Editor’s note: The following is a guest post by Eric Clemons, Professor of Operations and Information Management at The Wharton School of the University of Pennsylvania. In it, he argues that the Internet shatters all forms of advertising. “The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed,” he writes. The views he expresses are his own, and we present them here to foster debate. (Obviously, we hope there is a place for advertising on the Internet since it pays our bills). Update This post has obviously touched a nerve. Clemons responds to his critics below at the bottom of the post.
- 1. There Must Be Something Other Than Advertising:
The expected drop in internet advertising revenues this year was neither unpredictable nor unpredicted, nor was it caused solely by the general recession and the decline in retail sales. Internet advertising will rapidly lose its value and its impact, for reasons that can easily be understood. Traditional advertising simply cannot be carried over to the internet, replacing full-page ads on the back of The New York Times or 30-second spots on the Super Bowl broadcast with pop-ups, banners, click-throughs on side bars. This might be a subject where considerable disagreement is possible, if indeed, pushed ads were still working in traditional media. Mostly they have failed. One newspaper after another is going out of business across the United States, and the ad revenues of traditional print media, even of highly respected magazines, is declining. The ultimate failure of broadcast media advertising is likewise becoming clear.
Pushing a message at a potential customer when it has not been requested and when the consumer is in the midst of something else on the net, will fail as a major revenue source for most internet sites. This is particularly true when the consumer knows that the sponsor of the ad has paid to have this information, which was verified by no one, thrust at him. The net will find monetization models and these will be different from the advertising models used by mass media, just as the models used by mass media were different from the monetization models of theater and sporting events before them. Indeed, there has to be some way to create websites that do other than provide free access to content, some of it proprietary, some of it licensed, and some of it stolen, and funded by advertising.
The idea that content has a price and net applications should find ways to earn a profit without providing free access to other people’s content gets explosive reactions; when virtual reality pioneer and tech guru Jaron Lanier suggested in a New York Times Op Ed that authors deserved to be paid for their content he actually received death threats. But other models are possible and several suggestions for alternative forms of monetization are offered below.
- 2. Advertising will fail:
The internet is the most liberating of all mass media developed to date. It is participatory, like swapping stories around a campfire or attending a renaissance fair. It is not meant solely to push content, in one direction, to a captive audience, the way movies or traditional network television did. It provides the greatest array of entertainment and information, on any subject, with any degree of formality, on demand. And it is the best and the most trusted source of commercial product information on cost, selection, availability, and suitability, using community content, professional reviews and peer reviews.
My basic premise is that the internet is not replacing advertising but shattering it, and all the king’s horses, all the king’s men, and all the creative talent of Madison Avenue cannot put it together again. To analyze this statement we need a working definition of advertising, and I proposed the following, which is as general as I could make it:
Advertising is using sponsored commercial messages to build a brand and paying to locate these messages where they will be observed by potential customers performing other activities; these messages describe a product or service, its price or fundamental attributes, where it can be found, its explicit advantages, or the implicit benefits from its use.
It is frequently argued that the advertising industry will provide sufficient innovation to replace the loss of traditional ads on traditional mass media. Again, my basic premise rejects this, suggesting that simple commercial messages, pushed through whatever medium, in order to reach a potential customer who is in the middle of doing something else, will fail. It’s not that we no longer need information to initiate or to complete a transaction; rather, we will no longer need advertising to obtain that information. We will see the information we want, when we want it, from sources that we trust more than paid advertising. We will find out what we need to know, when we want to make a commercial transaction of any kind. The conventional wisdom is that this is exactly what paid search helps us to do, but all too often they are nothing more than a form of misdirection, as I explain further below. Instead, we will use information that we trust, obtained at the time that we want to see it.
Better targeting of ads using individual interests and individual behaviors will ensure that we do not bore or annoy as many people with each ad, but cannot address the trust issue. As for paid search, it is closer to other mechanisms that allow a website to sell access to potential customers. It works effectively as a revenue source for Google, of course. But it surely is not replicable for the average content website.
- 3. Advertising will fail for three reasons:
There are three problems with advertising in any form, whether broadcast or online:
- Consumers do not trust advertising. Dan Ariely has demonstrated that messages attributed to a commercial source have much lower credibility and much lower impact on the perception of product quality than the same message attributed to a rating service. Forrester Research has completed studies that show that advertising and company sponsored blogs are the least-trusted source of information on products and services, while recommendations from friends and online reviews from customers are the highest.
- Consumers do not want to view advertising. Think of watching network TV news and remember that the commercials on all the major networks are as closely synchronized as possible. Why? If network executives believed we all wanted to see the ads they would be staggered, so that users could channel surf to view the ads; ads are synchronized so that users cannot channel surf to avoid the ads.
- And mostly consumers do not need advertising. My own research suggests that consumers behave as if they get much of their information about product offerings from the internet, through independent professional rating sites like dpreview.com or community content rating services like Ratebeer.com or TripAdvisor
Yes, both network executives and their ad agencies have noted that we are not watching traditional ads, and they attribute this to the fact that we have moved beyond newspapers, televised network news, and broadcast movies, to video games, iPods, and the internet. Porting ads to a new medium will not solve the three problems noted above. The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed.
- 4. Alternative models for monetization are available:
Again, my research suggests that there are three general categories for creating value that can be monetized, including selling real things, selling virtual things, and selling access. Some websites exist solely to sell real things. Many of the best-known perform aggregation of demand, so that there will be enough customers to justify stocking and selling items for which there is only limited demand. Amazon is merely the best-known example. Sites like Amazon and Zappos are especially good for long tail items … where else do you go for a copy of the Green Sea of Heaven, Elizabeth T. Gray’s magnificent translation of the Ghazals of Hafiz, or for a pair of size 20 basketball shoes? Selling real things online has been studied since the advent of interest in eCommerce and will not be discussed further here. Other websites sell virtual things. These activities fall into three categories:
- Selling content and information, from digital music to news and information. Some of these sites are funded by subscriptions, like Gartner Research; some are by direct micropayments for purchases, like iTunes; and some currently attempt to fund themselves through advertising, like Business Week or The New York Times, while still searching for a more effective business model.
- Selling experience and participation in a virtual community, including Second Life and World of Warcraft, Facebook and MySpace, Flickr and YouTube, or LinkedIn. Not all of these have found a way to charge for participation.
- Selling accessories for virtual communities, like completed homes and stores, furnishings, clothing, and pets in Second Life or characters and accessories that would be difficult to earn in World of Warcraft, although this behavior is generally despised by serious World of Warcraft players.
Finally, some websites create and sell access to customers. Again, this can be divided into multiple categories.
- Misdirection, or sending customers to web locations other than the ones for which they are searching. This is Google’s business model. Monetization of misdirection frequently takes the form of charging companies for keywords and threatening to divert their customers to a competitor if they fail to pay adequately for keywords that the customer is likely to use in searches for the companies’ products; that is, misdirection works best when it is threatened rather than actually imposed, and when companies actually do pay the fees demanded for their keywords. Misdirection most frequently takes the form of diverting customers to companies that they do not wish to find, simply because the customer’s preferred company underbid. Misdirection also includes misinformation, such as telling a customer that a hotel is sold out when, indeed it is still available, if the hotel has chosen not to pay a promotional fee, and then allowing the guest to choose an alternative property. Misdirection is, regrettably, still a popular business model on the net, although for reasons I explored in an earlier TechCrunch post on Google it seems ultimately to be unsustainable. More significantly from the perspective of this post, it is not scalable; it is not possible for every website to earn its revenue from sponsored search and ultimately at least some of them will need to find an alternative revenue model.
