Online advertising post-recession

Carl White, CEO of  ValueClick Europe, on how online advertising can emerge stronger from the recession.

For many of us in the media industry we are on the third recession of our careers, so we should have the benefit of experience to guide us through. The market will not permanently be depressed and if our businesses are going to survive and thrive we need to embrace the changes and make sure we adapt to take advantage of the new opportunities that our diversifying market unleashes.

Where are we now and what can we do to capitalize on our potential? Businesses have obviously been concentrating on stabilising existing operations with one eye on the true valuations of companies. We know there will need to be consolidation in online advertising companies once this recession has run its course so we can emerge stronger. But the core issue here is the true valuation of companies – the ones that were looking to sell or be sold couldn’t quite get their head around what their valuation would be in the new economy. This meant most of those conversations have stalled. Where we are right now is that, with examples such as Publicis buying Razorfish and Orange buying Unanimis, there’s evidence that valuations are stabilising and either sellers are being more realistic in their valuations or buyers are accepting that the market has stabilised.

So whilst we have been looking after our businesses, the digital space has been evolving thick and fast, with exciting new models as social media starts to monetise itself more successfully, as mobile advertising and the monetisation of Apps starts to become stronger and as video advertising grows. All of these things are going to serve to reinvigorate digital models because they will attract large amounts of money to the digital space.

But the future is all about performance with advertisers becoming more savvy about performance-related advertising expenditure. Stand-alone expensive “tah-dah” TV campaigns may have no justification as multi-strand integrated campaigns take over, so the role of performance advertising, whether search, affiliate or lead generation, will be the crux of advertising strategy. However, we need to make sure we are not focused on pitching one aspect over another – it’s not about search versus display. All the elements of digital complement not only each other but other media, especially broadcast.

The other crucial aspect of the future success of our industry is behavioural targeting. Looking to the US here, there are some moves afoot to regulate against behavioural targeting and the large industry bodies and large companies are having to make sure they are preparing users, consumers and the regulatory authorities to understand behavioural advertising and the benefits it can bring. So here in Europe we will undoubtedly follow the US and go through a stage of renewed activity on the regulatory side, and therefore be equally prepared. For me, I’d urge European legislators to stay calm and gain a good understanding of the benefits to user, publisher and advertiser.

For behavioural targeting to fulfil its true potential in the way it could transform advertising, we must exercise restraint and not utilise data and information in a way that upsets or frightens users. We need to ensure that everyone understands the benefits but we shouldn’t rush to exaggerate what the technology can do, or spook users by too obviously tracking what they’ve done. It’s about subtlety and restraint.

So with proof of stabilisation, consolidation, performance and embracing our opportunities, we should be getting into the minds of marketing directors to best help them spend their advertising budget in the best way to reach their desired consumers in the digital space.