For the first time in the past four years, portals lost share of ad dollars year over year -- at least from Avenue A/ Razorfish, which releases its latest Digital Outlook report today. The shift comes after years of ad-dollar consolidation with the largest players online.
In 2007, 19% of Avenue A's media spending went to portals, down from 24% in 2006.
"It's pretty uncommon to see a drop like that in any one category," said Jeff Lanctot, senior VP-global media director. And while the outlook studies the media spending from only one agency, it's indicative of the ever-increasing options marketers have online. To wit: Last year, Avenue A dollars were spread among 1,800 sites; the year before, 863.
"We're seeing ad dollars spread down through the Long Tail, though not just through ad networks but by buying directly," Mr. Lanctot said. Of course, advertisers still value scale, and he said despite the talk that efficiency can be achieved only with scale, there's a growing awareness of the influence blogs and smaller sites have -- which can make them a wise buy.
Vertical content properties, up to 39% of spending from 37%, were the great beneficiaries of much of that wealth. In addition to share shifts, there was great pricing-growth disparity between verticals, up an average of 30%, and portals, whose CPMs grew only 7%. The average CPM increase across all online media was 20%.
Search continued to climb, with Google's share of ad spend increased, but Yahoo's and Microsoft's also went up, thanks to gains they saw from implementing their respective search-management systems, Panama and AdCenter.
Ad networks, meanwhile, essentially were flat, but the mix of spend shifted toward larger players. In 2005 the top five ad networks snagged 50% of Avenue A's ad-network spend. In 2006 that grew to 63%; this year it hit 70%.
Incidentally, as the portals' share of ad dollars appears to be slipping, they also are investing in large-scale online-ad networks. Last year Yahoo bought Blue Lithium; Microsoft bought DrivePM (through its aQuantive acquisition); and AOL, which already owns the leader, Advertising.com, added Quigo and Tacoda.
Ad networks naturally benefit from scale as a greater swath of sites and advertisers makes them more likely to be able to match the right ad with the right inventory.
Of course, that's also the goal of media exchanges, which have emerged during the past two years and are being implemented by Yahoo, Microsoft, DoubleClick and independent players such as ContextWeb to help ad liquidity to the online-advertising market. But when asked whether they could help even out the advantages big players had, Mr. Lanctot said he wasn't sure, saying they are "still pretty immature. ... It's too soon to say."
Despite all its slicing and dicing of media spend, the report acknowledges that the digital-media business is more than just paid media these days; agencies such as Avenue A are also called upon to "distribute branded experiences," it said, through social networks, widgets and other social-media tools. Paid media, however, can be an important driver and promoter of traffic to those experiences.
Avenue A is part of Microsoft, thanks to its acquisition of aQuantive last May.