- Evaluation, assessment, and validation. The opposite of sending a customer someplace other than where he wants is providing the customer enough information for him to make an informed choice on his own. Recommendations on TripAdvisor.com allow potential guests to evaluate and validate recommendations provided by Hotels.com; not surprisingly, Hotels.com originally owned TripAdvisor, and benefited greatly from it. Since Hotels.com did not attempt to influence or censor TripAdvisor content the website was (and is) trusted and helped put recommendations from Hotels.com at a level of trust comparable to those from an experienced travel agent. There are at present only a few other examples of website symbiosis like this, where community content on one site adds considerable value for another; consider also the relationship between the Beeryard’s list of new beers and Ratebeer.com, where clicking on the name of a newly arrived beer at the Beeryard will allow you to examine reviews on Ratebeer.com.
- Social search. Social search is a way of tailoring search based on the user’s network of friends. Rather than searching for any hotel in Chicago, or for any hotel that paid for the keywords “hotel” and “Chicago” I would like to be able to ask for the hotel where my friends stay when they are in Chicago. This invades no one’s privacy, avoids the annoyance of pushing ads at me when I am not searching for something to buy, and provides more relevant results than paid search usually can deliver. There are many problems with this, including the fact that my friends may not be on Facebook or other networks yet and those that are may not post their hotel or automobile or restaurant preferences. Most seriously, while it is clear how Microsoft might benefit from this, using its Facebook connection to undercut Google sponsored search, it is not clear how Microsoft or any other firm could monetize this directly.
- Contextual mobile ads. At present contextual mobile ads delivered by SMS appear to offer much promise. Imagine a hypothetical all-knowing information-based firm that (i) knows your location because you have registered to have the information from your in-phone GPS shared with your friends and (ii) knows that you like Thai restaurants because it monitors the content of your email and your online restaurant searches and (iii) knows that you are hungry because you just said so in a text message or Twitter post you sent from your phone. What a great time for them to text you an advertisement for a nearby Thai restaurant, sent directly to your phone. But why would you trust this? I remember when Hotels.com used to refer me to the same hotel, albeit at different prices, when I asked for a two-star or three-star hotel close to my office; I was never sure which was more amusing, the 80% price increase for the same hotel when I was willing to splurge on a three-star for my visitor, or the fact that there were comparable hotels 20 blocks closer to my office. I suspect that my hypothetical all-knowing firm will similarly be providing sponsored content; perhaps I will take a couple of additional seconds in order to find the restaurant I really want. This probably does not work as a form of advertising.
Of course no one knows yet, but if I had to guess, based on my meatspace experience, I would offer the following guesses for successfully monetizing the net in the future:
- Selling Virtual Things: People will pay for superior, timely, original content and for superior online experiences. Presently I willingly pay for the Financial Times, The Economist, and Foreign Affairs, I value the content, and, indeed, I feel I need it; I will continue to pay for them online. Perhaps I would not be willing to pay for archive material, which I expect that I would be able to find elsewhere, but I will cheerfully pay for the newest content online. Similarly, I willingly pay the cover change for my favorite jazz clubs in New York, and expect that I would cheerfully pay to participate in Second Life or World of Warcraft if, indeed, I had any interest in those virtual experiences. I guess, ultimately, if we compete for status through our purchases of accessories, clothes and homes in meatspace we will probably continue to purchase virtual accessories in Second Life, though I can’t say I fully understand this yet.
- Selling Access. Misdirection will fail totally and completely. I use a Mac, but I have abandoned Safari for Firefox. I have an iPhone and an iPod but I have never used the little white earbuds, preferring instead to purchase a pair of Shure E500 phones that I think sound vastly superior. Similarly, I would be equally happy to purchase a search service that worked for me, rather than accept a free one that works both against me and against the firms I patronize. In contrast, while people will continue to value community content and social search, these will be difficult to monetize. Finally, contextual mobile ads will, likewise be difficult to monetize. With information easily available, I will make my own restaurant choices, irrespective of those pushed at me via SMS, especially when I know that those pushed at me have been pushed for a fee, rather than based on an impartial assessment of my preferences. Yes, I can imagine SMS ads initially succeeding if they provide discounts, but ultimately this leads to little more than a bidding war for traffic and benefits no one other than the firm that provides the text messaging services. I can think of a few commercial SMS services that will benefit everyone, such as letting the most loyal guests of a restaurant know when it is still possible to get a reservation if they act immediately, eliminating the inefficiency of empty tables, but the restaurant will do this itself, using its email or cell phone contact lists. I don’t see this as advertising, or as being monetized by any intermediary. Of course, in an age before texting and email restaurants would have welcomed the all-knowing intermediary as the only mechanism available for communicating quickly with its most loyal customers. Now, restaurants have lists of their most loyal customers and can send out real time messages of interest. If the Blue Note were to text me on some night that I am in New York that it is still possible to get a table for two for Clark Terry, or Tria were to text me on a day when I was in Philadelphia that, surprisingly, there was no wait for an outdoor table right now, I’m sure I would respond to both. Of course there is no intermediary for this interaction, and this is more like direct communication than paid advertising.
The internet is about freedom, and I suspect that a truly free population will not be held captive and forced to watch ads. We always knew that freedom comes at a price; perhaps the price of internet freedom and the failure of ads will be paying a fair price for the content and the experience and the recommendations that we value.
(Photo by nickyfern).
Update: Response to comments
OK, guys. It’s time to calm down. I did not insult you, your families, your religions, or your rottweilers.
I may have presented a message you did not want to hear. Let me summarize it again, for those of you who appear to have commented on it without reading it:
If you disagree with me, it would be helpful to think about the basic premises of the article and to refute them:
- People don’t trust ads. There is a vast literature to support this. Is it all wrong?
- People don’t want ads. Again, there is a vast literature to support this. Think about your own behavior, you own channel surfing and fast forwarding and the timing of when you leave the TV to get a snack. Is it during the content or the commercials?
- People don’t need ads. There is a vast amount of trusted content on the net. Again, there is literature on this. But think about how you form your opinion of a product, from online ads or online reviews?
- There is no shortage of places to put ads. Competition among them will be brutal. Prices will be driven lower and lower, for everyone but Google.
Or you can continue to laugh, or to attack. That does not constitute a response, and it does not help you plan for the future. But a few parting thoughts may help you construct stronger attacks.
- People whose experience is different from yours may still have experience. People whose industry contacts are different from yours may still have industry contacts.
- I’ve been attacked and ridiculed before. I warned the floor traders in New York about the coming of online trading back in 1989 and was fired for it. I warned traditional people-based travel agents about dropping commissions and their eventual bypass through online booking systems and was ridiculed. I warned early investors in online grocery that it would not truly succeed as a mass-market offering for at least a decade and was ridiculed again. I warned investors in specific early online business-to-business exchanges, like Covisint, that sellers would not participate. All of these ridiculed me more politely. But most of them still cannot afford to buy me dinner now.
- And even if you continue ridicule my piece, there are too many other professionals noticing the same thing. Consider the recent article in the Economist on essentially the same thing: advertising cannot fully support the net. You cannot ridicule everything you do not like off the net.
So … those of you with commercial interests in online advertising … you can laugh at me. You can attack me. Or you can think about how you can protect yourselves and your companies against the changes that are going to come.
I look forward to continued informed debate.
This is the looong version of: no one has money to spend, so the cleverness of the advertising doesn’t matter. The age where traditional banner and text ads sell things is slowly ending.
Some people are seeing drop in their advertising sales but some are not having much effect..I have seen increase in my advertising sales
http://www.smartbloggerz.com
I think the analysis is a bit simpler.
Ultimately someone pays the bills.
Up to now and for most online, non e-commerce sites, that someone has been the advertiser.
As the economy tanks, these advertisers no longer exist or have much less to spend.
Supply of advertising goes down = amount of dollars available for publishing sites goes down.
