Will Publishers Lose Their Bacon if Ads Are Traded Like Pork Bellies?

Aside from the Microsoft bid for Yahoo, the biggest topic of conversation at the Interactive Advertising Bureau’s convention this week was pork bellies.

The seemingly odd topic sprang from comments by the group’s incoming chairman Wenda Harris Millard, in her opening talk that: “We must not trade our advertising inventory like pork bellies.”

Half the audience felt this was the rallying cry for the battle to save the creative art of advertising from being devoured by soulless math drones. And the other half saw it as the last gasp from a species ill-suited to survive in the current environment where results can actually be measured.

In particular, Ms. Millard’s pork-belly analogy was a reference to the rise of advertising “exchanges,” modeled after financial markets, that match buyers and sellers of online advertising space. Yahoo and Microsoft have bought exchanges and Google hopes to do so as well as part of its purchase of Doubleclick.

But Ms. Millard, the president of media for Martha Stewart Omnimedia and the former head of ad sales at Yahoo, was reacting to several other automated ad placement approaches. There is the explosion of advertising networks that simply buy unsold space cheaply from many sites and resell it to marketers who want to reach the most people for the lowest cost. And there are behavioral targeting systems based on the idea that it matters who sees your ad, not where it is placed. These systems assemble data about users that follows them around the Web showing ads for products that a computer model predicts they may want to buy.

Ms. Millard argues passionately that the context of how an ad is set amid a broader environment is crucial to its effectiveness. Speaking to me later at the conference, Ms. Millard asked why Playboy never attracted major national brand advertisers like General Motors. Its audience had very attractive demographics for anyone who wanted to reach men. But it wasn’t the environment that many marketers wanted to appear, she said.

The debate became most passionate in a panel discussion Tuesday about advertising exchanges. Jim Spanfeller, the chief executive of Forbes.com, argued that his company’s limited experiments with exchanges had been “underwhelming.”

“The pricing had dramatically underperformed the initial expectations,” he said.

Bill Wise, general manager of Yahoo’s Right Media exchange, said publishers were not being thoughtful about how they used exchanges and ad networks.

“When the last sales person sells the last bit of space, they send the rest to the network,” he said. The publishers would do better, he argued, if they sold most of their inventory through automated systems and kept only a small amount of their very best ad positions to sell to clients as part of custom packages, they would make more money. The scarce supply of attractive space would raise prices, he claimed.

http://bits.blogs.nytimes.com/2008/02/27/will-publishers-lose-their-bacon-
if-ads-are-traded-like-pork-bellies/