Online Advertising Bubble

Last week, Publico interviewed me about the recent changes on the online advertising industry. As the article is only available in portuguese to premium subscribers, i’m posting here my answers to João Pedro.

Online Advertising Bubble

With online advertising budgets increasing, should we expect that it will surpass the investment made at the other media?
Even with changing consumer habits, where consumers are wired for about a third of their time, most of the large media budgets are still invested in traditional media, usually called above-the-line media. Some change is happening and the numbers are there to prove it: IAB, the Internet Advertising Bureau recently announced that Online Advertising has reached 17 bilion USD, with a 35% growth rate from 2005. These values are the cornerstones of projections that media such as radio or press will be overthrown by internet until 2010. I don’t think tough, that Internet will replace old media, but rather complement these or other media, increasing the proved positive correlation between online and offline campaigns. Much of this budget migration will happen thanks to greater accountability by interactive advertising technologies, richer consumer involvement and more personalized and targeted online advertising.
In Portugal, we’re only at the beginning of this trend, lacking true integrated marketing strategies and substantial online budgets, even if this kind of advertising is much more qualified and less expensive per reach than traditional media.

Is there any trend by advertisers to choose Google platforms to launch their campaigns? Or are they used as a side-strategy?
Big advertisers usually perform some risk management by diversification, with their specialized media agencies, optimizing campaigns and choosing the right channels and partners. Google, of course, is one of those partners, but is being referred as a frienemy, a short-term friend and a long term enemy, with several conflicting interests for being at the same time competitor and supplier.
For medium or small business, these platforms (Adwords, Analytics) are quite efficient for their small marketing budgets, with qualified targeting and easy campaign management. Google’s advertising solutions are now reaching also print or even TV, taking the next step to campaign integration and management for a large group of companies.

Some say that the recent purchases (specially by Microsoft and Google) of advertising companies can be a sign of a new bubble. Is this a sound argument?
While Microsoft reacted mostly to their failed attempt to buy DoubleClick, and didn´t intend to be left out of this industry, Google’s purchase of the DoubleClick is a bit different from the normal acquisition strategy, where smaller companies were the target. But if we understand Google as a advertising company, it makes perfect sense to increase their online advertising solutions portfolio with display advertising, or even with RSS advertising, as recently happened with the purchase of Feedburner.
Google’s information added to 10 years of DoubleClick’s consumer profiles will provide a huge and robust online advertising platform. All these internet media giants are buying more than companies — they’re buying data, huge amounts of data, and that’s the extra value they were charged for. We’ll surely won’t see any bubble, as most of the growth of these services is based on real needs, with consumers adapting to a new digital lifestyle, and in consequence, more and more investment by brands in this medium.

© Publico 2007