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This month has been a busy time for the online display advertising world with the huge dmexco trade show in Cologne followed by AdTech and two display-focused conferences taking place in London last week.

This post covers some of the main trends and challenges discussed at these events, some of which were outlined in my State of Display presentation at OMMA Display.

While there is much excitement around the growth of real-time bidding, there has also been plenty of realism and candour about the industry's on-going struggle to address the issues which are preventing brand advertisers from investing more of their advertising budgets.  

Growth of online display: how big can it get?

According to ZenithOptimedia figures, the global display advertising market will reach $33bn this year, with the channel's share of internet advertising expected to increase to 41% by 2014.

Part of the growth of the market can be attributed to real-time bidding which is the focus of a new buyer's guide published by Econsultancy last month. Research firm IDC estimates that RTB will this year account for 16% of display sales in the US and 12% in the UK.

These figures are forecast to rise to 27% and 25% respectively by 2015.

Source: The Real-Time Bidding Ecosystem, Econsultancy

Despite this healthy growth, some commentators believe that RTB, which by its nature lends itself to direct response advertising, is not - as things stand - a panacea for a sector which needs to start attracting more significant sums of money from big-spending brand advertisers. 

This is a point made well in a blog post by Mike Teasdale of Harvest Digital, who points out that "within display media, a very small percentage of spend goes on the kind of interruptive, interactive formats that are used to support brand campaigns."

The launch of Facebook Exchange

The opportunities and challenges facing the display advertising world are nicely encapsulated by the launch of Facebook Exchange (FBX) which enables advertisers to re-target people on Facebook using first- and third-party data.

The ability to pinpoint consumers based on demographic, behavioural and geographical data is where display advertising comes into its own, making the entry of Facebook into this ecosystem an exciting development. 

But while the demand-side platforms and trading desks involved with testing FBX have reported strong results from trials over the summer, others have pointed out that FBX, while bringing more liquidity to the marketplace, presents more questions than answers in a world where publishers are concerned about falling CPMs.

More retargeting on an unsexy format, though effective, is not seen by many as the holy grail for a channel which needs more brand dollars. According to Petteri Vainikka, of premium advertising platform Enreach

RTB inventory is already as good as infinite; FBX will further push down prices as it is getting ready to unleash its vast inventory. The gap between remnant (RTB) and premium (direct) is growing fast, and very few technology vendors seem to be interested in the premium direct channel although it is what matters most to all premium publishers. The publisher-controlled direct channel is most likely not scalable or sexy enough for massive VC funding on an IPO plan.   

Programmatic premium - not an oxymoron

The need for more premium advertising spend through real-time bidding was also a major talking point at ATS London last Tuesday, with some of the thinking here nicely summarised in this video from Improve Digital posted on the ExchangeWire blog.

There is a good analysis by Ran Cohen of Legolas Media on AdExchanger about why programmatic premium does not have to be a contradiction in terms, with an outline of what is required not just for brand advertisers but also to tempt publishers to make more Michelin-starred inventory available through exchanges. 

What is disheartening for many industry onlookers is that much time and soul-searching is still being spent working out and agreeing on a metric which looks beyond the last click and gives brand (and brand response) advertisers something meaningful to assess the value of what they are doing. This is exactly the kind of conversation which could have taken place 10 years ago.

Complexity of the marketplace - the CMO doesn't care, and nor does the consumer 

Another issue deemed to be holding back the industry is the complexity of the display advertising landscape as various vendors and agencies jostle for position.

This was a theme of my State of Display presentation where I argued that the CMO doesn't care about the complexity of the marketplace, and still less does it matter to consumers who wants a consistent experience along all avenues of the customer journey. Display should slot into that bigger picture, a point also made in a keynote at OMMA Display by Paul Frampton

Frank Addante, founder and CEO of ad tech firm the Rubicon Project hit the nail on the head when he said: "We need to take the tech out of the middle and put it underneath - pushing the buyer and the seller closer together."

Speaking at ATS London, Addante argued that there are too many many steps in the typical online display media ordering process

Mike Nolet, CTO and founder of AppNexus, which provides the 'plumbing' for a significant chunk of RTB advertising, spoke about four key components of ad trading companies, namely technology, strategy, people and data. Like Addante, he believes that the technology should operate in the background, enabling people to innovate around creativity and use of data for more effective advertising.  

Taking a candid view of the current state of affairs, there is an excellent post here from earlier this month by Stuart Colman of the Colman Media Consultancy where he argues that publishers, advertisers and agencies all need to get their act together. The whole landscape, he argues, 'is a mess':

Many publishers still don’t really know what to do with their data assets, often selling this asset cheaply in search of short term revenue. Advertisers, on the other hand, don’t truly understand the value locked up in a data world, whether they’re buying it from a third party, or it’s data they can generate and control themselves. 

Mobile - a challenge and an opportunity

Another fertile area of discussion last week was what the dramatic growth of mobile means for both publishers and advertisers. For publishers, the elephant in the room is how much of their traffic is now viewed on mobile devices, including smartphones which don't lend themselves as well to display advertising as the desktop experience.

Advertisers, meanwhile, already wrestling with attribution in a multichannel world, face the added complication of understanding how individuals are engaging with them across different devices throughout the day, and working out how best to reach consumers via mobile. 

The Olympic Games have brought into focus the scale of how much impact mobile is now having with the Opening Ceremony drawing a peak broadcast BBC audience of 9.2m via the mobile site and 2.3m on tablets (out of a total audience of 27.1m people including the red button). There are more facts and figures about the scale of this broadcast event on the Adobe blog

According to David Karnstedt, senior VP of Media and Advertising Solutions within the Digital Marketing Business at Adobe, the lines are becoming increasingly blurred between a number of overlapping channels including display advertising, broadcast video, mobile and social. He rightly argues that marketers need to "adopt a multichannel digital advertising approach to reach their target audiences".  

Integration of display advertising with other channels made up the final section of my State of Display talk where I presented data from the recent Econsultancy / Responsys Cross-Channel Marketing Report to show the extent to which marketers are integrating display with other channels, such as search marketing and display.

The State of Display presentation on 'Growth, Complexity and Integration' is free to registered Econsultancy users.  

Image credit: shannonkringen

Linus Gregoriadis

Published 25 September, 2012 by Linus Gregoriadis

Linus Gregoriadis is Research Director at Econsultancy. Follow him on Twitter or connect via LinkedIn or Google+.

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