After experiencing a double-digit spurt in growth rates last year, display ad revenues are still healthy, but the gains have slowed considerably lately. AdAge surveys some of the reasons as to why the slowdown has been so sharp. Primarily, the general halt in all measured media has had a particular affect on the flow of dollars into display. And though TV, print and radio are also suffering due to the economic downturn, ad execs say that traditional media's reach still makes it a more important branding medium than online, even as display has been touted as the answer to the direct response aura around search, which remains more dominant. Therefore, the bellwether marketers like consumer packaged goods titans like Procter & Gamble and Unilever spent only 1.5 percent and 2 percent, respectively, of their marketing budget on display. Meanwhile, P&G raised its magazine spending 7 percent last year.
-- Targeting and metrics: For the past few years, scores of interactive ad industry advocates have been saying that better measurements are key to maintaining the strong growth rates for online ad spending. Better metrics are still being worked on by the audience rating firms, though a wide disparity between what they report and what web publishers claim in the areas of unique visitors and pageviews remains. And internet advertising is widely regarded for its audience targeting abilities, in terms of targeting consumers based on intent is an important element that's still missing, Rob Norman, CEO of WPP's Group M Interaction, tells AdAge. As greater advances are made in that areaas long as they steer clear of any legislative or regulatory trip-wiresthe balance should tip in favor of display again.
-- Marketers going it alone: Apart from the traditional/digital dichotomy, another factor affecting display ad spending is that marketers like Nike and Converse are creating their own branded web destinations that are taking money away from display. In order to compete with those initiatives, Norman says that ad agencies will have to do a better job at creating content for brands. The criteria for such efforts is based on how well agencies can answer these two questions: "Why should consumers keep that content? Why should they share it?"
By David Kaplan