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Personally, I think the future of online advertising – beyond the AdWord/AdSense buyer with intent model – will involve the old school method of clever product placement. The "editorial" won't be about the product, but the product will still exist within the editorial. The future of modern online advertising will rest in the hands of streamlining the process of integrating product placement with high quality content. In my mind, it won't be much different than what movies and print publishers do today. It's just that nobody, except for a few players, have truly created a brokered process that can be easily integrated with mainstream advertisers and generalized publishers (niche blogs, etc...).
so what is it going to be like in the near future?
something like a magazine, which i buy for the ideas, and have the choice about paying attention to the ads, if there is visual beauty i had a nice moment, probably don't remember the product, and didn't even look at the ones that didn't catch my eye (didn't even need to look to know there was nothing there for me, but that is a separate (and mystical) subject)
as individuals become "empowered" we are more and more in charge of our experience, and ads have to fit into that possibility. if you interrupt me, i will hate you, in short. would happily physically beat many advertisers and spammers if i met them at a party, no questions ask, just whack! we could talk about why later, but the short answer is your greed steals my time. you are not good for the human race.
you have to give me something, be on my side, try to uplift my life, and then, just like a friend, i will give you lots of time
in short, it is NOT the technology that needs to be tweaked ... it is simply your MOTIVATION!!
so simple
1) Flaw in logic: All advertising doesn't really work. I mean traditional advertising "works" but not to the degree that most marketers thing -- and definitely not as quickly as we want to believe. But agencies and CMOs have staked careers on the fact that the millions in TV & Print is "working" without any good way to measure success. So it is not that traditional tactics don't work online, it is that they really aren't that effective to begin with.
2) Fact that gets in the way: Traditional tactics work online, when properly targeted, typically better than offline -- but scale is typically the issue. Pre-roll has better recall than TV. I have had lowly banner campaigns that actually drive better ROI when measured to off line sales than TV.
3) Real problem with digital rates: Most marketers are looking at very near term metrics (Clicks, sales on site, a registration, a site action) vs. longer term brand impact or, gasp, off line sales. Why? Cuz most industries haven't figured out how to measure it yet. Digital is trapped in a near-term world (hence Google, being as near-term as they come, is king) and hasn't made the long-term value value proposition clear to advertisers. TV and Print have spent years "proving" that -- the digital space needs to do the same.
If direct marketers spent over 80% of TV and Print dollars you can bet rates would be lower in those media too. The industry has chased the easy money and is paying for it in lower rates.
we will never get to a point where online advertising adds "value" to us. If it did, it wouldn't be advertising anymore. As Dave Winer says, "Perfectly targeted advertising is just information."
Non-direct response, display ads fail online because they rely on interruption, and this medium is resistant to that.
What works? Online ads that hold your attention and are as well designed as what we are used to seeing in magazines and on tv. Companies spend 6 figures to create a slick magazine ad, and millions to create a great tv spot, but then let the graphic design intern make web banners for their online campaign, and wonder why it's not compelling.
Expect to see more investment in casual games and fun apps that are created by advertisers themselves.
Advertisers want to occupy the places people are, and with volume comes the problem of free-riding, which online translates as low CPMs.
The reverse is exactly what you say: "Some sites can get $50-100 CPMs on some pages from certain advertisers..."
That is the business to be in.
Hashim says: if advertising added value it wouldn't be advertising anymore. Is that not perhaps the answer? Should there be advertising? Should it not be content which attracts views because of the value it has for the reader?
From my LinkedIn Answer (1/6/07):
I dropped my subscription to the NYT print daily not long ago (but kept the Sunday sub -- which gives me free access to TimesSelect). Now I find I don't even look at the website much anymore, which is a mess and cluttered with distractions. One Sunday, I was reading a food piece in the print edition of the Magazine. When I went online to find it a day or two later, I noticed that the only hyperlink in the piece was to Al Gore (don't ask what he was doing in a piece on leeks!). The link took you to NYT news articles on Gore. Really dumb. So here's my proposal: How about letting advertisers buy relevant text links in the articles (integrate with Google AdWords?). If the article is about scallions, let Gourmet Garage sponsor that link. And signal to the user that it's an ad link by using a different color (green, maybe) or a double underline like Vibrant Media uses. I know the editorial side will scream bloody murder - just like they did about the very profitable advertorials I produced for years at New York Magazine. So let's not use the "ad links" in the hardest news stories about war and famine. That leaves, like, 75% of the lighter content - including auto, fashion, travel... big money ad categories. We maintain the same ad/edit wall that exists in print (where even The New Yorker runs advertorials). We tell the reporters: "Ignore the ads; just keep doing the great impartial journalism you've been doing. We'll take care of the business." How about it?
"We have to figure our how to monetize [the Web] so that we're not trading analog dollars for digital pennies."
Good luck with that.....
Also, I think the ad clutter on many sites drives their effectiveness down. Not to mention the impact of the site itself.
analogous to putting a space ad in the Yellow Pages (offline).
