Less than a month ago I led an all-day meeting of a few dozen digital sales leaders at The Upstream Seller Forum. One of our topics was "The Incredible Shrinking Third Quarter," a discussion prompted by the experiences of many in the room: they'd experienced a surprisingly soft July-August-September (a trend borne out in our internal group polling.) We postulated all the reasons why this may have happened: Were advertisers sitting on their wallets till the election results were in? Was all the money getting sucked up by programmatic trading? No really clear answer emerged then, but just now the story takes an interesting turn.
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According to a report just released by the IAB and PriceWaterhouseCoopers, internet advertising revenue for the third quarter of 2012 shot up nearly 18% to a historic high of $9.3 billion. Turns out it had been raining money throughout the late summer and early fall, but fewer and fewer companies were getting wet.
Welcome to the age of consolidation.
For many years there had been a tacit understanding that the largest share of online revenue would go to the largest players. But it had also been true that the rest of the bounty would be somewhat evenly distributed across thousands more websites and networks. If you kept your product offering fairly current, sprinkled on some innovation and covered the agencies pretty well you could anticipate at least modest revenue growth on pace with the industry norms. I think we can now declare that era officially over.
Today consolidation is the law of the land, and it's a ruthless and impersonal taskmaster. Marketers have told their agencies to do bigger things with fewer players. There's also the very real consolidation of DR and audience dollars into programmatic channels: it's not the whole story, as some "progs" would have us believe, but it's a very important chapter. If your Q4 revenues bounced back pretty well, don't be lulled into complacency. The walls on Fort Knox have gotten taller, and that's not changing.
So if you're a smaller publisher or an innovative network, do you just give up? No. You adapt, very quickly.
- First, abandon your "strategy of inclusion." Many sales organizations are built on the idea that they'll generate lots of RFP activity, play nicely, and "earn their way" into the agency's heart and the client's budget. Instead pursue a "strategy of positive disruption."
- Next, stop trading commodities. Selling "holes in pages" is nothing more than zombie sales activity. As I've said in this space before, banner "space" is now fully commoditized. Start focusing more on the stuff that at which you are the "first, best or only" option.
- Finally, head for the border. Companies and sellers who synthesize, blend and combine will continue to thrive. As much as that junior planner wants everybody to fit in a neat little planning box, there's power in spanning channels, media, markets and disciplines.
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