DoubleClick's Bruner: Internet Marketing Has Come of Age
Read what DoubleClick research director Rick E. Bruner has to say about interactive marketing's progress in an in-depth interview with DM News executive editor Mickey Alam Khan.
What moved the needle in 2005 for Internet advertising and marketing?
Spending on Internet advertising has been surging for two years. 2003 was when online advertising spending turned back to growth after the recession, and 2004 saw a new high-spending mark for the industry - $9.6 billion in the U.S. market, according to the Interactive Advertising Bureau and PricewaterhouseCoopers - and 2005 is on track to set another spending record.
I think it was not so much any one thing, like a new hot technical breakthrough or fad, as much as accumulated momentum of the sector. Internet marketing has come of age and demonstrates strong enough results that marketers are moving in large numbers and in large dollars online, and I don't expect to see that slow significantly for the next few years. Some of the factors that did contribute would include:
· Constant innovation from Google propelling search marketing further, along with the entrance of MSN into the search ad space.
· Maturing tools in the rich media space.
· Broadband usage passing 50 percent of U.S. Internet users, meaning the Internet becomes an ever more constant part of everyone's lives.
How will the channel evolve in 2006?
As inventory continues to get tight and CPMs go up at the bigger sites, where the online ad industry is concentrated today, I think there will be more recognition of the importance of the ad opportunity in "long tail" - the many small sites - blogs, user-created content, other amateur sites - where much of the audience is spending its time.
Also, I suspect CPA/CPC pricing for display ad units will get pushed off of premium sites as inventory can be sold more at premium CPM rates. That will leave ad networks scrambling to identify new sources for inventory, which will probably include more of the blogosphere and that long tail of smaller sites.
Expect any upsets in preferred tactics?
The pop-up ad may finally fade from larger sites. With pop-up blocking rates already nearly 50 percent, based on research from various sources I've seen, plus the next version of Internet Explorer set to block pop-ups, it may be hard to sustain them. They're also closely associated with the whole spyware issue, a dark cloud over the entire industry, even the legitimate players.
While there is a big difference between an advertiser-initiated pop-ad on a Web site where they have purchased media and the more nefarious spyware applications that are placed surreptitiously on the desktops of consumers and perform malicious or privacy-threatening actions, the public is not always able to differentiate.
Have marketers finally accorded online advertising the respect it deserves?
Many have, but a surprising number of marketers are still just feeling their way. The first 10 years were the early adopters. I think the large majority of marketers are still to come online. Those that are already experienced with it are shifting more of that budget to various forms of digital marketing, which is itself in a constant state of evolution, including mobile devices, IPTV and a whole new generation of media formats. And there are still many who are benefiting from the learnings of the early adopters and coming online for the first time.
Will search continue its successful run in 2006? And what about e-mail and banners?
DoubleClick has products in all these areas, so it's hard for me to sound objective, but yes, I do expect growth in all those areas next year. Search has clearly been a powerhouse for the industry, so I don't know whether it will continue to grow at the same rate it has done in the last few years, but it works so well that advertisers clearly are not going to back away from it. And as prices for keywords go up for the most-sought-after phrases, more advertisers are becoming more sophisticated about going deeper into keyword lists and managing ROI for positions lower in the ad rankings.
Despite all the worries about spam, consumers continue to engage with permission e-mail programs. Though we have seen open rates drop in the last year, we have not seen significant declines in click rates, and post-click conversion rates continue to rise. In our consumer surveys, consumers continuously tell us they value permission e-mail.
And display advertising - the term I prefer to ad banners, which to my mind refers specifically to 468x60 units - is booming. Top publishers are selling out more of their content for higher rates than they have done in years. The reduction of clutter on the pages - moving to fewer and larger ad units - has been a win-win-win for all sides: less competition for attention for advertisers, less distraction and clutter for readers, and higher CPMs for publishers.
What about RSS advertising and mobile marketing - fad or here to stay?
I think podcasting, which is a form of RSS, is more promising than straight-up text RSS, but I am sure you'll see ads being served into that platform, especially as Microsoft's new Vista operating system promises to give RSS much greater exposure.
Mobile marketing will be set to boom in the next one to three years. Mobile content and communication devices are hot. If you don't have the cool new thing now, you know you want it. It makes perfect sense to consume content that way, especially with the increasingly widespread distribution of Wi-Fi Internet access. ITunes' new distribution deal with ABC-TV for popular TV content in mobile format will be an important trial to watch.
What challenges do you expect in 2006? And opportunities?
Something has to be done about spyware. Publishers, agencies, vendors, associations, the whole industry needs to tackle this together, or it could really hit us where we live. DoubleClick is taking a role in this dialogue in Washington, on the state level and in the industry.
Opportunities are both in continued innovation and continued discipline. Many of those agencies and publishers that got through the dark years of the dot-com bust did so by honing what works. There is a lot in the online marketing sector that works well, but it's complicated enough that it takes discipline, best practices and constant fine-tuning to really get the most of out it.
Have consumers accepted online advertising?
I think so, more or less. Spam is getting more manageable, with lots of tools available to Internet service providers and consumers. Pop-ups are still annoying, but they're easy enough to avoid for the most part as well. Otherwise, I think the American consumer understands and accepts the bargain of media: you accept the ads and you get the content for free. I think the subscription and micro-payments models also play a role in the publisher landscape, but I can't see them ever overtaking advertising as the mainstay of the content revenue model.
I think advertisers are also going to get better at designing consumer-centric ads. In a world where consumers increasingly can avoid interruptive ads, either with new technologies or just learned indifference, advertisers will have to rise to the challenge of making advertising more engaging. It's a trend I refer to as "invertising," which I elaborate on in the paper we released earlier this year titled "The Decade in Online Advertising."
Rick Bruner's e-mail address is email@example.com.