Ad industry leviathan Federated Media has just announced that it’s putting its direct display ad business out to pasture.
In news guaranteed to grab the attention of every advertising sales manager and business development manager working in Adland, FM’s move heralds a major change in the face of online advertising sales. The advertising Goliath, which boasts 145,000 content (publishing) partners and 180 million monthly unique page views, has seen the share of revenue attributable to direct ads slide from 15 percent in 2010 to 11 percent in 2012.
Banner ads generally take pride of place on webpages and are usually limited to a small number of standard sizes. Until now, they’ve commanded premium prices when sold to business brands and marketers, and web publishers have traditionally depended on companies like FM to root out firms to advertise on them.
The times they are a‑changin’
But the times, they are a‑changin’, as Bob Dylan might put it. Federated Media says demand for banner ads is falling. In a recent blog, its founder, John Boyer, wrote that the display banner model of “boxes and rectangles” is failing to support traditional content websites “beyond a handful of exceptions.”
He went on, “A new generation of “native” ad units are on the rise, which live primarily on large social sites that curate and aggregate content. Examples include Twitter, Facebook, Tumblr and of course the grandaddy of them all, Google’s AdWords. Big sites like HuffPo and fast social comers like BuzzFeed are also employing native units. Pinterest is expected to roll out something similar soon.”
Direct sales will, he predicts, become vastly more competitive with the growing strength of Google Adwords and the coming generation of native ads. These trends will of necessity force a change in the way ad agencies function in order to cater for the growing number of advertisers who are embracing more conversational/social ad campaigns.
FM is spearheading the evolution because the writing is on the wall; it just doesn’t make sense any more to hire teams dedicated to finding and tracking advertisers looking for banner ads. Instead, FM is channeling all its resources into two areas only, conversational and native advertising, which is the relatively inexpensive field of “programmatic” advertising that allows sites to display ads automatically all the time.