For the past few months, AOL (NYSE: AOL), Yahoo (NSDQ: YHOO) and YouTube (NSDQ: GOOG) have turned to huge takeover ads as a way to attract premium brand dollars as the display market has picked up markedly over last year. Takeover ads or splash pages come in various formats, but most tend to serve as a way to show premium rich media ads. Macquarie analyst Ben Schachter took a look at which sites are using takeovers during the first half of this quarter and found that most are adopted homepage takeovers as part of their display ad strategy.
The one laggard, however, is MSN, which had the lowest amount of takeovers and rich media ads among its chief rivals, suggesting Microsoft (NSDQ: MSFT) might be having some difficulty selling out its homepage inventory, Schachter found in his study.
When it comes to online brand advertising, size does matter if you’re talking about the potential to drive up premium ad prices, and most media sites have been ramping up their use of huge takeover ads over the past few months. The promise of larger ads, which have been promoted heavily by the Online Publishers Association over the past year, is that it will attract more creativity and place for rich media ads. After all, the static banner ad is the bane of premium publishers, as the format is best used for cheaper, direct response “click here now” types of advertising.
The report doesn’t directly say that the bigger ad units have been driving more revenue, but it’s pretty safe to assume that if companies are able to drive up CPMs, address issues of clutter and reduce their reliance on low performing remnant ads, they should be able to better capitalize on the display ad recovery that is expected to continue into next year.
Oversized/custom ad units accounted for 44 percent of all homepage ad units across Yahoo, AOL, YouTube and MSN during the first half Q4. Just looking at the three portals, takeovers accounted for 26 percent of all homepage ads across the portals up from 18 percent during Q3.
Aggressive adopters: Takeovers made up 23 percent of daily homepage inventory for Yahoo, which has seen its display revenues rise 17 percent in Q3. AOL, which is still getting ready to rollout its Project Devil takeover program, nevertheless had the highest percentage of takeovers with 36 percent of its ads using that format. Along with the residual effects of the ad recovery, AOL used these premium placements to arrest its display declines in the past quarter. The company has attributed those declines to the continuing restructuring of its ad sales and ad placements, and CEO Tim Armstrong has said that that business should rebound before the middle of next year.
Media are main advertisers: Given how much media companies are depending on takeover ads to build up their ad revenues, it’s not too surprising that firms in that space are the most aggressive in using those placements to promote their businesses. Media companies made up 23 percent of the takeover ads placed on the four properties Macquarie looked at. For example, Yahoo struck a pretty big ad deal during Q3 with CBS (NYSE: CBS), which used the takeover format to promote its fall season. Next in line were automotives, which were just under 20 percent, followed by financial services firms at around 12 percent. Health and pharma, retail and telecoms hovered around the 10 percent range. Consumer packaged goods and insurance comprised barely 2 percent of the marketers using takeovers.
All about branding: Much to publishers’ delight, branding was the most popular reason marketers used the takeover ads, though direct response has found a way to use the larger formats as well. Brand ads accounted for 57 percent of takeovers, while 28 percent were devoted to direct response. About 45 percent of the takeover ads presented by MSN were used by direct response. About 15 percent of takeovers were represented by what Macquarie identified as hybrids of both marketing plays.
YouTube is canvas for media: About 55 percent of the homepage ads on YouTube that Macquarie counted came from media companies. All the big names did takeovers, including Time Warner (NYSE: TWX), News Corp. (NSDQ: NWS), NBC Universal (NYSE: GE), as did smaller ones such as Lionsgate (NYSE: LGF). Video game publishers including Activision (NSDQ: ATVI), Electronic Arts (NSDQ: ERTS) and Ubisoft bought homepage inventory in the past two months.
Update: Jennifer Creegan, senior director display media for Microsoft Advertising, responded to Macquarie’s report, saying: “These reports can often be subjective with different factors to be considered. We’re following up with the analyst to better understand their methodology and how they classify what makes up a rich media ad, what the sizing criteria is, etc. From our standpoint, we’ve seen significant growth. With 450 million unique visitors a month, we’re a leading portal and are tracking aggressively in our rich media campaign sales for the quarter. This is shaping up to be a great holiday season for us and our advertisers.”