So the thesis on the death of advertising is probably premature … I am sure when the economy picks up again, advertising will pick up again.
That said, the professor is right that online properties definitiely need to dversify away from advertising. Take China’s Tencent for example … you may not have heard of it, but they just did $1 billion of revenue, of which only a small minority has been advertising.
I would submit that Internet advertising is “failing” because every website that uses AdSense or Doubleclick provides the same affiliate advertisement that the next website does. The trend in Internet advertising will move away from affiliate/ad networks, and move toward direct sales/local advertising.
Advertising means so many things, like writing names of websites and companies in your well-informed post on TechCrunch…
The best ad is a hidden or partially hidden ad, like all the comments you’re getting who actually just want someone to click their name to visit their website
Great to take notice of google’s misdirection. All newbie net users i see click google’s sponsored link. The author has courage to take on “innocent” google.
You just did some GREAT advertising yourself.
I have an iPhone and an iPod but I have never used the little white earbuds, preferring instead to purchase a pair of Shure E500 phones that I think sound vastly superior.
Did you get a fee for that AD placement? Make and Model in a investigative post, with authority, the other headphones suck.
To bad we can’t check amazon to see how many addional searches were done on Shure E500. Mike might be able to get that info as important as he is in the valley, I am sure he can.
Internet was and will be run by ads. But a correction in prices was needed, thats all. Interactive display ads is what i expect in future.
The tips (Green Sea of Heaven) were great, yes. In fact I bought the book on the spot (yes, via Amazon, bless them!), though I’ve passed on the basketball shoes. But the point of the article is that it wasn’t advertising. It was information from a source that appears trustworthy, since no ulterior motive for the recommendation is visible. So I trust it and act on it in buying something. Tony appears not to trust it, so for him, perhaps, it is advertising.
@fiarflow
The author of the article, I thought was trying to say that too many people push AD’s, and my point is/was, he did just that?
Didn’t he?
His way was worse then being “hijacked” by google or others since we do not know if he was paid or not.
Think payperpost, how do you know if he did or did NOT get something like that?
Yes, my angle is a reach, I am just trying to prove a point, that advertising is GREAT on the internet, mostly trackable and results are almost instant.
Completely agree that product references/contextual recommendations are great contextual recommendations (”advertising”) but it is not a scalable nor sustainable biz model. Advertising = Big Fail moving forward.
This is the hidden message here. The author has been advertising like crazy throughout his post. If he had done all that for free, too bad for him.
totally agree with write , if you see increase in advertise on your blog…good for you we are talking about general here
True
It really depends on what you are advertising. We have lowered our Adsense budget ourselves since our products — diamonds is not really a need but more like a want. But for basic necessities, advertising is still a must to keep the brand in tact inside people’s minds.
Yo !!! 442 comments? I WANT MINE ON TOP !!!!!!!!!!
Yeah 1 you are right bro if you can put your advertisers in innovative manner on your webpage then you can remain unaffected ! Take a look at my site for eg i found drastic improvement in these days !
People still want to buy things and spend money they just wont be sold to. Advertising on the internet is about engaging your audience building trust and relationships and offering value way before you stick a product or link in their face. When they eventually air their problem you offer a solution. There are many ways of finding people with a problem in your business niche, then all you have to do is know how to introduce yourself and your solution without spamming.
You seem to be the kind of person who likes to hear themselves talk. I say this because you could have gotten your point across just as effectively by using less than a quarter of the words you used.
The post is way too long. Trim it for more effectiveness.
To you and the person above who called this “looong”, this is 20 paragraphs, around the size of a typical NY Times article, a few factors less than a feature. If this is too long for you to keep up with, then you need to invest in some ritalin.
As for you in particular, you might want to look in the mirror when you’re accusing others of using too many words to state their point. You could have gotten yours across by eliminating all but the last sentence.
In my opinion he could have elaborated a bit more on the virtual bit, describing the more fully the reasons why that seems to work.
I agree with John. To fully digest an idea one needs to be able to read at least an article this long. Drink some coffee, slow readers. It helps me.
My guess is the article comes across as “loooong” because the excessively long paragraphs *by Internet writing standards”.
Write for print is one thing, writing for online medium is another. Reading lengthy text on a screen is harder one most people’s eyes. People tend to skim more online, are more distracted, and in general: less is more.
The fact that, given the subject matter of the article, the author should have already KNOWN these things…makes me doubt his expertise in this area.
That said, he had some totally SPOT ON points.
Cut the guy some slack. He’s an ACADEMIC. He doesn’t know how to write in a concise way!
I could not agree more, If people had money the ads would be back, who are we kidding.
He writes the article as if we all had money we wouldn’t spend it on advertising, come on come on !
Good article , just way long winded for sure !
Although I think he makes some good points about people not needing advertising….but only for certain items. There are definitely times when advertising is very helpful as you aren’t looking for that thing at any specific time.
When advertising is highly targeted, it’s not that bad. However, we mostly get much irrelevant things advertised.
On my website I run AdSense but don’t enjoy it that much because many of the ads are not related to the site’s content. Yes, I know Google try their best on it.
I agree, it’s all about the spending power of consumers. If they see ads and have the money to pay for it, it’ll be an effective means.
It’s a great in depth article, *a must read*
TechFilipino
What you spell out is 100% true, it was true 50 years ago when TV started. What people saw on TV was best and people purchased it. People then said the exact same thing about advertisers and the channels that published them.
The companies that advertised the most won.
That didn’t make the advertising any less effective.
What everyone forgets advertising is effective even bad advertising.
The basic truth will come forward again, those who don’t advertise will fail.
Finding the best platform to advertise on is the problem.
People want to be told what to buy, as long as they don’t get cheated. They will like it.
IMHO
EXACTLY – If ads are relevant to the potential consumer visiting the site and actually add value that compliments the content, ads are effective.
What cracks me up is the comparison to full page ads in print. The reason print media is failing is because things like full page print ads aren’t measurable enough. There’s one thing for absolute certainty – you can measure an online ads conversion rate and campaign effectiveness very well these days and it will only get better as the technology improves. It’s in its infancy actually and will continue to evolve. Eventually, online media spending will outstrip all other forms of advertising because the world’s communications infrastructure from the end user to the corporate enterprise will continue to exploit it. It’s obvious that it will be ever more pervasive in every day living and everything we do.
“Find the best platform to advertise on” – period. You hit the nail on the head, Tony.
Publishers can actually do better than free.
We can start sharing the billions of advertising dollars with the users. What a concept. This is why Google is rich!
Don’t be so greedy and you’ll make more money.
Advertising is the first thing cos cut down on in trying to maintain their margins. got nothing to do with internet or anything.
-JP
http://hopedwor...os.blogspot.com
Clemons, if you think that the internet is going to be some ad-free ecosytem in the near future, you’re completely wrong. You represent the type of liberal (not to say I am different), DIGG using type person (with Ad-Blocker) that is too smart for the advertising and thus can find many ways to pick apart why it’s not working. Well, don’t forget that the very content you just wrote is being monetized at this very second, whether you like it or not and the site that published it (TechCrunch), needs the money so it can continue to push quality content (unlike what you just wrote). You can’t just come out and trash every aspect of internet advertising and the freemium models that exist. I’ll give you 3 reasons why you are out of line. I can give you more at another time.
1. Don’t talk about Second Life as if it is a model to followed. Things like selling virtual goods is not a a direction everyone can follow, just as you said not everyone can buy their keywords on Google, so it is not a sustainable or scalable business model. Are you nuts? First of all, you openly admit you are not a part of a virtual community, so how do you know you would pay for goods and this is a model to be copied? SecondLife isn’t even doing well. You are a part of the content community, and seem to easily be able to bash the idea that you would ever interact with someone’s display ad. Get a life.
