The simple display ad market, now worth $12.7 billion may begin shrinking soon. Marketers are starting to understand that a significant percentage of the inventory has no value, primarily because of new viewability standards. To counter this problem, publishers are making changes to the media spaces that they are selling.
One of the problems with digital advertising has been the race to the bottom in terms of how inexpensively banner ad space is being sold. With no limit on the amount of inventory being created, publishers have been forced to sell their space at lower rates. At the same time, studies are showing that up to 30% of ads are never seen because they appear ‘below the fold’. This problem is prompting marketers to seek different arrangements with publishers. Instead of relying on networks to serve up ads, some brands are dealing directly with publishers to establish sponsored posts in the hopes of getting themselves noticed in the busy online media space.
According to Alex Kantrowitz, writing for Digiday, publishers also see the threat in the digital ad market and are changing the way they design their ad space. Kantrowitz describes how Gannett is now reducing ad inventory. In some cases, the publications “place a single ad unit next to each of the site’s articles and package the content and ad together in a pop-out lightbox.” This strategy is proving effective in terms of CPMs. If more publishers shift away from banner ads, especially to appease consumers who dislike being followed and targeted online, the ecosystem that supports program buying and ad networks will be impacted.
About 5 trillion banners ads will be served this year, but all interested parties believe the system is overdue for a change. It’s too soon to tell what the industry will look like a year or two from now but many believe that if publishers limit ad spaces, revenues may rise for them. In addition, the major ad serving and buying networks may see their revenues squeezed by this shift.[Source: Kantrowitz, Alex. Banner Industrial Complex Under Threat. Digiday.com. 1 Mar. 2013. Web. 20 Mar. 2013]