Future of Online Advertising Looks Like Video, Mobile…and Microsoft

3/24/10Follow @gthuang

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30-second ads. As McAndrews pointed out, that’s largely because there’s only one “Family Guy” (one of my favorite shows) and one Super Bowl (one of my favorite shows when the Patriots are playing). YouTube has been farther behind because of the short duration of its clips and their user-generated nature, which means they’re less polished and less predictable.

More generally, it remains difficult to make money from user generated content—unless you have the traffic of a Cheezburger Network, say—because advertisers don’t know what they’re getting placed next to (it might be objectionable text, photos, or video). But Tillinghast said, “Advertisers are increasingly comfortable with user generated content” in certain situations. The key, he said, is you “can’t let the community get too large, or the quality of comments will degrade.”

2. Mobile

People have been talking about mobile advertising for years, and it might be starting to take off now. Tillinghast said that later this week MSNBC will roll out the ability to “incorporate a standard desktop ad into a mobile experience.” This isn’t a new thing, but it lets advertisers and publishers use the same ad inventory across different devices. “We haven’t even begun to see what we’re going to see in mobile,” he said.

“There are still barriers to advertising on the mobile phone,” McAndrews said. The Internet on PCs is a well-connected technology with unified standards, he said, but distribution of ads on different devices like the Apple iPad and mobile phones is much more difficult. (For example, the iPad won’t allow Flash applications, and some wireless carriers block Web cookies.) “The advertiser wants to buy across all these devices, but some of these new distribution channels are blocking that,” he said.

As for “hyperlocal” ads, Tillinghast said, “The trick is selling. You either have an online self-serve system or you have someone knocking on doors. I see a huge opportunity for someone to put together a local sales force…the incumbents are TV, radio, newspapers. Maybe it’s not even a technological opportunity, but a business opportunity.”

3. Microsoft

Yes, Microsoft. Lanctot defended his Redmond, WA, employer as a major player in online ads, though it’s business is still relatively small—even after the $6 billion-plus acquisition of aQuantive in 2007. The bottom line is, Microsoft is big enough to catch up eventually.

“We’ve been willing to invest for a long time. Parts of our business are not profitable, but that’s OK for now. Bing has been a big win for us. We have seen growth for nine consecutive months and are growing more quickly than Google and Yahoo,” Lanctot said. “Atlas [technology from aQuantive] gave us a boost—we feel like the pieces are coming together. We don’t have technologies in silos, but have a cohesive approach for our customers.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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  • http://www.owneriq.com Katie Frothingham

    And no mention of the retargeting and behavioral targeting space? More and more safe ways to anonymously tag internet users are on the rise.

    With Google’s acquisition of Youtube, more and more video results are showing up deeper in search engine feeds, good point re-corporate vids.