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2007 INTERACTIVE PUBLISHER SURVEY
OVERVIEW: Advertising.com, Inc. operates the industry’s largest online advertising network, consisting of inventory purchased from web, search engine and affiliate publishers. Advertising.com’s network includes approximately 3,800 websites and reaches more than 148 million unique visitors each month (85 percent of the Internet audience) according to comScore Media Metrix1. Because of the volume and breadth of websites within our network, we are able to extract insights from our publisher partners and use this data to forecast trends for the online marketing industry as a whole. METHODOLOGY:
Publishers actively working with Advertising.com were asked to complete an online survey about their advertising business outlook for the coming year. The questionnaire covered predictions with respect to: • Revenue growth by creative size • Advertiser objectives • Advertising capabilities The survey was hosted by online marketing research company InsightExpress. Equal value was applied to all publisher respondents, and no incentive was offered for participation. Data was gathered from January 31 to February 16, 2007. Of the publisher respondents, 33 percent are in sales; 25 percent are in corporate divisions; and 18 percent are in business development roles within their organizations (See Figure 1).
Figure 1: Which best matches your area of responsibility?
Definitions:
• Banner ads are defined as image-based creative units with the following dimensions: 468x60, 234x60 • Leaderboards are defined as image-based creative units with the following dimensions: 720x90 • Skyscrapers are defined as image-based creative units with the following dimensions: 120x60, 160x600 • Pop-ups/unders are defined as image-based creative units that appear in a separate window on top of content displayed on a user’s screen or beneath an open window • Large rectangles are defined as image-based creative units with the following dimensions: 300x250, 336x280, 250x250 • Small rectangles are defined as image-based creative units with the following dimensions: 120x90, 125x125, 180x150, 120x240 • Text links are defined as text-based advertisements • Behavioral targeting is defined as ads served based on web-surfing habits • In-site behavioral targeting is defined as ads served based on user behavior within the publisher’s website • Network behavioral targeting is defined as ads served based on user behavior across a network of sites
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January 2007
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• Contextual advertising is defined as ads served based on the content of the web page • Co-registration is defined as advertisements placed within the publisher’s registration path • CPA is defined as cost-per-acquisition • CPC is defined as cost-per-click • CPM is defined as cost-per-thousand impressions • CPL is defined as cost-per-lead • Revenue-share is defined as a pricing model in which publishers are paid a percentage of the revenue earned from sales originating from ads placed on their website • Hybrid model campaigns are defined as those with a combination of branding and direct-response objectives • Syndicated content is defined as content on a website that is provided by another source • User-generated content is defined as media content created/produced by end-users • Original content is defined as original content created by the publisher • A companion banner is defined as a standard online media unit that runs along side of a pre-roll video unit
while revenue from text links appears to be on the decline – with fewer publishers supporting this capability.
Media Landscape Continues to Shift
For the fourth consecutive year, publishers are predicting increased spend from traditional offline advertisers. Although web-based advertisers are expected to account for the majority of online spending, publishers are expecting a four percent increase in online spending from offline businesses (See Figure 2).
Figure 2: Percent of Revenue from Web-based and Offline Companies
FINDINGS
Results from this year’s survey indicate that offline advertisers will continue to shift more dollars to online advertising, maintaining a three-year trend. Despite the influx of more traditional brands, advertisers plan to devote their online spending primarily to hybrid campaigns, which comprise a combination of branding and direct-response objectives. In addition, for the fourth consecutive year, CPM pricing models comprise the largest share of publishers’ revenue. With regards to online advertising capabilities, publishers are increasing their support of emerging solutions such as video advertising, also adding original streaming content and user-generated content to their sites in 2007. This type of more impactful content and related advertising capabilities coincide with publisher predictions that larger ad formats will drive revenue growth again in 2007,
Last year, survey respondents predicted an increase in branding revenue as a result of this increased spending by traditional offline advertisers. However, the majority of publishers in 2007 felt that their greatest source of revenue would come from hybrid campaigns (See Figure 3).
Figure 3: Percent of Revenue by Campaign Objective
*Hybrid was not included among 2006 response options
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Hybrid deals are typically purchased on a CPM basis, while performance is assessed using a back-end metric such as clicks or sales. With more advertisers adopting a hybrid approach to their online buys, it is logical that CPM pricing models are expected to comprise the largest share of revenue at 62 percent. Furthermore, direct-response models such as CPC and CPA were expected to decline in 2007.
Larger Ad Formats Lead Revenue Growth, Text Links on Decline
support year over year. In contrast, fewer publishers are supporting contextual advertising capabilities this year. Similarly, co-registration capabilities have declined 12 percent since last year (See Figure 5).
Figure 5: Which of the following advertising capabilities does your site support?
