Retailers spent a fraction under $19 billion on newspaper display advertising in 2008. That was down from 2007 and you can bet that 2009 will be down again as the recession and declining circulation take their toll on the sector.
In this dilemma lies the principle opportunity for online publishers to capture share and build revenues yet the key to success seems elusive. At the center of the challenge is to associate online exposure to offline sales as very few of the retailers that underwrite the newspaper business achieve more than 10% of their sales through online channels. Put simply retailers need to be persuaded of the effectiveness of online at the store level in order to make radical changes in their mix.
Their seems to be a sense of ‘after you’ in this area. A raft of tests executed in partnership between brands and vendors and supported by Comscore and other data providers seem to provide indicative data but the market remains short of proofs. Those proofs are as important to the retailers as they are to the vendors but it is the vendors that have the flexibility to make the data of decisive value. Their simple advantage is that their supply of inventory is, in practical terms, unlimited and at its further reaches exceptionally difficult to monetize at respectable CPMs. For the retailers budgets are limited and the risks of abandoning print are great.
Today the inventory surplus is largely shipped to ad networks who seek to make their money by optimizing to a CPA or CPC metric that produces an outcome in the online space most often in the form of e commerce outcomes. This activity becomes progressively refined by an increasingly cluttered array of protagonists all dancing on the pin of 10% or less total volume share and the creative and media optimization to deliver it.
Surely this holds both sides of the deal back and the time has come to move the investment in our business towards the 90% of sales that happen online, to tests that prove it and to brand metrics that don’t consider the click as a key metric or even a metric at all.
IAB members have long bemoaned their lack of share among the biggest advertisers. if everything you do is focused on 10% of the deliverable that is not so surprising.