US advertisers fail to keep up with consumers

24 February 2010

NEW YORK: Advertisers are still not allocating enough of their media budgets to online promotions, a leading tech expert has claimed.

Speaking at the IAB's Annual Leadership Meeting – covered in more detail here – Susan Wojcicki, Google's vp, product management, said that across all demographics "people are spending more time online".

The internet population is now as large as the TV viewer base, with social networks, video services like YouTube and a range of other portals attracting large numbers of new users on an ongoing basis.

However, while "interactive vehicles" account for 32% of audience media time at present, the net currently takes just 15% of advertising expenditure, a total that falls to 5% for display ads.

"With so many users coming online, the ad models haven't kept up," Wojcicki suggested.

One of the main reasons why advertising revenues have fallen "so far behind" popular preferences is that the process of buying web display inventory is often highly complex, she added.

Moreover, Wojcicki estimated that 28% of online expenses are diverted to meeting administrative costs, compared with just 2% for TV ads, indicating that further progress in this area is also required.

Similarly, while the amount of data available to marketers, from "tweets" posted on Twitter to the number "friends" a brand has on Facebook, has exploded, the payback on these metrics is unclear.

Wojcicki summed up the key challenge in one simple question: "What's the right way to monetize those viewers?"

She also used the IAB event to discuss a range of new display tools that Google has developed for both large and small publishers, with the aim of driving sales from this under-exploited area.

Alongside making it easier to buy inventory, the search giant is providing a wide range of insights about web users, and offering a broader range of formats for advertisers.

"There are unlimited opportunities for display advertising. In fact, we're in the process of massive change in display industry – how it's bought, how it's sold, and how it's targeted," said Wojcicki.

To read more about Susan Wojcicki's presentation at the IAB's Annual Leadership Meeting, click here.

Data sourced from Warc