Running Out of Online Advertising Inventory?

There is an interesting article released by McKinsey and Company looking at the growth in advertising spending on the Internet and the potential challenge of limited inventory.  The study has sparked several articles including one in AdWeek worht the three minutes of time.  

The Ad Week article  does a nice job of highlighting a few data points and the fear of CMOs to move online because of the lack of metrics for impact:

“McKinsey polled 410 marketing executives in five sectors, and among those already advertising online, 52 percent said “insufficient metrics to measure impact” was the biggest barrier, followed by insufficient in-house capabilities (41 percent), the difficulty of convincing management (33 percent), limited reach of digital tools (24 percent) and insufficient capabilities at agency (18 percent).”


Many of the articles sparked by this research highlight the double digit growth of on-line spending, even as overall marketing expenditures are expected to decline in 2008 or increase very slightly.  The report also highlights the growing influence of the digital space in the new product discovery and purchase decision process.

Regardless of the mode, clients and agencies are all scrambling to keep pace with consumers whose desire to live and shop online is growing. By 2010, McKinsey’s survey respondents expect a majority of their customers to discover new products or services online and a third to purchase goods there.

What is most interesting is how these discussions still focus on the advertising online as if it was a product just like traditional broadcast advertising.  It isn’t, and it is this limited understanding that will continue to cause supply demand swings.  However the heard mentality is certainly not a new concept in any area of business.

Yes better tracking and analysis tools need to be developed but traditional advertising models can not simply be extended to the web 2.0 world.  Marketing will continue to develop into a mutli-channel, multi-platform approach that will be dynamic and constantly changing – not hard to appreciate the CMOs apprehension, but finding the new balance in communications is a process, it will take time, money, and the solutions will be developed by diverse teams that look nothing like today’s main-stream advertising agencies.  This turmoil and change presents new opportunities for those who assemble and manage the pieces correctly and new found pain for those who fall behind.

And for the idea of running out of advertising inventory online?  No, there will be plenty – just not much you would want to buy, or could afford to buy.  The real value will come from those who understand the tools of the Internet and can think strategically about how to communicate the brand – an uncommon pairing in today’s marketing and advertising landscape.


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