BRW’s Digital Generation Report: The Class of 2007

BRW’s Digital Generation report is fixated with the revenue numbers of the major players, detailing marketshare (by revenue), and by advertising category. The BRW takes credit for conducting its own research into the size of the online advertising market, concluding that the combined market of general, classifieds, and search & directories is valued at A$1.45b. By comparison, IAB Australia, through its audit partner, PwC, comes to a total figure ofA$1.36b

While the two parties conclude the classifeds category makes up 27% of the total amount, the BRW study suggests that general advertising holds a 29% share, versus the IAB’s 27%. Correlating to a higher general or display share, the BRW study puts search and directories at a 43% share compared with the IAB’s 46%.

Intriguingly, the article makes no reference to IAB Australia, or in fact any audience metrics associated with individual publishers, ad networks or affiliates. The article constantly describes sites with “millions of users”, yet no sourcing is supplied. It’s astounding that revenue estimates are ‘analysed’ here without any reference to the publisher’s operational size, audience characteristics or marketshare. A few comparative ratios between publishers like average revenue per user (ARPU), or premium pages versus remnant inventory, would have provided contextual value.

A great deal of column centimetres has been wasted on the ubiquitise Facebook and MySpace, and their role as an enterprise solution, which instead might have been spent on some serious issues and innovations affecting the online advertising market, including:

• The abject failure of major online publishers (and networks) to prepare for display performance models, via behavioural targeting, and instead ride the wave of brand advertising and its esoteric justifications about value;
• A $1.4b market built on the sliding sand of an atrocious set of audience measurement options;
• Run-away commissions rates offered by publishers, and
• The uncritical pursuit of social media as a general advertising solution.

The report concludes that the $19m of advertising spent locally on sites like Facebook, MySpace and Bebo is set to grow “exponentially” in coming years. This is very unlikely. Not only does Victrix’s own ID Index prove the inverse relationship between personal environments, like social media, and the effectiveness of brand advertising, but BRW’s own survey of online marketing executives indicated that in 2008 adspend in the area of social networking will decline substantially relative to 2007. Interestingly, the other advertising type expected to experience a similarly dramatic fall from grace are online directories, like Yellow Pages, local search and CitySearch - the latter being one of the most neglected online brands of the last 10 years.

Rather than be purely descriptive, BRW had a chance to shake up this cosy club with some very stark reminders that the market remains wide open in the general advertising space. All publishers remain in the game to seize a dominant market lead, and truly accelerate the growth of online’s share of total adspend, but they must commit to performance measurement and customer data/analytics.

Between 10 and 15 years ago online media over-promised on the issue of campaign performance in a desperate bid to differentiate itself from print and television. Understandably, advertisers are calling in their IOUs, and if the publishers won’t deliver then the combined entity of Google-Doubleclick, with all its data processing and measurement capacity, will.