Home Industry Events Search Engine Strategies Display Ad Panel Shows The Tide Is Turning

Search Engine Strategies Display Ad Panel Shows The Tide Is Turning

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Search Engine StrategiesThis past Thursday morning, Search Engine Strategies reprised its display advertising panel, “Ad Networks & Exchanges: How the Search O/S is Changing the Display Game,” for the New York audience. Given that the panel was up against a formidable group of search engine marketing superstars in another room, this panel more than held its own with informative presentations (note to self: get PowerPoints) from Jonathan Mendez of Yieldbot, Justin Merickel of Efficient Frontier, Dax Hamman of iCrossing, ClickForensics’ Paul Pellman and moderated by Bianca Gardner of Publicis Modem. Other than the good presos, it was heartening to see the well-attended panel’s audience not only engaged, but informed, as the Q&A period at the end of the session yielded pertinent questions.

Over the past year or so, Search Engine Strategies has been slugging away by consistently including this panel in their conference programming across the U.S. despite search marketers initial lack of interest and understanding of the coming search/display convergence. This investment in education as the display space gains traction is slowly starting to pay off.

Among the many bytes of data from the panel during the Q&A, one comment stood out. ClickForensics’ Pellman said that according to his anecdotal evidence, a few ad networks are having a tough time in Q1 due to the entry of DSPs into the display ad space. Pellman said:

“I think that migration is starting to happen from a buying standpoint as far as using some of these new technologies, leveraging demand-side platforms that buy the media because the media is now there, targeting’s there. Agencies and advertisers are going to be more comfortable with buying this media. And it’s more efficient and effective – the kind of place that ad networks have been maintaining the lion’s share of the margin in that channel.”

At the very least, it would follow that if agency buying desks (estimated to spend $500 million in 2010 according to DataLogix Eric Roza; and David Moore of 24/7 has already said that he expects $130 million to pulse through B3 this year) are starting to ramp, their dollars are being taken away from ad networks and given to DSP’s which are powering agency trading desk strategies such as Omnicom’s and Cadreon’s deal with Turn. Or, look at the direct advertiser, such as the dollars flowing through AppNexus thanks to Ebay. These are only some of the deals which are public.

It would seem conservatively possible that another $100-300 million in run rate attributed to large advertisers, smaller agencies (the non-agency trading desks), and yes, even ad networks, could be running through DSPs in 2010. Any ad network with undifferentiated technology or services will likely be impacted as dollars shift. But, make no mistake. The ad network model is drinking the DSP koolaid regarding exchange-type buying. And, the service layer provided by the ad networks is valuable as several of the DSPs know and provide today. As has been stated previously on this site, the display ad media business didn’t get easier with DSPs, it became more complex given all the tools which unlock one type of transparency or another (verification, creative, audience/cookies, placement and so on) for the media buyer.

Is real cost efficiency happening today through DSPs? Probably. Will a demand-side platform someday enable more efficient media buying, better ROI, etc.? Definitely – it’s hard to beat buying by the impression and only the impressions you want. Ironically, the companies using DSPs will also be ad networks. Expert media services + DSP tech = digital agency of the future.

By John Ebbert

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