2. People do not trust advertising? Look at the ads surrounding your article. Is there one company or brand that you don’t recognize? No. So, what is so untrustworthy about any of these ads. And what kind of sites are these ads on that make people not want to trust them? Is it TechCrunch, is it Hulu, is it some random site no one has ever heard of? Such a general statement with little substance.
3. You would be equally happy to purchase a search service? What kind of Roger McNamee, acid-trip-palm-pre-will-succeed, type BS is this statement? It’s the same ingenious concept that if Facebook were to charge $1 a month, they would be making a killing. Not going to happen, not intelligent, and would certainly be a flop.
I just want to say that for a Wharton professor, you clearly don’t understand what monetization strategies are working on the Internet. I actually began to laugh when you started talking about mobile contextual advertising, as if you know what the future beholds for it. I don’t want to call you out any further. I’d love to make some sense for you over the phone though. Have a good one:
Jason
editor | TinyComb
Here you go Clemons: http://tinycomb...dont-know-jack/
Nice, you just used TC to gain free publicity.
On a more serious note, I have to agree with you. Internet advertising isn’t going to die. Most of those who read this blog are tech savvy, but remember, we only represent 0.0001% (mild exaggeration) of the population. There are too many people out there who are actually receptive.
But okay, since you’re a professor, let’s do a hypothetical scenario. All of the old timers die out, and being web savvy is as important in society as clipping your nails. The psychology behind advertising won’t change. The advertiser simply needs something that will captivate you to click, then divert your emotions to want something you don’t particularly need, and after enough repetitions will result in you having you purchase the item.
But I do agree with one thing in Mr. Clemon’s analysis, and that is advertisers will need to get smarter. That, however, is a different discussion.
“But I do agree with one thing in Mr. Clemon’s analysis, and that is advertisers will need to get smarter”
natural evolution of advertising.
Regarding #1:
Paying for items in virtual worlds is a successful business model, mostly for online games. See: http://en.wikip...iki/Gaia_Online
Regarding #2:
People do not trust advertising because the message does not come from a neutral source, not because they think the company is some sort of fraud. Why do you think people trust word-of-mouth from their friends or Consumer Reports-style ratings over advertising? They know that either of those sources is trying to rate the product fairly, rather than just sell it. That said, people are often too lazy or indecisive to do the research themselves, so advertising can still tip the decision one way or the other. Even so, people often turn to forums or ratings websites with guides to make that same decision.
Agreed, Second Life isn’t a good business plan for most companies. Why was that even mentioned?
Nice reply Jason. I have two words for Mr. Clemons – email marketing. Companies everywhere are still developing their email marketing strategies. So, here we have a technique (glorified spam aka targeted email) that originated long before display was even close to being mature and all of the email marketing companies I know are actually growing in this recession. I would say this is a good gauge of where the majority of consumers’ heads are at in terms of receptiveness to advertising. The idea that advertising models are dead is ridiculous. Of course, as in all mediums innovation needs to continue but Clemons is premature and plain out of touch in many of his observations. Peace and chicken grease.
There is a big difference between email marketing and advertising. These days, the latter is usually bacn not spam (i.e. you opted in).
When companies deliver useful information as part of their marketing people are willing to listen. Daily Candy is a pretty good example of this, but there are many others.
We have yet to figure out how to deliver really useful information within the constraints of advertising.
Professor Clemons’s beliefs about the decline of advertising reflect his research and sound theory. His incentive on this issue is to explain the situation based on his evidence, with no stake in the question of what will happen in the future to advertising in an online environment?
With you being an industry person with an incentive for advertising to sustain itself as it has been, your incentive is to keep believing that advertising needs to succeed the same as it always has.
You can guess then who I consider to be a more credible source on this. Your flawed perspective is especially revealed as you mischaracterize him as somehow hoping that advertising fails, or by saying that advertising will completely die — he says neither, only that advertising is on the decline (case in point, advertisers are paying less to online content providers because the advertisers know that they get less bang for their buck because people are ignoring and avoiding the ads).
Unlike pundits and marketers, social scientists don’t hope for a particular outcome and then argue in favor of a particular outcome — they only seek to explain. You can get upset about what the consequences of his argument would mean for you, but that’s different from saying that he’s wrong. He clearly leaves open the idea that companies are developing strategies to be more successful advertising their products online and that the market on advertising will eventually flatten, but currently it’s declining and the aggregate evidence says it will continue to do so.
Whats funny about “advertising online is dead” is that as I’m reading this, there are 15 separate ads on the right portion of the page.
FU, TC.
And I completely ignored/overlooked every single one of them
I also read this and a dozen other articles today with out even taking noticing a single ad.
As someone without a stake in online ads at this point, a constant user of internet technologies, and an online consumer, I can say that I trust no ads not even broadcast ads. Information that is paid for isn’t trustworthy, there is an agenda behind it.
Will ads online completely disappear? no. Will ads have the same goals as they have today? I hope not.
Changes in the internet are accelerating constantly and just like all other cases of change old ways struggle to survive and new ones struggle to exist. Neither of them will survive forever!!!!
What ads? I use AdBlock plus for Firefox.
I have never used paid advertising for any business I have owned. Marketing wisely via event support and involvement in the community I believe wants my product.
This works GREAT every time and no one has to tune out my hard earned dollars being shoved in their face.
Just my experience
STAY OUT OF THE REAL WORLD OF BUSINESS ON THE WEB Mr. Eric Clemons.
You’ll starve, or be eaten alive. Actually before that happens you’ll probably be BEAT TO DEATH BY SOMEONE LIKE ME who imagined your whiny nerd voice in my head as I was reading the article. I almost went crazy, but then I just skimmed the last 80% to save my sanity. I normally wouldn’t post a reply but I feel so compelled to tell you I think you’re a total idiot. I’m glad the world can read this article attached to your name and know it too.
The tragedy is all those university students who think they’re getting an education from your shit work!
Victory darwin:
Ooh, ad hominem attacks. Immature and fallacious. Try actually responding to specific arguments made in the article next time. Where’s your research?
wow… coming from some who runs a BigScam website!
thank GOODNESS someone read that and translated… I don’t have that much time.
High Time the model changed…Current financial crisis may lead to emergence of next level of innovation in online advertising, where in its more reader friendly, transparent and advertisers generate more value per $
Indeed, the problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed. Another important variable affecting advertising and monetizing models, aside from medium and message, is the audience. The audience is participating in different activities which prevent captured attention to a particular message. Moreover, the audience trusts information obtained from sources known rather than advertising. Perhaps it will be wise for advertisers to develop a new model based on word of mouth.
Did anyone read this article before commenting? I don’t think he is saying that advertising is failing because of the economy, although that might be a factor in speeding things along.
His clearly stated hypothesis is that advertising is failing because people no longer need it. There was a time when advertisements played a part in our purchasing decisions, and that time has past. We no longer rely on advertisements to tell us what our purchasing options are – we research our options carefully online.
To everyone defending the idea that online advertising has a future: when was the last time you clicked on an online ad????
you are a complete idiot, people click ads every day I own websites that earn clicks that monthly are more than your mortgage. Get a clue
So people click on ads everyday, Gfy, but not enough to sustain advertising online as it has been in the past. The point is not that advertising will completely die, only that it will become/has become less effective overall.
Does anyone take “impression” as a factor for delivery? TV, radio and Cable do, why is that not as valid on the Internet?
yes i definitely agree with you. there are still many people on the internet clicking on ads, and not just the internet newbies, so to speak.
And I agree with you. Most of these posters have a blind spot in that they underestimate the sheer number of internet newbies! I live in FL on the west coast and we define the digital divide I think. Mr. Clemmons may be correct and in fact is, I think. He admits that every time predicted a trend he was way out in front of it and so was attacked. It may take another 50 years for all of the newbies and newborns to stop clicking on internet ads
The main point of this article Eric’s inability to be concise.
