Some very interesting tidbits in Neal Mohan’s post on the Google blog yesterday.
First is that Google sees display inventory per user declining 25% by 2015. This is a pretty interesting prediction given the conventional “wisdom” that online ad inventory is unlimited. This hasn’t ever really been true (provided one cares about quality of placement) and if Neal’s correct, it will become even less true over time as the industry collectively realizes there’s there is too much low quality inventory out there and it’s not doing anyone in the ecosystem – advertisers, publishers or users – any good.
Combine this prediction with the forecast growth in display spend over the next decade and it’s pretty clear we’re heading for a much more constrained inventory landscape. As these constraints start to bite, it will be interesting to see what happens to today’s auction-driven RTB infrastructure where delivery is not guaranteed.
Expect some serious turmoil as delivery rates drop and volatility increases. Maybe that’s why Google has begun work on a reserved inventory product…
I also want to amplify Neal’s point about 35% of campaigns measured on other metrics than clicks and conversions by 2015, particularly offline sales. Those campaigns comprise the orange box on this graphic – some $6B in spend last year. So Neal’s saying the orange share of online spend will grow from just over 20% in 2010 to 35% in 2015.
That prediction certainly syncs with the qualitative discussion in the eMarketer article I cited above, and if you combine the spend estimates there with Neal’s 35% share forecast, you end up with an online brand advertising market of ~$15B in 2015. Using Barclay’s market sizing estimates for the base you end up with ~$18B. So the online brand advertising market will more or less triple by 2015.
That’s great news for the ecosystem as a whole and particularly for the relatively few of us delivering targeted solutions for Brand advertisers.
Today’s Ad Exchanger published more commentary on Google’s GDN Reserve announcement last week.
Views from senior execs at VivaKi (Publicis) and Group M (WPP) rounded out the additional commentary from Google that was posted Monday. John also published some additional perspective from Elizabeth and others.
A few things in the various posts caught my eye. One was simply the difference in perspective between Publicis and WPP – clearly two different strategies at work there. Another was the refinement in Google’s messaging between the earnings call last week and Monday’s spokesperson (PR) commentary. Seemed like a careful balance between agency and advertiser in the messaging this time around (what frienemy?). I also thought VivaKi’s mention of Yahoo! in this context was interesting. Y! was once the dominant global player in online branding and reserved display marketplaces. I would have expected more from them sooner, but it’s nice to see the old alma mater at least in the game. If there’s any road back for Y!, this is it.
I’ll close with a quote from VivaKi’s Curt Hecht:
“While our spending continues to grow in the spot marketplace, clients and publishers still desire the controls and forecasting offered in a guaranteed market around context, price and performance.”
I couldn’t have said it better myself.
This being my 100th sermon from the Brand.net pulpit, it’s nice to see the gospel is spreading.
John Ebbert of AdExchanger and we here at Brand.net noticed the same thing on Google’s earnings call last night – the launch of Google Display Network Reserve, “which gives advertisers the opportunity to buy premium inventory on a guaranteed basis.”
This is interesting for a couple reasons.
First, it’s a clear signal that Google understands where the growth will come from in the display market: large brands moving traditional media budgets online to follow their customers. eMarketer laid out the case in December and it’s clear Google understands and agrees; Google launched the guaranteed product because “it’s how brand advertisers are telling us they want to buy inventory.” We’ve been hearing the same thing loud and clear.
Second, to anyone that still had any doubts about Google’s commitment to or progress in Display: Wake Up. Since acquiring DoubleClick 4 years ago this week, Google has moved in a fast, focused way to lock up all the key pieces of the transactional infrastructure for Display. They haven’t been shy about it , especially over the past year, but I still don’t think the market fully appreciates how close they are to the endgame: extending the hammerlock they have on Search to all elements of the Display market. Scalable, efficient forward buying is the last piece of the puzzle. It has been Google’s soft underbelly, but they are clearly doing sit-ups like crazy.
It’s crunch time. AOL, Microsoft and Yahoo!: If you’ve got a second wind in you, now’s the time. Accenture, Adobe, Akamai, Apple, Cisco, IBM, Oracle and others: If you’re serious about bringing your expertise in enterprise class infrastructure and service to the huge advertising market, your opportunity is slipping away. And Agencies: I agree with John’s emphasis on the particular phrasing of the announcement. Don’t let frienemy Google steal a march on you. If they take the Brand business client direct, that’s a big problem. Microsoft has Windows and Office to fall back on. You don’t.
It’s amazing how fast this market is moving.