Publishers To Have Tough Time On Online Ad Revs With Increasing Fragmentation: AvenueA

Avenue A/Razorfish, the online ad agency which is part of aQuantive, which is now part of Microsoft (NSDQ: MSFT), has come out with its annual report on the state of the digital advertising, and bursts the bubble, sort of, on mobile advertising, social media and Web video, and calling them as “not ready for prime-time,” “a work in progress” and “a ways away” from standardization, respectively. At least that what Jeff Lanctot, SVP at Avenue A, told Reuters.

With the recession and its looking effect on the online ad industry, current trends will make it difficult for major Web publishers to increase ad revenue in 2008, as marketers divide their budgets across more sites, the report said. The agency spent client money on more than 1,800 sites in 2007, compared with 863 the previous year, and handled $735 million in ad budgets in 2007, up 36 percent.

The money share spent on big Web portals dropped from 24 percent in 2006 to 19 percent, while search share rose to 31 percent from 28 percent, vertical sites rose to 39 percent from 37 percent, and spending on ad networks was flat at 11 percent, reports

Vertical content properties were the great beneficiaries of much of the wealth. In addition to share shifts, there was great pricing-growth disparity between verticals, up an average of 30 percent, and portals, whose CPMs grew only 7 percent. The average CPM increase across all online media was 20 percent, reports AdAge. The report can be downloaded here.