It seems to me that we are trying to push traditional idea in a different medium. Just like when the Internet hit it big before the bubble bust while everyone was talking about a new economy, which was false. The basic rules of goods and demand still applied.
I feel the same is happening as for the music industry. If the content is not interesting, than why bother? When an add is good, people watch it and send it around the world. Look at Apple… iTunes works because (like mentioned in article) it creates a desire for the consumer to be part of a certain group (which is also supported by traditional ads on TV by the way). Maybe it has to do with advertisers underestimating their audiences and thinking the same old formula works for all…. Once you have done an TV spot, you take some stills for the print and poster versions, and voila…
Eric,
This is a very insightful article and has elicited a very strong response from professional SEMs. I have to say that I agree with you, but that we will not see the changes you predict this year. I feel that this is a long view and a future trend, but that being said, we in the industry need to prepare for the change or risk getting left behind.
Right now paid search advertising works for some clients as there are no great alternatives, but I can see the days of Google’s AdWords auction at the current CPC figures for some accounts going through a major adjustment. When it costs over $11 a click for a cosmetic dentist in San Jose CA as one example, advertisers feel that the price for exposure is just too high and does not provide the return on investment.
I personally feel that social networking will be turning the SEO and SEM industry on its head in the next few years, but the technology to really make this work well for businesses as lead capture has not fully evolved yet nor ways to share information more fully between users across multi-platforms.
I hear you, I think advertising online as we know it will be replaced by reviews, personal testimonials, and smart aggregation of data and personal preferences and this is where social networking can easily step in to fill in the blanks, but we are not there yet.
Personal search is one thrust and Google has announced that it will be capturing ad preferences in the future to help people at least have ad exposure more targeted to their interests, but I have not seen this rolled out yet. This is at least a step in the future direction but still not a real answer.
You have an interesting point of view and I applaud your far-sightedness. As for me, I am taking note and looking to posture my business and that of my clients to take advantage of some of the future trends you are suggesting.
Wow, I agree very much and think it well put. Can’t believe all the snarkiness! If people are interested in a topic, they will read it in depth. Wonderful job. Eric says everything I was thinking, you’re right for sure and we need to be ready for it. Those who don’t take heed will have trouble in the future. I do think it’s a while away and a bit premature for my clients who are making money through advertising to throw this at them. Instead, we will gently introduce other ways to monitize on the web and use it to enhance expertise and reputation on the web…
Thanks, this was very valuable!
I think one of the main reasons for online advertising campaigns failing so much is a lack of education from people buying the campaigns.
From experience of years of running campaigns it is easy to analyse the reasons why.
Online advertising does work but only in the right hands with people looking at longterm profits and not flash in the pan profits.
First, let me just say I have been following your posts quite often lately. I wanted to ask whether it is true that the EU just agreed to have all websites ask for the agreement of the visitor when a cookie is being passed through the browser. I think that would be very difficult to manage for us, the not-native internet users…. Do you know anything about this? Supposedly this would turn all websites more complicated, including blogs? What are cookies and why are they dangerous? Are cookies from your blog safe?
Thank you and very interested in your reply,
Mary,
Sensationalism anyone?
Just a bunch of stupid-ass opinions without much backing.
“The expected drop in internet advertising revenues this year is neither unpredictable nor unpredicted, nor was it caused solely by the general recession and the decline in retail sales”
Much of the drop IS because of the recession. So using the recession-hit numbers to make a point about the downfall of internet advertising is lame and faulty argumentation.
“Indeed, there has to be some way to create websites that do other than provide free access to content”
Uh, we have subscription models yes. And when they work better than advertising, folks use it. When advertising works better, businesses use advertising. What’s your point?
“Consumers do not trust advertising”
“Consumers do not want to view advertising”
“And mostly consumers do not need advertising”
Right. And that has been true for decades yet, somehow, just somehow, advertising has survived.
“My basic premise is that the internet is not replacing advertising but shattering it”
YAY. Go get your techmeme headline Mr. Sensationalist. And get a lesson in logic.
” “Consumers do not trust advertising”
“Consumers do not want to view advertising”
“And mostly consumers do not need advertising”
Right. And that has been true for decades yet, somehow, just somehow, advertising has survived.”
The author, Eric, is spot on, you obviously need a lesson in marketing.
“YAY. Go get your techmeme headline Mr. Sensationalist. And get a lesson in logic.”
Speaking of logic, your logic suggests that nothing changes, evolves or fails. – Your reply proves different.
@Hmm. Somehow economists believe that a certain era of something ends with another era continuing where it left, in the case to adapt to the newer changes…
Like we’ve seen, ads have been ’surviving’ so far, well it’s time to end. Like how GM is gonna end its lame system, AIG gonna end its corruption with taxpayer’s money…
“”Just a bunch of stupid-ass opinions without much backing.”"
Do you have backing then?
you are a total moron, get a clue
thank you. all I got from this post was something I knew very well already… targeting sucks.
so, the recession has lead to two things:
1. national brands who were buying a ton of ads at ridiculous prices are no longer doing this because the economy sucks and now there is a ton of excess inventory on huge sites where targeting is really really hard.
2. sites like TechCrunch and ANY OTHER vertical specific sites where you don’t need targeting because the content provides the targeting are still selling a ton of ads. sure, they might not be getting ridiculous CPM’s anymore, but that more a function of the economic situation & demand (not because advertising is failing).
all of these “the world is going to end advertising is dying” posts are getting a bit lame. no kidding, we need a little innovation (as do most industries), but online advertising is growing and there’s a good chance it will stay that way for a long long long long long long time. Don’t use the economy to distort the true picture.
Yep if you are going to argue that the end of advertising is coming, the burder is on YOU prove it. Cuz, well, there is little evidence of that.
This is coming from a guy who personally dislikes ad-based models of running startups. Yet, my personal dislike does not mean that I am delusional about the reality of the ad industry…which is several times larger than the software industry.
I read somewhere that the software industry in all is about 80B and how microsoft is jealous of google being in a 300B ad industry.
And if you want to argue that what is happening to AIG will happen to the ad industry, well, again, why? Simply because you think so? Uh, ok.
You clearly did not get my point did you? I said that the era of this – if you wanna put it, text advertising – is soon dead.
And something needs to be done to either change the system totally and the way ads are presented or it will just die off…
And what makes you think startups with just an ad revenue model will make it? Like those using adsense or banner ads…
Text ads will ONLY die when something BETTER comes.
Just like banner ads ONLY began to disappear as something better came.
So essentially you are saying that the online ad market will be changing, right? If that’s the case, then, well, doh? No need to get all sensationalist with the ads-are-gonna-be-dead-lalala.
Whether ad dependent-startups make it or not has little relevance to where the ad market goes. For example, simply because ad-dependent startups die would not mean that the ad industry will also be dead.
I think you’ll find that those “sensationalist headlines” are actually part of his thesis. He’s just writing a well structured article.
The simple truth that is there is no credibilty in Advertising and business try to use it as ‘what you must do’. Advertising is meant for branding proposes.
For example, the best buy ad up top… we know it, they are using it to brand. But as for watershed.. wtf is that? Watershed wasted money adverting because there is no credibility in that little ad up top to most people.
To gain credibilty you create word of mouth or the buyer sees the service/product first hand… not through some cheap blinking advertisement.
The companies with a lot of money who can afford to be up top in Google, have shown their products aren’t always the best, therefore, the evolution of what people are finding is advertisement can mean lower credibility. – In the age of information, everything moves faster… even the evolution of advertising.
