NEW YORK: Traditional premium display advertising is in permanent decline due to the rise in programmatic buying, according to a new study.
A report by Pivotal Research Group noted that the long-term trend was revealed by Yahoo's weak operating results, as the US internet group is more-than-usually exposed, being a leader in traditional display advertising.
Online display advertising is a weak revenue generator, the study found, and it is likely to become weaker, meaning publishers will need to seek other revenue streams.
Advertisers have been seeking alternatives to display advertising, and many have significantly reduced their advertising spending.
Some newspapers have explored other revenue sources such as paywalls, and this and other forms of monetisation may be the only answer for leading digital media owners, Pivotal suggested.
Google has proven immune to the trend, as one of the world's largest display advertising sellers, with some $4bn in annual gross revenue from this source.
This is because its data collection is so sophisticated that it can provide more revenue than other channels could for their advertisers, and it is thus able to charge higher fees for advertising space.
These two factors have enabled Google to continue to capture a disproportionately large share of display advertising on the internet.
Trading desks, many run by the marketers themselves rather than via their agencies, have received a significantly greater share of digital budgets, and this too has driven change.
Trading desks such as WPP's Xaxis, Publicis's Audience on Demand, Omnicom's Accuen and Interpublic's Cadreon are thought to have deployed about $2bn in online spending in the US last year, compared to half that the previous year, and the upward trend is expected to continue.
Pivotal concluded that many publishers remain in denial about the state of their business and the possibility for growth in advertising revenues.
Data sourced from Pivotal Research Group; additional content by Warc staff