The Emerging Structure of the Digital Display Marketplace - A Simple Overview - Leo Scullin

Welcome Leo Scullin our newest MediaBizBloggerDuring the month of January 2011 and in review of all the market buzz of 2010 the author interviewed a coterie of thought leaders and expert practitioners in the digital advertising arena As a result of the dialogue with the panel of experts from the buyers and sellers perspectives a simple picture of the structure of the digital display marketplace emergedSimple Tiers Explained amp160 Digital Display Advertising Marketplace Tiers amp160 amp160 Highest Cost Per 1000 CPM amp160 amp160 Primary Tier amp160 Features highest CPM but smallest inventory primarily sponsorships and customized packages high credibility quality content amp160 Secondary Tier amp160 Features the bulk of the quotnegotiatedquot market involves labor sales cycles tends to harbor the most inefficiencies in process complexities being addressed with technology for some quotnonnegotiatedquot premium inventory amp160 amp160 amp160 amp160 Tertiary Tier amp160 Features largely remnant inventory quotnonnegotiatedquot low CPMs networks and exchanges operate this tier amp160 amp160 Lowest CPMs amp160 amp160 Source Arkose Consulting LLC amp160 amp160 amp160 amp160 The IAB reported that the display market in 2009 accounted for 80 billion or 35 of the total Internet Advertising spend For the first half of 2010 total US Internet ad revenues totaled 121billion the best firsthalf revenue ever Display ad revenues were 436 billion or 36 of the total spend up 16 over 2009 According to the IAB quotupward bound display impressionbased and hybrid revenue models indicate an influx of brand dollarsquot Further spending breakdowns are not aggregated in an industry spending database like Publishers Information Bureau PIB offers for magazines and Kantar Media Intelligence and Nielsen Monitor Plus provides the major media However Arkose Consulting estimates the 2010 ad revenue breakout by tiers as followsDigital Display 2010 Revenue Estimates amp160 Digital Display Advertising 9083 Billion amp160 amp160 2010 Revenue Estimatesamp160 amp160 amp160 Primary Tier amp160 amp160 Size 0500 billion Notes Extrapolation of IAB 1st Half 2010 Sponsorship estimate amp160 amp160 Secondary Tier amp160 amp160 Size 6249 billion Notes Includes estimated 0850 B in Demand Side Platforms amp160 amp160 Tertiary Tier amp160 amp160 Size 2334 billion Notes Assumed to be all network and exchange for remnant inventory amp160 amp160 Source Arkose Consulting LLC amp160 amp160 amp160 amp160 amp160 amp160 amp160 In addition to the dollar allocations by tier ascribing pricing to each segment would then define a marketplace that39s easier to understand and to embrace Such a pricing tool would be an industry cost database This would permit clients and their partners to evaluate the cost and implications of different strategies before they set foot in the actual transaction marketplace As will become apparent any tools that help address the key challenges facing this multitiered market can be of enormous valueTwo key challengesamp183 Managing quotinfinite inventoryquot amp8211 There is an overabundance of advertising supply across thousands of sites in what could easily be called an quotInfinite inventoryquot of ad impressions Each of the marketplace tiers has different needs and opportunities and as a result this makes it difficult to exploitamp183 The Ad Operations Work Flow amp8211 The ad operations work flow that supports digital campaigns is complex costly and is notoriously dependent on manual labor Reliable estimates from media agencies large and small suggest that for every dollar spent in digital an additional 015 amp8211 020 is spent to manage it Compare this to 002 amp8211 004 for broadcast and 005 amp8211 009 for print An industry that is complex and also expensive raises the threshold of resistanceThese are serious impediments and the developments in each of these two arenas and the implications for positive change driven by more widespread support for an industry cost database are the focal point of the next few posts on this subjectLeo Scullin is a Partner at Arkose Consulting LLC of New York a firm that offers strategic tactical and management guidance to clients seeking to leverage their interactive marketing investments and initiatives He has extensive experience in internet professional services as well as deep expertise in launching and positioning online and traditional media lscullinarkoseconsultingcomRead all Leo39s MediaBizBloggers commentaries at ArkoseCheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerMediaBizBloggers is an openthought leadership blog platform for media marketing and advertising professionals companies and organizations To contribute contact Jackmediadvisorygroupcom The opinions expressed in MediaBizBloggerscom are not those of Media Advisory Group its employees or other MediaBizBloggerscom contributors Media Advisory Group accepts no responsibility for the views of 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