If you want to know what watershed is, click on the ad. In fact, I suggest that everyone click on all the ads on TechCrunch and buy the advertised products and services just to prove Clemons wrong
I can’t do that. My Ad blocker plus firefox add on does not allow me to view those advertisements, rendering them useless.
Oh, they still get their OpenX impression ticker incremented, they are just never seen. LOLZZZZ
OMG you are so TOTALLY owning them all!! HAHAHA, they are all idiots and you’re sooo much smarter!!!
Cretin.
Erick, I understand that advertising is essential for TC to survive, but I find the ads very annoying and would never click on them.
In fact I magnify the screen on Firefox [ctrl +] until the ads disappear – and I’m not the only one doing this.
With the exception of the spammer’s comments, the content is what really counts.
Newsflash – they already know this. The reason advertising thrives is because even though 90% of viewers are like you, 10% interact with the ads and that 10% is more than adequate to create a hefty profit margin.
Learn some stats
Martin, you’ll notice a Media Temple ad in the sidebar. Click that ad and get yourself a website.
Where are the ads? I can’t see them here?! Wait, let me check with IE8
Violation of TOS?
TechFilipino
This is SO TRUE. I finally truely truely 100 percent believe what my friend said… Stop following the SV way, stop using ads as a revenue model…
Have a unique selling point… Have a concrete business model… Now it starts to show that ads are really not meant to be used… Google had its glory days… That’s why it’s slowly branching out to browsers, OSes(maybe), mobile, etc. It knows the search ad medium is soon going bust.
But hey, I really love this guy. I learned a lot in this. I will bookmark this 1000 times if I had to.
Having a solid business model and relying on advertising are not mutually exclusive.
Someday you shall realize.
@Hmm – It seems most of these peeps haven’t heard about a little company – ticker symbol GOOG.
And how the CEO of another little company (ticker: MSFT) spends all his waking hours being jealous about GOOG’s ad revenues.
Oh wait – the genius author thinks GOOG model won’t work any longer…
Heh… and how much does Google charge for all those other things you say they’re branching out to?
Google makes it money by attracting more eyeballs than anyone else in the world. Be it GMail, search, Picasa, Shopping, Scholar, Code, Mobile, Maps, and the list goes on… they thrive as a business because they have more consumer eyeballs to send contextual ad traffic to than anyone else.
Let’s not look at advertising as disappearing… as long as there is capitalism, there will be advertising. Let’s think about how it will evolve. In this one, I think Google is actually leading the pack… Radio and TV advertising was all about massive dumps of ads… in Internet, you can be far more targeted and relevant to what people are looking for. You want sprockets? Check out my online sprocket store – we also have thingamajoos, in case you want to connect your sprocket to the gizmo!
An aside: The poster is wrong about Google letting you buy a higher position… it’s an urban legend of sorts, but it just doesn’t make good business sense and I’ve never seen any evidence of it. There are search engines that will let you do that, but Google’s not among them. Every initiative I’ve seen from them is to promote honest and fair placement of relevant organic links near the top of your results (excluding the small areas dedicated to advertisements that you can easily skim past).
This isn’t because Google is a bunch of swell guys. It’s just good business.
If you don’t get quality links from your search on Google, you’ll ultimately leave for a different search engine, right? If you leave, it’s one less revenue generator for them. This is why they also enforce strict rules about how you can advertise on Google… if people stop trusting Google ads, they stop clicking on them… and the value of their advertising drops.
Sure, you can get some revenue through their blue box servers… but enough to run a company like Google?
If we assume that all (publicly traded) companies are inherently selfish and driven by their bottom line, you can’t talk about all their free services and products without considering how those impact their bottom line.
In this case, all the really great products and advances that Google gives out for free… they are free because you, the searcher, are more valuable to Google as an advertisement consumer than as a paying customer.
This post was a rash, emotional rant – not something I’d expect from a Wharton guy. There are too many assumptions and the most obscure, anecdotal, and unsubstantiated pieces of… evidence.
I vote that this guy is either A) talking waaaaay outside of his field, or B) trying to make a Swiftian argument that missed the mark on satire.
Whats the problem with this great article? Are you afraid?
I believe that this article is 100% right. Advertising in the classic term is simply incompatible with the preferences of most internet users. The basic functions of the internet are link and share. Everything else is a “could be” without warranty. It’s a toolbox, an easy, cheap and digital way to solve problems, inlcuding asyncronous/convergence exchange of information.
There will be a future with new forms of advertising, and the ad market will be much smaller. That’s ok. You better take a closer look at the opportunities which arise!
Totally agree with Hmmm. What a bad post, just because this person teaches at Wharton (whooo hoooo) doesn’t make him an expert. Did you guys even review this before hitting post? If some of your advertisers read this non-sense they may stop advertising with you. A bunch of fluuuuuf. Has Prof. Clemons ever heard of re-marketing/targeting pixels?
Eric – I am glad I didn’t have you as a prof. Do you preach subject that you cannot back up with data?
Advertising/Marketing works – there is no such thing as bad marketing – there is good marketing (TV/Radio, etc) and better marketing (The Internet). Ask MA how he was able to move into his new offices, afford to hire staff, etc? I
My two cents,
Signed,
Graduate of an SEC University
I think internet display ads are no different from magazine ads. So I think they can work.
But certain types of ads like interstitials or any ad that interrupts I agree is stupid. Why do they even have a skip button on interstitial ads?
Also I think the openness of google text ads has eroded the degree of trust we have. I mean for television primetime or magazine ads at least we see big reputable companies that can afford to advertise there doing so. With google ads I can go on and put an ad up there and scam you.
So I think the profitability of display ads should be maintained by keeping only reputable advertisers on a site, keeping the ads side by side with the content.
And I agree ad-supported content isn’t the right revenue model for all sites. Particularly sites that have more dedicated but smaller bases should not use an ad supported model, while sites with larger bases should use one.
perhaps your definition needs re-working…Maybe advertising hasn’t failed on the web, it simply just doesn’t cost as much to disseminate a message with Bloggers etc. picking it up for free. This would attribute the large decrease in spending and yet simultaneously wouldn’t mean advertising death, either.
I agree with you in a way, that advertising within certain branches or areas will no longer be as successful as it used to be. I’ve felt this way about advertising for quite some time and especially with all the ad blocking programs people are starting to use, advertising revenue is just going down hill. I do not use ad blocking programs, however, I simply go to websites to read the content and then get out of there, never do I find myself clicking ads and I think that as more and more people become accustomed to this, revenue will continue to fall.
Most people don’t use ad blocking programs. Even if users aren’t directly looking at the ads they saw them and that builds the brand.
I recently worked at an internet company that offered a valuable service for free for the first couple of years, after we built a solid user base we started to monetize with ads. Our users flipped out. Threatened to quit, demanded refunds (even though they didn’t pay anything).
It really makes you want to b*tch slap them, shut down the site, and wish all these valuable services and content came off with us until all you have on the internet is Amazon, the yellow pages, porn, and torrent sites.
But I held back on lashing out on my users, took the ads offline. I know that us internet entrepreneurs are responsible for figuring out a way to monetize these services, but a lot of smart people have been working on this for several years now and it has been difficult to figure out how to pay expensive programmers while giving away free storage, bandwidth and content.
True words. I appreciate your experience and the power to tell the truth. A lot of people have not realized yet, that the internet is a space owned by the ones who create the content. They are free users, marketeer and advertizers call them customers.
But the success of the company is under control of these customers – and as soon as they realize this, they are users. Means that they are educated MF. They identify every ad, starting on a scale with insult, ending with personal problem.
