Layoffs at 2nd Tier Networks – Miva, Vibrant Media

7 July, 2008

The AdViking scouts are hearing from unofficial but reliable sources in the field of battle that both Miva and Vibrant Media have made staff layoffs in Europe during Q2 2008. This is regrettable for the employees who are getting their pink slips (or P45s) and we hope that all good people find rewarding and fulfilling employment quickly. Alas, AdViking is not hiring for our latest adventure. At least it is summer and a good time for a bar-b-q and some strong ales.

We do want to note that we believe these layoffs are a sign of the general slow down due to the economy and perhaps the natural advertising cycle. However, we do not believe that the online ad spend is going down overall, only that the spend pattern will migrate to the bigger and better quality sites (like portals) or ad networks and rich media channels (ie, video) – all while we watch online advertising out pace TV advertising in the UK. And is predicted in general to grow around 20% or a bit less depending on what report you read. Those players further down the food chain and/or offering poor products (and traffic) will suffer. We fear that many established players as well as start-ups in the ad space or with ad funded models will be forced to trim back and some will perish. This is a time when it is going to be safer at the head of the long tail of advertising.

On a related note we were reading the UK NMA this week which is touting a story titled “Portals drop ad rates to fill space” (note: paid content, best save your money) and we don’t buy it yet – the idea that spend is shifting away from portals or that their is price pressure. The article goes on to imply that display (banners, brand advertising – which matters!) are being impacted first and that as spend tightens it is shifting to ROI or direct response products. AdViking thinks this is a poor strategy by media buyers as it will only drive up the cost of media or clicks on the likes of AdWords and that then pushes ROI down. Down a rat hole of DR chasing Google’s tail… All media buyers please re-think this strategy, try to get that right mix of spend and help prove the NMA story wrong. Anyway, digital is the king of advertising now. Long live The King!

Post-script:

Miva accounded they are doing a 15% staff cut, including killing it’s Italian Media Operation


Behavioural Targeting? Who Really Wins

28 May, 2008

Targeting the ConsumerAt AdViking towers, we mull things over. Sometimes things that look really good on paper – perhaps too good to be true – can be wolves in sheeps’ clothing.

Take behavioural targeting as an example. In principle, a sound idea – the more you know about the user, the more you can target ads at them. This can improve quality for both the user and the advertiser, which can increase the value of the communication… all fine, then.

“It Doesn’t Work Like That”

However, in recent conversations with two ad networks who major on profiling… Adviva and Tacoda… something is emerging that requires a little more scrutiny. Their detailed profiling of customers doesn’t seem in an effort to increase the value to the publisher – but to further increase margin on sale.

Do the ‘Math’

Let’s say we have publisher A who usually sells at £0.70 CPM for media on his site. The advertiser currently pays £1.50 CPM to their agency (as the agency takes a slice, the ad network takes a cut).

However, with profiling, the ad network can raise the revenue to £2.00-3.00 (and possibly more) CPM – which is great… but for whom. In most cases the publisher is actually getting their sell on reduced – to as little as £0.45 CPM. If the agency takes a standard slice, then who’s really benefitting?

We would be interested in hearing how the alleged improvements in profiling and targeting are going to benefit the publisher because from what we can see, it actually negates the value of the publisher entirely. The message seems to be: “we know what the customer is interested in – so we don’t place any value on the space on your site”.

So, in this industry, ownership of the most attractive profiling is key… until, of course, the various personal data security concerns are aired and shared in the House of Commons. Perhaps the next wave of advertising is going to be defined by government policy rather than technology? We’re watching the forthcoming debate in the US and UK with interest.


UK Online Ad Spend Predicted to Out Pace TV in 2009

8 April, 2008

The IAB released their 2007 UK online ad spend study yesterday – the full PR is here. Two very interesting points from study included how the UK was ahead of online spending targets (gowing 38% to capture 15.3% market share) and is now predicted to pass TV in 2009. This is not a surprise to AdViking but still very significant.

To grow 38% from £2 billion to £2.8 billion is a very powerful performance, and with 16% share of media spend, the UK is head and shoulders above all other major world markets. It’s clear marketing directors now recognise the value of online to drive their business, and more and more are using rich media and video to build their brands, just as they do on TV.  – Guy Phillipson, Chief Executive, IAB