Bloggasm

[Huffington Post managing editor Jai Singh's] departure follows a number of others. When AOL acquired HuffPo for $315 million earlier this year, it lost that company’s chief executive (Eric Hippeau), as well as its top sales guy (Greg Coleman), although for known reasons (AOL chief Tim Armstrong once fired Coleman from an earlier job, so Coleman’s departure was expected). There were the 900 layoffs two months ago, which included the loss of experienced editorial talent. And then the string of departures from Engadget, long considered one of the leading examples of quality in AOL’s portfolio — from editor Paul Miller, who slammed the “AOL way” on the way out, to top editor Joshua Topolsky and at least six others.

Why AOL’s exodus is worrying, and time is running out

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The bulk of advertising in the social media sector comes from display ads, which the company sees rising from $2.1 billion in 2010 to $7.7 billion in 2015, but revenue from non-display formats, such as promoted products on Twitter, is where BIA/Kelsey sees significant growth, from zero in 2010 to $600 million in 2015.

Social Media Ad Revenues to Reach $8.3B in 2015: BIA/Kelsey

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For an article on Business Insider, I traveled into AOL’s NYC headquarters to interview one of its advertising executives about the state of online advertising and whether AOL can change the way ad success is measured:

But whereas online publishers have had a host of different tools to manage content and serve it to the web — whether it’s WordPress, Blogger, Movable Type, or a custom-built content management system — brand marketers have been limited in their ability to be their own publishers. Traditionally, ads are served as either GIFs or Flash images (what Rogers referred to as the horse and buggy and the Ford Pinto of advertising), or, if it’s really willing to devote time and money, an advertiser can create a rich media ad (the Ferrari of advertising). Pictella, on the other hand, is essentially playing the role of Blogger when it launched a decade ago: Giving non-coders an easy-to-use content management system to efficiently and quickly deliver content.

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Blogads has a blog post out today noting that with the launch of President Obama’s 2012 campaign, several progressive blogs saw campaign ads appear today:

Wow, this is the fifth campaign cycle for blogs. As a sign of how campaigns are accelerating: the first ads of the 2004 were bought by Howard Dean’s campaign in December of 2003, nearly 9 months later in the campaign cycle.

I queried Blogads CEO Henry Copeland about whether this was a story worth covering. “If ads aren’t running in other places, probably yes,” he responded. “I don’t see [Obama ads] on washingtonpost or [The New Republic] for example.”

It’s extremely difficult to find out the entire ad inventory for major newspapers, so there’s no way to confirm this short of emailing every single ad director at every single newspaper (I doubt they’d respond in a timely manner). I’ll definitely keep an eye out, however.

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For my latest piece for Harvard’s Nieman Lab, I interviewed several big players in the display advertising industry about the obsession with click-through rates and what this means for AOL’s content strategy

According to several studies, click-through rates — the number of people who actually click on an ad — run well below 1 percent on most sites, and each year these rates get lower and lower. Some industry analysts have said this is a result of “banner blindness,” the idea that we inadvertently train our eyes to ignore certain parts of a web page, including sidebar and banner ads.

Depending on which side of the aisle you are on, these metrics are either a blessing or a curse. On the one hand, the Internet allows us to measure ad success like never before. In the past, advertising agencies would have to employ arcane formulas using Nielsen or circulation numbers to guess how many eyeballs saw a 30-second spot on television or a full-page ad in The New York Times. Now, we can open up Google Analytics or click-tracking software to determine exactly how many users engaged with an ad. We can even in some cases determine conversion rates, measuring not only how many people clicked on an ad, but also how many actually purchased a product after making the click. These metrics are a welcome relief to the client who famously said, “I know I am wasting half my advertising budget; I just don’t know which half.”

But many publishers and advertising agencies have expressed frustration that their industry is beholden to such confined measurement. By focusing so much on direct response, they argue, advertisers are missing out on the larger branding opportunities afforded by creative advertising. The Geico Gecko is not successful because he inspires people to jump up from their couches and purchase car insurance; he’s successful because when a person decides months later to shop around for car insurance, his image springs to mind.

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At first glance, the Washington Post’s Q4 report suggests that newspapers may be able to rein in the revenue decline they’ve been experiencing for the last few years. Revenue remained stable from year to year and 43% of the paper’s revenue came from online. But Frédéric Filloux easily read between the lines:

Now the bad news: this trend is more a reflection of the print’s business continued erosion than of a sufficient growth on the online side… Over the last seven years, for each dollar added to online revenue, the WaPo lost five dollars on print. During that time, the Post has lost $88m of print ad revenue and it improved its online business by only $18m. This leads us to a key realization, a sobering one: there is no hope current online revenue stream will someday offset the past decade’s tremendous losses.

Despite such pessimistic forecasts, Filloux had some suggestions for how WashPo could stem the tide:

- Cutting down at their inventory by at least 50% in order to revive a sense of market scarcity.
- Investing much more in technology in order to match the sophistication of clever pure players.
- Refusing to sell the lower end of their inventories to bottom-feeding “ad networks” that act as powerful deflationary engines.
- Getting out of the audience-measurement systems that are ridiculously inaccurate and setting up their own system of traffic analysis.

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Today, most online publishers count themselves lucky if they can charge $10 for every 1,000 pageviews they generate, and usually it’s much lower. It’s largely thought to be a supply-and-demand issue, with ad networks like Google Adsense spreading advertising budgets across millions of websites. As Om Malik argued, media is becoming unbundled and it’s driving down ad prices across the board.

Today Forrester Research released a forecast predicting the online retail market would grow to $279 Billion in 2015. I haven’t seen any speculation as to how the rise of ecommerce could affect online CPM advertising. As businesses become increasingly focused on driving direct online sales, will this create enough demand to outpace supply?

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