Even the smartest entrepreneur has no solution for this problem. The only way seems to be authentic and transparent especially in case of the revenue model. Companys who try to ride the “first free, than money”-model stuck faster and faster. Most of them. Twitter is different, that is why I think Twitter has a really big problem in future…
Also I the internet is more capable of producing special interest sites. It’s much easier to start a website than to publish a magazine, and so there is a lot more options for specific targetting, which makes ads worth more on the internet and more valuable to companies.
One of the biggest problems on the internet is that along with more sites comes more advertisers. An ad block, let’s take a google ad block, can be held by anyone. But that ad block will be held by less reputable services most of the time. So then more reputable services who advertise in the same block will now have a less valuable ad placement.
great article
Way too long, TC should have some sort of executive briefing for such long posts in 3-5 lines that will sum up the main message
Agreed. The post contained a lot of waffle despite being a good read.
The summary might also help the author get their point across more effectively.
Hey Professor, online advertising will be bigger than any other form of advertising and in a few years your students will find this article on a search engine and make jokes about you. Just my opinion
How much did this idiot wharton prof paid for posting (or should i say advertising) a dummy post such as this on techcrunch?
In 1968, MIT and Wharton competed in econometrics, so this new battle with Wharton is welcomed. I’m MIT educated.
This is the ramblings of an academic with no first-hand experience. I have the top blog for ‘Economics of Advertising’ at http://adecon101.blogspot.com and a network of publisher sites. BTW, Internet is a proper noun by convention and should be capitalized.
Let’s see:
- Agencies don’t know how to push the right message through the right mediums.
- Web publishers don’t know how to monetize through advertising and need to change to charging for content, services, whereever we can make a buck.
In broad strokes, Mr. Clemons has struck at millions of passionate innovators in advertising and publishing.
Rubish. Let’s get back to work on the real Internet.
Regardless of the validity of your point or not, here’s where I differ. Capitalizing “internet” is archaic just as using an apostrophe in the shortened version of photographs, “photo’s”. Lowercase “I” internet is widely accepted just as the unhyphenated version of E-mail, “email” is.
By the by, IF you’re going to criticize grammar make sure yours is spot on first. “Rubish” has two b’s (rubbish) and “whereever” drops one E in the middle (wherever). Cheers.
you are a complete moron
What an intelligent response. Very well thought out. I’m sure write really epic things. Oh wait, I can’t check into that can I? You didn’t leave your credentials. Way to hide behind anonymity. ha
Do they they teach spelling at MIT or were you playing video games? Big East Grad
Google. Thus I refute.
Everyone can’t be Google. Refute, rejected.
Why not? Oh wait, it’s against their TOS!
I think ads, especially internet based ones are not launched by advertisers to earn per click or even per visit conversion on their target market, rather they are more of an effort to brand the advertisers products or services over time.
I.e getting the message across that product or services exists to the intended audience etc.
You might patronize today or perhaps recommend to your friends or maybe even patronize the products or services in the future.
I doubt any internet advertiser can actually convert all their advertisement budget to a per product or per service direct expense, and still be profitable on that particular unit used in that conversion.
What you just described is my job. And yes, it’s all quite profitable. Honestly, business is up for many.
“Marketing has existed since the serpent sold a piece of fruit to Eve and will continue as long as people need to eat…”
~Ric
Linkbait much?
What a joke advertising is dead??? So I take it techcrunch is a running in the red. Eyeballs are and will always be worth something…true generic eyeballs might not be worth as much as they were in the NY time or a superbowl ad. That said my ability to market directly to some one looking for “small blue wdgets in indiana” online is worth far more to me as a small blue widget maker than a display advertisement in a print media in indianapolis.
I just don’t get the sales/advertising hate…creating content/products takes resources, time, money etc…to think that content/products are created entirely for altruistic motivations is naive.
do not trust advertising – there is nothing wrong with the positive promotion of quality goods and services. as long as you can deliver on your promise. wise consumers know this.
do not want to view advertising – they always want a deal incentive ads bring.
do not need advertising – consumers clutch to incentive based ads that trustingly bring value.
internet search is dead.
internet location is everything.
Three words
Ad blocker plus
https://addons....efox/addon/1865
544,316 weekly downloads
44,009,754 total downloads
44 million people can’t be wrong.
Keep in mind that one person can download the addon multiple times.
keep in mind that they probably don’t
Keep in mind that pretty soon nobody will be viewing these advertisements.
The correct way to advertise in the digital world is the same way as in the traditional world.
Google, for a moment, allowed this alternate advertising reality to persist. The hole is closing on that reality and we will see a new reality closer to that we knew before ad blocking technologies started to take over the web.
If the masses did adopt these blockers – not just the naive Digg kiddies – then much of the internet would disappear. Even Digg would disappear.
The piper must be paid. Either you accept the advertising, or you pay directly, but either way you pay.
That just represents *some* people who uses firefox . What about the rest who uses IE, opera, safari and chrome?
Well, I used to use IE but once I discovered Firefox, I made the switch and have never looked back. Add ons like adblocker are awesome. I have a will purchase things on the net, but not because some annoying at was thrust at me. I understand that these ads finance free websites, and consumers that are interested can look at the ads.
Saying that people shouldn’t block ads is like saying that I shouldn’t change the TV channel when ads are on. Why not? It’s my TV.
You and chris should get married two complete idiots
I believe that users are already beginning to recognize that advertising pays the bills, so they will actually patronize the advertisers that sponsor their favorite sites. Publishers and sponsors just need to make a better case for advertising and educate the consumers.
I know many average users who click through ads when they have some time, just to support their favorite sites. Even when they don’t have time, they are more likely to recognize the brand and appreciate the sponsorship.
People using ad blockers are selfish and don’t deserve to consume great content. Without advertising, we can expect the quality of content to go down or sites disappear entirely because the creators need to get paid. Don’t you want to support sites like this?
Let’s say EVERY consumer on the Internet downloaded it.
And let’s also say this causes google’ ad revenue to reach $0.00.
And let’s say this causes google to shutdown.
Something has to give at this point…
Either the consumers will realize that ads are not so bad. Or the consumers will say ads are bad but we will pay $4.99 to use google.com.
I love how folks make it seem like it is all the WEBSITE OWNER’S fault to be using ad model. Hey, the ad model means a free service for the consumer. And if you are saying the ad model is going to fail, then you must also be saying that IMPORTANT services consumers use will become paid OR die…hurting the CONSUMER.
Dear Professor, get out in the real world for a few years before you make such silly claims..
you might even get a date with a girl too!
Yea precisely. Descartes said not to make extreme claims unless you know for certain what you are talking about? So in a few year wee see internet advertising not dead you’ll just end up more wrong then if you took a more moderate stance.
Descartes was talking about natural sciences… scientific method… not about economic analysis, which is far from being a science.
This is a really good read. I found this other article on the web that other reader’s might find useful ….
http://scobleiz...wont-start-now/
Learn to stay on topic.
Chris, thank you for the voice of a grown-up in the geekdom of kids.
My respect.
Advertising is failing on the web because the traditional heavy handed approach to advertising isn’t effective.
People aren’t passive spectators any more so they won’t stand still to be sold to even if they do want to buy.
Interesting post, Eric. Do you believe strongly enough in your “Death of Advertising” thesis to bet on GOOG stock going down significantly? If so, it would be great to hear more about that.
The furthest put options for GOOG are for Jan 2011. Google has too much money in the bank and thus too much inertia to crash and burn in two years.
Article is lame and long. Linkbait 4 sure.
Advertising works. Always has, always will. It will change by degrees as the internet evolves but advertising is not being shattered.
Well wait, does it actually?
Here’s the thing. There is clearly support for both sides of the argument — that online advertising works, and no it doesn’t.
If it DIDN’T work, then there wouldn’t be a market at all. $25B markets aren’t grown over 10-15 years time on speculation – it has to be providing value in SOME way! So clearly online advertising works!
