so on...This is why you see those companies mentioned above advertising on TV and Radio ads. They know who their market is, they know where and how they can reach them. On the web ? no, TV and radio stations gather this data specifically for the use of advertisers (and other reasons).

When you show a toy commercial during...Pokemon, your market is kids. You know that you won't be reaching the millions of adults who watch TV. If you want to reach adults who like to travel (i.e. Travelocity) you run an ad on the Travel Station, or during a program similar to that. When someone logs onto MSN.com, you don't know anything about that person. MSN.com attracts people from all over the world, of all ages and languages. I log onto MSN.com and when I see that Visa ad, I don't pay it any mind. Online advertising hasn't come to the point where you know who's looking at your ad. Doubleclick tried to do that and they got into alot of trouble. This is when advertisers started to pull back from the whole internet scene.

Even big companies like Coca-Cola, advertising on the web is of no value to them because, yes they do want to appeal to the whole population who drinks soda (for their main product) but they reach them in different ways, and doing that online is extremely difficult because you don't know if 10 year old Joe is looking at the ad or 50 year old Bob.

Just the way I see it.
Ravi

Ravi Pachai,

I think you hit a very powerful point, one that many people, including myself often over look. When Geocities first launched as a free web community, many people questioned filling out the 10 line form (name, email, address). However, for every person that choose not to give up their information, two more did. Luckily, enough many brave souls realized that a few bits of information was worth the great service they were getting and the internet community grew.

Out of the footsteps of these free services emerged an idea of giving more and more demographics. However, 6 or 7 years later, people are still upset about giving out their name or gender. What they dont realize is that every store takes surveys of their customers, every magazine pools data, everything is demographics based. The only way ads get less annyoning is when people open their mouths, give out a few bits of information and allow for targeting.

Although I certainly agree the internet needs to keep a certain amount of privacy, espcially since databases could easily be used to track people in so many ways we'd all go insane with personal driven ads, there is a limit. Privacy needs to exist to a point but more importantly, people need to realize that without at least a little information, companies can not find the right ads, can not make the right content and therefore can not grow as we would like.

It's time for the privacy advocates to take a step back and allow people to say who they are, no secret tracking to trick them, just honest stats here and there to make this thing called the internet make some sense to business.

Well, I'm back after a month travelling for work..
I like this thread, it's dealing the core of our current problems:
Low rates and unsold inventories.

My feeling is that ad networks and websites are just facing that advertisers suddenly became aware of that point:
Amazon is adverting out of the net... why?

This is due to two main reasons:
1. You need to make your name know, and whatever anybody can say, radios and tv's cover at once much more audience.
2. The second and mor dramatic reason is that e-commerce is not and will not be that diamond guru's said.
Human are animals, and thus like to feel and live things. They need to touch, to see the object they buy and moreover comunicate and an HTML form ending with "SEND" is not comunication. Just think about what we do, how many times we went to a mall to buy something and just saw the thing, touched it and had a coffee or a beer instead of buying it?
Where is the coffee shop in the net? You went to see the thing because you knew its name... and did not buy it.
Then for any company what is important in advertising is brand marketing and this is not e-commerce. Until websites will not consider themselves as communication media and plan and sell advertising on the same philosophy that papers, radios and tv networks, advertisers will not consider the net as a proper advertising media.