Web Ad Buyer: Online Less Robust Than You Think, CPMs Headed Down

Most prognosticators predict another booming year for online advertising, but Carl Fremont isn't so sure. Fremont, the global media director for digital ad giant Digitas, says the weakening economy will slow down Web ads as well. He also predicts a tough slog for publishers hoping that online video will give them a shot in the arm: Video is flooding the Web, he says, but most it is unsold and will remain that way.

SAI: What do you expect in terms of online ad spending in the coming year?
Fremont: I don't personally see large increases in digital this year, mostly because of economic uncertainty. Overall marketing dollars will be flat, and there will be more caution. Many online verticals--financial services, entertainment, telcos, retail--are maturing. Luxury brands, personal care, fashion and cosmetics are laggards. They have yet to spend heavily in digital.

SAI: What about video advertising? Some have predicted a big year as more professionally-created content comes online.
Fremont: Premium content that marketers want to be associated with will get a higher CPM. But I believe something like 70% of streaming video inventory is still unsold. A large part of that is in the long tail and not all [advertisers] have completely embraced video.

SAI: Who wins when TV dollars shift online?
Fremont: The vast majority of impressions are with the portals and the ad networks. They will get the lion's share. Because of advances in behavioral targeting, they've moved way from a content strategy to just capturing as much audience share as possible. The portals' greatest asset is audience accumulation and their biggest threat is not creating the stickiness.

SAI: What happens then to online CPMs?
Fremont: I see them flat or in some cases down. What is happening is there is a glut of impressions on the market. I believe what's going to happen is there will be more inventory flooding the market as a growing number of publishers move away from the the subscriber model to an ad-supported model. You are going to see much more inventory on the market.

SAI: If there is a glut of inventory, is there a need for online publishers to hold TV-style 'upfronts?'
Fremont: For certain key sectors for whom inventory is important, yes. Like pharmaceuticals, automotive, telcos; the sectors that are spending a lot and need to reach certain audiences. That said, behavioral targeting is negating the impact of reaching people within affinity content. I can reach a car buyer other places than Yahoo autos.

SAI: What will be the impact of the writers strike on TV advertising?
Fremont: It will depend on when the studios come back and what they come back with. It's interesting that consumers aren't feeling they are missing out--there are many other venues to go to for entertainment.

SAI: What would you do if you were in the TV networks' position?
Fremont: What would have been an interesting strategy is if the broadcast networks had some original content in the can that they could 'air' online, and then cross-sell the properties when they come back on the air. That way, they wouldn't be losing mind share for their brands.