Publishers and ad networks ‘devaluing’ online industry

Publishers and advertising networks have been accused of slowing the growth of online ad revenue through heavy discounting and the move towards cost-per-click ad sales.  

Stuart Pike, Nielsen’s online division Asia Pacific research director, said the fact that online revenues are down despite increases in banners and advertisers “suggests an increase in discounted online advertising rates”.

The recent Interactive Advertising Bureau/PriceWaterhouseCoopers quarterly Online Advertising Expenditure Report, showed that online display advertising revenues fell by 3.8 per cent in the three months to the end of September this year.

Despite this, Nielsen AdRelevance figures show that the number of advertisers online rose 41 per cent in the September quarter compared to same period last year. Meanwhile, the number of banners ads in the September quarter increased by 19 per cent compared to a year earlier.

Pike added that over the past five years there has been huge growth in online inventory in Australia. “This inventory growth, along with an increasing number of publishers and ad networks competing for online display advertising dollars, seems to be driving discounting.”

He said that as an industry “we are failing to communicate” the value of the online medium as effectively “as our counterparts in television”.

“It is time to change the way we evaluate the success of online advertising campaigns and focus more intently on the metrics that advertisers themselves care about, and less on outdated metrics that are more closely aligned to daily management of inventory,” he said.

Pippa Leary, MD of Fairfax Digital’s media division, said the problem lies in a combination factors which consists of an over supply of low-quality inventory and publishers historically focusing on “the ‘click’ as the only metric of success”.

“Once you start to put the focus on brand effectiveness studies as TV and magazines already do, then the focus suddenly becomes about engagement and online hasn’t done a good job of doing that, which we’ve all woken up to this year,” she said.

Ed Smith, News Digital Media chief commercial officer, added: “Quality content created by professional journalists is expensive to publish. Cost per click advertising yields a small fraction of this cost and gives no reward to the publisher for all the other value delivered to the advertiser apart from the click, such as increases in awareness, purchase intent etc.

“Cost per click isn’t a sustainable charging model for local publishers at any great scale as its yields are simply too low.”


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