Bainbridge OMPG carries on an interesting exploration on the value of automated ad distribution networks to distribute ads across offline media. That is, does it make sense for advertisers to hire companies like Google, Yahoo or MSN to do their non-online media buying?
(Which brings up another question on how much media convergence is really valuable for brand advertisers -but that’ll have to wait for a different day).
The Bainbridge post talks in terms of relevancy and targeting.
Another angle to bring into the discussion is the supply of online content and the ease with which it can be created. While television channels have proliferated in the last two decades, and video content is ever finding new places to be viewed, it pales in comparison to the amount of content available on the web.
It is really cheap and easy to create a web page (which is not the case with a TV show).And it doesn’t require a license from the FCC to broadcast it.
The overwhelming ease of supply has the potential to destroy the integrity of the search results and therefore erode the value of ad distribution bots. Since the barriers to entry are higher for creating and broadcasting or disseminating offline content, advertisers and media buyers should continue to get a bigger bang for their buck with offline content. -At least until the search engine networks figure out some way to further fine tune their alogrithms.
Here’s an example of what I’m talking about. Take the keyword “deodorant.” There are nearly 9 million pages Google found that it thinks are relevant to the term deodorant.
There is a neat metric called the KEI (keyword effectiveness index) which compares the supply of webpages which are relevant to a term versus the demand for that term. It is a scale of 0 – 400, with 400 being the most effective keywords. The KEI for deodorant on Google is 0.00. That means that the supply of websites, the supply of content, outstrips demand by a near infinite amount.
An automated ad distribution bot doesn’t know which of those are most revelant to an advertiser. It will broadly distribute those ads. This is fine if the marginal cost of each ad is near zero.
The problem is that with such a large amount of competition, owners of those content sites will likely start to bid up the cost of that keyword to make sure their content or product gets seen. (Which, of course, doesn’t give the ad network much incentive to change since its collecting the money.)
A second problem with the ease of content creation and the volume of content is that it increases the opportunities for click-fraud, link farms, and other practices which further degrade the value of the ad network.
A third problem is that the content doesn’t cost the ad network anything. They are capitalizing on other people’s work and do not have an ownership or any accountability to the content owners. Therefore, they have very little incentive to protect the integrity of a particular ad.
Google, for example, does not have any practice in place to stop a rival advertiser for flat out stealing another advertisers ad.
A television network is dependent on advertisers for revenue. The network and media buyers protect the integrity of the ads and, to some degree, the content of the ad outlet (the content and programming).
In the world of Google and other automated ad distribution networks, it is the content providers and advertisers who are dependent on them. Its not a winning dynamic for a big brand advertiser.