Ask an industry old-timer about the early days of display, and they'll regale you with tales of huge CPMs and click-through rates that seem impossible when compared to today's standards. Display is a ubiquitous part of the web experience and part of every advertiser's digital plan. Publishers lean on it heavily for revenue, and display is a proven commodity for delivering campaign results. Display buying strategies such as automated buying are gaining momentum, and adoption from buyers and would seem to indicate that display has its groove back.
It may come as a surprise then to hear that display is badly broken. But it is, and it needs fixing lest it lose traction in the marketplace. A number of big publishers have eschewed automated selling — have kept their premium inventory free of these tools. This is happening just as non-standard IAB display units from search and social are commanding the majority of digital revenue, which is a bad sign for traditional publishers.
Time to Automate
Big publishers don't want to release premium inventory to automated purchase because they fear commoditization. The persistent fear is that selling through automated channels creates an opportunity for buyers to get the same inventory at reduced rates. And indeed, finding the same inventory via automated routes could make direct buys unnecessary. So publishers release generic inventory only, which undermines the potential of automation.
Premium display units are excellent tools for delivering branding messages, and automated technology enables advertisers to value impressions on their own terms. That sounds like a match made in heaven. If a highly sought-after audience target lands on a page that has premium ad slots available, several advertisers are likely to bid, which will drive up the price. Auction models reward the highest bidder, not the most conservative one – that's how Google has made so much money on premium search keywords for years.
But this isn't happening at sufficient scale, and revenue isn't going to IAB display ads right now. Instead it's going to search, social and, in the not-too-distant future, mobile. That fact does not indicate the failure of display, but it does show advertisers to be shifting away from the commonly held notion that brand placements work best with solid content. All of the new investment indicates that brands feel otherwise. After all, neither social nor search players create content. Instead they monetize other people's content effectively, via sharing and discovery platforms.
Content Isn't King, Anymore
Online advertising grew up on the foundational belief that good content attracts a highly desirable audience. It offered advertisers a way to leverage that audience. There's still some truth to that, but advertisers are speaking with their dollars, and those dollars indicate that social and search offer better targeting opportunities.
Publishers will be rewarded if they enable advertisers determine the value of their inventory on their own. Highly visible units paired with good page content and audience data carry a very high value. Right now, many advertisers are showing that they don't value the content creation process, because publishers have essentially said that they're not going to compromise on their best stuff. Companies like the Rubicon Project, which make it easy for publishers to put a floor under the price of each unit, offer a way to preserve premium pricing.
Most of the inventory currently available through automated channels is at odds with what you'd expect – it's not the "premium content" that many say should be paired with ads. Social has dominated the automation headlines of late, as Facebook's exchange has given a huge boost to its ad revenue. Search and social appear to be in the drivers' seat.
As more inventory moves to automated, the reserving of premium inventory as a strategic and/or marketing-oriented buy will severely limit the value that publishers can – and should – fetch if the market were to demand this inventory be valued as premium.