It's great if someone is searching for something in that particular field.
Well, it depends on where you set your goalposts here. One could make the same argument that speed limit signs fail as well.
I recall your July 2007 piece on what you called the 10% problem, wherein NYTimes.com has 10x the readership of the print paper, while bringing in 10% of the revnues. (In addition, I calculated, the print subscribers are paying a third of the cost of the paper, while the online subscribers are backing to paying nothing.)
Joshua Jeffryes, in the comment to your piece, pointed out:
"When I worked in Advertising the ineffectiveness of advertising was hardly a secret. But customers couldn’t measure the effectiveness of ads. So they paid and continue to pay ridiculous prices for them. Online ads, on the other hand, are measurable. They work just as well, if not better, than print, television, etc., the difference is that for the first time ad customers know exactly how ineffective they are."
Also, re: this comment: "Research by Jakob Nielsen puts this into sharp relief..."
Not necessarily. You didn't link to research by Jakob Nielsen. You linked to an article which mentions the report, without-- ahh! linking to it. (So much for linked journalism). I'd buy the report to try and understand his point here, but I don't know which one.
As ever, you're straying into the woods when you talk about advertising effectiveness. People have built entire careers trying to parse the efficacy of ad spends -- it's subtle. In your zeal to discount "traditional" methods of advertising (and would that be branding or direct?), you've only raised the specter that the Web 2.0 ad-driven ecosystem may be a house of cards built on air. I'm not sure that was your intention.
For years advertisers have been moving dollars into media forms that allow better tracking of behavior, first with telephones now with cookies -- the web is not unique, just more efficient. But advertisers (and consumers) don't live by conversions alone, there will always be a need for messaging that doesn't provide (obvious... to you) "value".
Re: Google, they succeed because they're a monopoly. In fact, we have no idea how well those ads "work" for advertisers. And as for the failure of "traditional" ad forms on the web, it may be too soon to announce that. Hulu seems to be doing well...
first, is a display ad (e.g. image mrec) delivered by adsense and contextually targeted to the content of a page considered "traditional" ? would u consider that a failed model?
second, if spam is successful based on an ROI argument, why shouldn't the same argument apply to traditional ad units? i.e. shouldn't we be looking at ROI or engagement, not price?
i'd bet the price of traditional web units are being mostly dictated by the demand/supply disparity, not their inherent value...
As others have suggested, the definition of "advertisement" needs to change. In the online space, information and advertising converge. Take Amazon: before they brought bookselling online you simply couldn't get hold of the millions of backlist titles that they've subsequently made available. A simple listing becomes the first step in advertising the existence of a book that we never even knew existed: any value added to that listing helps shift that item (becomes advertising copy)...
The implications are far greater than advertising that simply does not work. When advertising makes your customers hate you, it denigrates your brand. Advertising can damage your reputation. That's a liability.
Max
Great post. I've been shouting this for years.
I know the answer to the next online advertising trend.. it's somewhere buried in Furrier.org :-)
Short answer: Content is the Ad!
Problem/Opportunity: it's not the content people who will dominate - it's an infrastructure trend (like search that enabled adwords and adsense); Only a small few are tracking this.
keep these posts rolling
This is one of the reasons why I am so passionate about Spot Us. I'm not saying Spot Us is a silver bullet - but it is an honest attempt to explore low hanging fruit that is an alternative to advertising: Community Funding.
Similar to the satanic product placement in movies, blog writers can influence, but it has to be honest and sincere or it doesn't work. And, it can't be overstated.
That's my useless advertising idea for today.
if you interrupt me, i will hate you
Show me a company that finds value in spending millions on a 30 second Super Bowl ad and I bet you'll notice their name is "ABC," "NBC," "CBS" or "FOX."
Perhaps when we perfect targeting, we'll be able to serve ads that *are* relevant not only to a person's demographic and interests, but to the person's "mission."
More on lackluster social networking performance:
"News Corp: Selling ads for MySpace is hard work!" - Silicon Alley Insider
http://www.alleyinsider.com/2008/5/news_corp_do...
It would have been great if you had commented on the online ads as a medium for building brands as Chris has pointed out.
Looking for a followup post on this topic.
Cmon man, you write such a great article but blow it by saying the "Big G" is the only ones in web advertising that have it right.
We need to invent new forms of advertising on the web."
B.S.!!!!!!!!!!!!!!!!!!!!!
Advertising worked with mass-media because we had no choice but to see it/watch it/listen to it. Now we don't, and I never will again! I feel pitched and it's an insult. What? I still need someone telling me how great their product is? No! I've got 6billion people out there whose real-world opinion of any product is worth a ton more than the slanted view of the manufacturers overpaid marketing department. I couldn't care less what the manufacturer says...of course, he's going to tell me how great his widget is, I expect that.
Manufacturers! Get rid of the ads. Save your money and improve your product so the 6billion who are commenting on it will describe it's quality and not how your ad misled them into buying some junk that didn't work out for them.