Buying And Selling Online Advertising Is Changing Quickly

I've been working on the internet and in some form of online advertising for the past 15 years, but I've never seen the landscape changing faster than it is changing now. Right before our very eyes, the way that media is being bought and sold is changing in an unprecedented way, at an unbelievably fast rate.

Since advertising began centuries ago, it has always revolved around selling and buying a media property, be it a newspaper, a tv channel, a billboard, a radio station, a web site or even a network that represented web sites, tv channels, newspapers, etc. Even when it came to targeting demographically, geographically, etc, marketers still achieved those targeting objectives by buying specific properties. This is still the most common way of buying media today.

However, this is changing rapidly due to new online advertising technologies -- user profile technologies that allow marketers to target the user no matter what media web site the user is on. I won't go into the details of how the technologies work, as there are far more expert articles already explaining methodologies like behavioral and intent-based targeting and re-targeting; that's not my goal here. Rather, I want to highlight the intellectual shift going on in the media buying and selling world, and particularly the implications for web publishers.

With a simple user profile cookie, a marketer can buy ad impressions on an ad exchange that is filled with countless page impressions that specific user is consuming across any number of web sites. So instead of buying golf.com (not picking on golf.com here -- just using as an example of what is becoming true for all web publishers) to target a 40 year old male who may or may not be interested in buying a car in San Francisco, an advertiser now has the ability to leverage an incredible array of registration and site visiting data to follow that user around 5o web sites with ads specifically about cars for sale in San Francisco. This isn't necessarily a new concept at all; we've been talking about behavioral and intent based targeting for several years now -- matching an ad cookie with a user cookie. What is new is the rapid realization for what this means for web publishers.

Web publishers invest significant resources to create content that attracts an audience, and hopefully a concentrated audience that an advertiser could use to reach a consumer with a certain need or area of interest. Further, these publishers have gone to great lengths to market and package their content with ads to have both great impact and attain a premium ad rate. Yet, with countless new ad targeting start-ups and ad buying platforms, an advertiser is no longer constrained to buying golf.com or any other single property, nor constrained to paying premium ad rates associated with a specific media property to reach that user. Instead, the advertiser can find that same user as they visit countless other sites and often on non-premium packaged pages with significantly lower ad rates.

So this begs the question: what does this mean for web publishers and their traditional revenue model? The answer is a long story with multiple thought streams for another blog post or two. The short story is this: the implications of new ad buying and selling technologies presents a staggering challenge for web publishers and the way they execute their business plans. What does this mean for ad unit pricing? Do you participate in data sharing or not join and risk being bypassed by advertisers altogether? How much do you invest in content, marketing? How do you sell what you have?

While I don't believe the traditional model of marketers buying specific web properties will go away, I do think these new technologies could significantly shift the mentality away from buying a property to buying audience wherever they are, and further, a consumer with a specific objective or interest. The shift is already taking place, yet I believe it will become a tidal wave within the next 12 months, particularly with the perfect storm of new technologies bring lower ad rates and higher ROIs in the midst of a severe recession.