Expect more long tail inventory

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The sophistication of rich media and targeting capabilities this year gave advertisers more opportunities in how and to whom they serve ads online.

Without doubt, online advertising saw huge increases in 2006. With the widespread use of online video, user-generated content and social networking, the Internet is a place where marketers can have deeper knowledge of buyers and more accountability with budgets.

"As consumers spend more and more of their time consuming media and entertainment experiences online, advertising dollars will follow," said Michael Jones, CEO of Userplane, Los Angeles, and vice president at AOL LLC.

He said to expect increased online ad spending over the next five to 10 years as marketers begin using the Internet as their standard for brand campaigns.

"There will be an increase in lower-value, lower-quality advertising placement options for marketers to sift through, which we feel will lead to advertisers aligning themselves with larger media brands and ad networks that can guarantee quality user experiences and stronger results for their campaigns," Mr. Jones said.

According to William Urschel, CEO of AdECN Inc., Santa Barbara, CA, the consolidation of ad networks at the high end of the market and the proliferation of new ad networks on the low end is a factor of larger ad networks focusing on improving the quality of their in-house inventory.

This leaves a lot of long tail inventory for publishers to sell elsewhere. But it does not indicate lack of value in the long tail.

"If advertisers know what they are buying, and can pay only what it is really worth to them, the whole concept of remnant inventory goes away," Mr. Urschel said.

Brad Bender, vice president of optimization solutions at DoubleClick, New York, said the past year saw advances in search management, optimization, workflow automation, and in-stream video trafficking and delivery.

He said that the digital industry will move to a more data-driven approach.

"The Internet is one of the most accountable mediums on the planet," Mr. Bender said. "Use of data to create better outcomes will firmly expand into display advertising as well. I think we will see optimization pop in 2007 as there is more focus on tools and methods that can help drive revenue."

Mr. Bender said marketers should stop relying on an assumptions-based model, in which it is presumed that a certain target is buying, and use a more data-driven, response-based model.

"Using similar techniques as in traditional direct marketing, for example A/B and multivariate testing, will also pay dividends in the online channel," Mr. Bender said.

Mr. Jones spoke to the importance of good audience segmentation.

"Marketers need to start embracing their users," he said. "They need to become less concerned with the actual ad display environment and more concerned with targeting the end user."

AdECN's Mr. Urschel's advice for the coming year was to experiment with new technologies.

"A savvy marketer should allocate a few dollars or a little traffic to test new technologies or models," Mr. Urschel said. "Our industry is still changing and expanding so quickly that important advances are still coming along all the time."

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