Q4 Not Looking So Merry for Some Display Ad Sellers

Despite recent reports that the market size for digital advertising has approached that of television, for some online publishers going door to door pitching banner ads the mood appears somewhat downbeat.

Based on my unscientific but detailed conversations with a range of publishers it seems that human-based banner sales may end up flat or even down compared to the same period last year. This is a surprising development given that many selling teams had a good Q1/Q2 and a decent, if not spectacular, Q3. There seem to be a number of factors at work depressing Q4 numbers, including:

Rise of the machines. In contrast to the human-based sellers, the automated buying platforms and agency trading desks are doing very well. In some cases the revenue from these platforms is up 100% year over year. The CPMs in these systems are also up. The relentless investment in ad tech over the past few years appears to be paying off and taking a sizable bite out of human-based ad sales teams.

More inventory. Perversely, the fewer premium banners that human-based teams can sell means that there is more prime real estate available through the automated buying platforms. If you can buy the same inventory through the platforms at lower cost why wouldn’t you? For sales reps it’s a vicious circle.

Some marketers are sitting out Q4. Marketers that don’t have to buy inventory in Q4 appear to be holding back spending this quarter. Their logic seems to be “Why compete for inventory in Q4 if we can just wait until Q1 when prices for media will presumably be lower?” The automated buying systems have made the banner market more liquid and thus there is less of a need to secure inventory months in advance through human-based sellers. Of course, concerns about the U.S. economy and European debt crisis may also be playing a role here.

Mobile is the shiny new toy. For years people have said that mobile is the “next big thing” but this year it finally seems to be the case. The premium, clutter-free mobile environments available through platforms like Apple’s iAd can make standard banner ads look dowdy by comparison.

Social, social, social. It may be a fad or it may forever change the way humans communicate. Either way, senior marketers at conferences this year have focused almost entirely on how they are building reach and relationships through social media. With marketing budgets finite, Facebook and other networks have likely impacted ad spend, including banner ads.

My conversations have included only a small percentage of the total universe of digital media sales professionals and obviously its only October. Things can change and hopefully there are a bunch of publisher sales teams out there that will absolutely kill it this quarter. But it appears that something important is happening right now in digital selling.