Display + Search

Thank God for Tim Armstrong. If you believe the hypothesis that Display is converging with Search, what could be a better test than to take one of Google’s starting nine and place him in the great underutilized display asset that is AOL? Nobody can ever say that Armstrong doesn’t get search. And while it gets a ton of grief, it’s hard to say that a platform with 90% reach in the US isn’t a great asset. And to make it really interesting, Armstrong is given a company that ceded search years ago despite having the largest captive audience on the web and one which, even to this day, shows no hint that an understanding of how to sell in a granular, search-like fashion exists in its DNA (although Bidplace is starting to show promise). It goes without saying that this blog will have a lot to say about AOL now and in the future.

So here we are. This is a big week for Armstrong and AOL. The first 100 days are over, he’s starting to talk about where he wants to go, and Friday he gets in front of the whole crew to lay out his plan. Armstrong says his goal is to become the market leader in display advertising. Is a leadership position in display even possible and can AOL get there? And, if so, how?

If by leadership position he means something similar to Google’s leadership in search, this is a pipe dream. Google has 65% of total searches based on the most recent Comscore rankings. Display is a bit more fragmented. Ideally we would measure this by share of all display impressions or revenue, but that data does not exist or is at least not publicly available. AOL leads in terms of Monthly Unique Visitors with ~175 million in May 2009 but Yahoo is right behind with 169MM and Google with 163MM. Another way to lead search is to take over the ad server market, but that is also pretty fragmented with Google’s Dart leading but not far ahead of Atlas and OpenAdstream (and AOL’s Adtech in 4th about 1/3 the size of AOL). Finally, the structure of the industry with several leaders competing, all having their own exclusive owned & operated inventory, and consumers having very disaggregated browsing habits makes a truly dominant position hard to imagine.

If it is apparent that a Google-like domination of display is not possible, what would “the leader in display” look like? While the same market share may not be possible, a real leader would actually have many of the same qualities as Google does in search:

1. Most revenue – It would be hard to call yourself the leader if you did not have the most revenue in the space.
2. First option for buyers – buyers have to think of you first when they think of buying display advertising.
3. Technological leader – the leader has to have the best and most advanced technology.
4. Innovation – the leader needs to be continually pushing the envelope and constantly evaluating and copying or absorbing promisting externally developed technologies.
5. Copycats – the leader needs a track record of competitors copying what it does and continually trying to catch up (think Microsoft and Google)

It’s safe to say that AOL is considerably behind in all of these qualities. Read the rest of this entry »

Recently it has become apparent that display and search advertising are converging.  Search agencies are entering the traditional display agency world (see iProspect‘s acquistion of Range Online Media).  Search and display platforms are merging (eg, Google’s merging of the Adsense and DFP platforms in its AdExchange 2.0 due to debut next month).   Numerous studies (examples here and here ) over the last year or so have aimed to prove the impact display advertising has had on search – driven primarily by frustrated display marketers struggling and starting to succeed in proving the worth of the medium.

But the convergence has been driven and demonstrated by more than just actions of marketers and sellers trying to expand or defend their businesses.  Fundamental changes in the industry, primarily technological, are giving display marketers access to many of the tools and techniques that have made search marketing so successful.

Here are just some of the changes that are driving display advertising to a more accountable, scalable, lucrative, and “search-like” future.

1. Intent -  Search, by its nature, reveals the consumer’s intent.  Display has focused on building awareness while the consumer’s mind is on something else.  Display technologies that have tried to directly respond to user intent (eg, contextual adware like WhenU and Claria) or to interrupt the consumer’s focus (eg, interstitials) have been met with consumer anger and frustration.  Advances in behavioral technology, particularly the decoupling of behavioral tracking from media through data exchanges like Exelate and Blue Kai, are now allowing marketers to target display ads based on user intent in a much less aggressive, more consumer friendly manner.
2. Creative -  The flexibility of text ads allows for virtually unlimited versions according to the particular targeting.  These versions can be quickly optimized based on performance data.  Historically display ads were expensive to create and to optimize quickly and economically.  Adready and Google’s Ad Bullder, among others, now make it easy and quick to create display ads that are good enough to test a marketing concept.  Tumri, Teracent and Dapper allow smart marketers to optimize the creative in real time and make sure that the most relevant and best performing offer is presented to the consumer at the right time.

Read the rest of this entry »