Larger ad formats are expected to drive revenue growth among ad formats in 2007, with large rectangles and leaderboards leading the category. Both of these sizes were up significantly compared to last year’s predictions – 115 percent and 75 percent respectively. Interestingly, text links were expected to lead revenue growth in 2006, but are expected to decline significantly in 2007. This may be a result of a decrease in revenue expected from directresponse advertising. Not surprisingly, pop-ups and popunders dropped off the map this year, with no publishers expecting these ad formats to lead revenue growth (See Figure 4).
Figure 4: Creative Units Expected to Lead Growth
*Video was not included among 2005 response options
Video is the largest gainer, with an 80 percent increase in the number of publishers who support video ad formats compared to last year. In-banner and pre-roll video ad formats remain the most widely used – with 90 percent and 72 percent of respondents supporting these units, respectively. Post-roll capabilities declined 43 percent from 2006 (See Figure 6), and approximately three-quarters of surveyed publishers indicate that they support companion banners.
Figure 6: Video Ad Formats Supported by Publishers
*Video was not included among 2004/2005 response options
Advertising Capabilities
For the third consecutive year, web banners are the most widely supported advertising capability, followed by rich media, video and contextual advertising. More publishers are supporting video, rich media, behavioral targeting and email capabilities than in previous years, with those formats receiving the largest percent increase in publisher
*Mid-roll was not included among 2005 response options
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While publishers support both 15- and 30-second video spots, a larger percentage support the shorter units – 93 percent compared with 70 percent (See Figure 7). This aligns with data from Advertising.com’s 2007 Online Video Study, which indicated that not only do consumers prefer shorter ads, but also that shorter spots perform better – with consumers 20 percent more likely to view 15-second spots to completion versus 30-second spots.
Figure 7: Length of Video Ad Units Supported by Publishers
Figure 8: Revenue from In-Site versus Network Behavioral Targeting
Finally, email formats will make a slight comeback in 2007, with almost 10 percent more publishers supporting email capabilities compared to 2006. Publishers serving predominantly direct-response advertisers have higher adoption rates for email than those with a branding- and hybrid-focused advertiser base. In addition, rich-media capabilities have steadily increased since 2005, with 82 percent of publishers supporting richmedia formats in 2007 compared to 75 percent and 69 percent in 2006 and 2005, respectively. In 2005, publishers indicated that technical issues were a barrier to rich media implementation, but these formats are now widely supported. Behavioral targeting is also supported by more publishers this year, as evidenced by a 15 percent increase in publishers supporting this capability than in 2006. Of the publishers that have behavioral targeting capabilities, 50 percent state that they offer in-site behavioral targeting while the remaining 50 percent utilize targeting that is part of a behavioral network of sites. This reflects a slight increase in publishers participating in network behavioral targeting (See Figure 8).
Publishers Explore Streaming and User-Generated Content
With the ongoing media hype surrounding streaming and user-generated content, it was interesting to learn how publishers plan to tackle these emerging trends in 2007. With the expected revenue growth and increased support of video advertising capabilities, it’s not surprising that more publishers have streaming content on their sites – 14 percent more than last year. Furthermore, nearly onethird of publishers that do not currently support streaming content plan to add it to their site next year. The majority of publishers plan to add original content to their sites, followed by syndicated and user-generated streaming content (See Figure 9).
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Figure 9: Type of Streaming Content Publishers will Provide in 2007
icant change from 2006, when approximately 80 percent of publishers with streaming content also supported video ad units. With regards to user-generated content, which includes video and web content, approximately 70 percent of publishers indicate that they either currently support this capability or plan to add it in 2007. Publishers like the idea of incorporating user-generated content because, as one respondent said, “Users love being able to input content and share ideas, which helps increase user loyalty and word of mouth.” While user-generated content helps build buzz and contributes to site stickiness, many publishers have reservations about incorporating this content because of the difficulty of effectively policing it and the strict rules that govern its monetization. Many publishers are seeking efficient monitoring tools to enable them to accept and profit from user-generated content.
All of the publishers with streaming content are monetizing this capability with video ads. This represents a signif-
CONCLUSION This year’s publisher survey revealed that traditional offline advertisers are continuing to spend more money online. However, instead of assigning either branding or direct-response objectives to their campaigns, the majority of advertisers are using the Web to achieve both objectives simultaneously via hybrid campaigns. Consequently, CPM pricing models represent the greatest share of publisher revenue, as hybrid deals are typically purchased on a CPM basis. With regards to advertising formats and capabilities, publishers expect to see the most revenue growth from larger ad formats, with smaller units and text links on the decline – most likely as a result of branding and hybrid campaigns comprising the majority of publisher business. As such, video advertising is also on the rise. For streaming content, publishers are most interested in adding original content, but are keen to monetize user-generated content once they identify effective ways to police it.
For more information on the results of Advertising.com’s publisher survey please email research@advertising.com