How will brand advertising scale online?

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The agency-media ecosystem is changing and finally working for brand advertisers.

Video advertising sales are strong. A number of sellers in the space showed impressive gains in 2009 and our business is up substantially. Rumor has it that the large home page display units on YouTube are sold out through 2010. The industry’s growth is not just about pre-roll, though maturation of the streaming video market is a strong driver growth.

What the YouTube inventory, pre-roll and the broader growth in rich media demonstrate is a return to basic brand advertising fundamentals. Brand advertising is about telling a story, not just redirecting traffic. Advertising experiences that deliver reach while finding ways of immersing the consumer in an experience, be it passive or active, will find a healthy market. Interactivity has given us new options to extend and dimensionalize the story, social has given us tools to make it spread and digital more broadly has forced advertisers to consider utility to the user. But the basics persist – find paths to the consumers where you can get scale, buy attention and repeat.

Something else is happening in parallel, something that is required to drive continued growth in the online ad market. The industry is slowly working through complex process and service issues required to make brand advertising manageable. I look at it like this: in the TV era, the impression was gold. If you had inventory, especially in quantity, you could sell it pretty easily. Contrast that with where we are today: to sell meaningful amounts of media to brands, you start with an impression, aggregate reach across sites and find data to focus your approach. You need to leverage people and technology to

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ensure environments are brand safe, customize your creative executions, and wrangle rich media technology and ad servers to ensure the delivered experience is what is expected—and measure outcomes ruthlessly.

Making this happen through a service (agency) architecture, which grew up and sustained itself on TV, has not been entirely practical. Agencies are expected to deliver much more (more outlets, more formats, more technology, more interactivity, more content, more measurement, more integration, more localization and more proof) against a medium that can’t justify the effort or spend. More for less only lasts for so long.

Fortunately, brand advertising in the US alone is a $100+ billion market and shifts in media consumption are now real problems for media companies–big enough to warrant investments in new technologies and approaches to make the process work online. As a result, brand-focused media sellers are picking up the slack and productizing what was once incredibly labor intensive into something more manageable.

At VideoEgg today, we produce a feature-rich media campaign in 10 different sizes and deliver it across hundreds of sites for a tenth of what I would have spent on production and rich media premiums only a couple years ago. Want maps as part of an ad experience to show local info? Want a survey or data capture in the ad? Want real time content like Twitter feeds? Now you can have cheap, fast and quality.

Integrated site experiences are also getting much easier. We are working on brand integration programs that scale across sites, blending connection to content with share of voice and reach.

The same evolution is happening in network development and targeting. Planning tools marry contextual placement and audience data, enabling companies like ours to quickly spin highly customized and data rich brand networks to meet very specific marketing objectives.

Which is to say, the online brand advertising market is finally maturing. The consumer ad experience has become far richer, publishers are rebalancing the content/ad mix in favor of advertisers and, most importantly, the technology and services required to deliver campaigns at scale are being streamlined and economized.

Perhaps most interesting is the economic shift that underlies all of these changes. Yes, we have simplified the advertising production and delivery processes. But in the end, there is still cost and real complexity. Instead of this cost being billed back to the advertiser as a service inside of the agency model, media sellers are getting better at packaging technology and services along with media, making the process less disjointed and more sustainable for brands. In short, the cost of making online media is being borne by media. Whereas the underlying value of the impression could previously stand on its own, in an age of media ubiquity, it’s now what you do with the impression that counts.

This is progress. Not for the sellers of a vast pool of unqualified impressions, who continue to find it difficult to keep CPMs’ up, but for the advertisers, who now get more of what they need to make digital a manageable medium. In the end, agencies can spend more time on the important stuff – delivering strategy and ideas to build brands. 2010 is going to be an interesting year.

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Troy Young

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