That said, the naysayers would be absolutely correct in pointing out that average click-through rates are less than .2% — just 1-2 clicks per thousand views of each ad. Which implies a 99.8% failure rate! How can ANYONE feel that online advertising works with that great of a demonstrable failure rate?
Point is — it’s a bullshit debate which goes nowhere.
The man is right. It is just a case of waiting to see who notices that the Emperor wears no clothes.
Not only click-through is way less that one percent, but I suspect the number of people who parsed the link that didn’t click through is similarly puny. I am now typing at the bottom of this web page, having carefully read the article and scanned through the comments. I cannot recall a single ad that was placed on this page. I don’t use adblocks; I don’t need them. My brain does a pretty good job of not looking at the paid content.
There are two aspects to selling your product.
1. Making people aware of its existence. “Persil!”
2. Convincing people it is worth buying. “Washes Whiter than White!”
In a TV ad, you get a crack at doing both. On the Internet, the wisdom of crowds does #2 many times better than a TV ad. Does anyone seriously watch an ad or read a puff piece on a hotel and book it without checking tripadvisor first? Really?
Internet ads are not a particularly good way of doing #1 either, but they are (mostly) the only one there is. If (big if) a better one crops up, things will change in a hurry.
From someone who actually buys and sells advertising, .2% CTR is NOT standard. The type of ad varies greatly, as does the site the ad appears on, as does the design of the ad itself. Within that clickthrough varies.
Text ads may perform better in some industries than display. In other industries display is cheap enough to give volume that text ads can’t touch. If your banner ad appears on a site with great content, you may have a low clickthrough because people are staying on the site. Ugly site with spammy content? You may get an amazing clickthrough if people think your ad could be more relevant than the site they’re on (and they can’t wait to leave). Similarly, a “press the fart button” banner might get a high clickthrough while an attractive banner gets clicked less. There are advantages and disadvantages at every stage, but the lowest common denominator is not enough to make a case for failure.
To claim an article that is packed with such substantive research is “lame and long” is a lame, ill-conceived response. The professor is documenting a disruptive innovation that by definition “shatters” the system it replaces. Advertising as an industry will surely continue, but it will have a fundamentally new form that is shaped by the evolution of consumer culture that the Internet has forced. It seems to me that too often technologists and Net advocates choose to disregard the historically relevant teachings and observations of those who have long monitored the progress and cycles of our economy. Have some respect and try to learn something people!
BREWTON
You are a complete moron you should try learning something.
I think that you are right and wrong at the same time in both your general assertion that the internet will destroy advertising and in the reasons why.
I think you are not fully on the mark when you say that we do not want to watch advertising. We don’t mind advertising per se, as the success of some of these TV shows that show nothing but weird and wonderful ads from around the world has shown.
Nor do we have no need for and categorically mistrust advertising. Most of the time, yes. But not always. A good campaign that fulfills at least some of the target audience’s needs can be of service to them and make them go out and buy something. For example, if you are in the market for an item and are told that it is available at a good price somewhere, you may seriously consider going there even if this wasn’t your original plan.
And yet I see a fundamental flaw in the way advertising operates: It is disruptive. When I am watching TV or using my e-mail, I do not want some company forcing me to stop what I’m doing to listen what they have to say. It is rude and would not be tolerated in face-to-face interaction. Imagine you’re in a restaurant chatting to your friends and a complete stranger walks up to the table and in a moment of silence blurts out: “Are you looking for cheaper car insurance?” It really wouldn’t matter if you were, you’d not put up with him.
And for that very reason we have devised advertisement avoidance tools: Recording devices that let us skip TV ads, blocking software that filters it out on websites, spam filters etc. And let’s not forget one of the reasons why Twitter is loved while Google, Facebook and others are met with increasing suspicion: They are not trying to turn users into consumers (something that was, according to one of my previous employers, online advertising’s raison d’etre). They don’t pester you with commercial rubbish. They don’t interrupt your conversation.
Does that mean there is no advertising going on there? Far from it. But it has moved away from the outdated offline model of disrupting conversations to a model that is more suitable to the Web 2.0 and more gentle on the people it is trying to reach. (Sorry, I hate the term user.) So in my opinion the Internet will indeed destroy traditional advertising. But at the same time, it may actually open the doors to new forms of advertising that will finally manage to add value to the lives of its audience (whether by entertaining them, giving them information they need or saving them money) rather than just sustaining an industry that does not see eye to eye with them.
Has Mr. Clemons actually run a successful ad funded content site? I thought this was a startlingly naive piece. Advertising is hear to stay, if anything the Web enables more slippery types of ads that are difficult to avoid.
Successful CPA (where you are paid on a task or buy being completed) ads prove that Web adveritsing can be very profitable for advertising and publishers, users are influenced by it and with CPA that can be measured directly. Same with cost per click and affilaite schemes.
I am not sure why the article is written as if advertising is something new on the Web. It seems to have been doing fine for years. Ups and downs sure and you certainly cannot ape a print setup online and expect the same revenues….but costs are lower and advertsing can adapt in more directions.
I think the article also underestimates how difficult it would be to get people to pay for content they are used to reading for free. The wide access to mutliple publications that the Web enables means it is even less likely someone will pay for access to just one. I guess a generation is growing up who expect to read mutliple versions of a story from different outlets/view points for free. There are a host of sites who exist just to aggregate for that purpose.
People hailing the rise of adblockers seem unaware how if they got their wish it would cut their nose to spite their face.
If Mr. Clemons actually went out and got some real experience running a large ad-funded website then he might realise the sky is not falling just yet.
I’ve recently quit my day job to become self-employed doing internet marketing full time. I only do CPA. Traditional advertisers are only going to flock to the CPA model more now that times are tough – they only have pay on returns. And I get paid on performance. Win-win as far as I am concerned.
so basically , yes this is long, advertising no good , but something that will help me make choices is necessary , hey but isnt advertising exactly about this , you dont have to book a hotel on hotels.com , you dont have to visit the thai restaraunt that pops out on your cell , BUT YOU CAN !
P.S.
i would personally prefer image ads , banners that do not have a click trough i mean you dont click on your tv add why you should on a banner ?
Great research. I’m truly puzzled.
All those arguments about a USP — how funny. You realize that consumers don’t want to spend, spend, spend. And then look at Hulu where people accept ads in exchange for TV shows.
There’s nothing wrong with promotion per se. A lot of people don’t do it right though. Just cause your Google Adsense brings in 10 bucks a month, that doesn’t suggest the entire model is bound for failure.
Most of advertising will be transferred online. There are two simple reasons: Because people respond to it and because it works for advertisers. Guess you didn’t come across that during your research.
I wish people would stop calling things dead just because they don’t know how to use them effectively.
As for your alternatives:
I’m horrified — you suggest we all sell content? I have yet to see all the premium content people want to sell.
Selling access to social communities — I want to see that. Facebook wants all your data and then charges you for it. Good one. Also, there are fundamental differences between WoW and communities like Facebook.
And your 3rd is the biggest joke of them all. It’s like online gaming is our last hope?
I hope that students at Wharton are kept far away from you. If I had a kid in your department, I’d have him switch to another school.
I summarize that your #1 argument is that “your research has shown”, but I suggest you look at some real world examples where the advertising model works. If you need pointers, I have left my email.
I disagree. The world hasn’t changed, just the platform.
I actually only find bad and excessive ads bothersome. Otherwise, it helps me find what I need/want in the market. I don’t want to spend 30 min in the bakery aisle at Whole Foods trying to figure out what bread to buy. Recommendations are too individual for me. I think within reason a lot of consumers would agree with this.
Also, whether people realize it or not, advertisers are essentially splitting the tab with consumers for good content. I don’t think removing them out of the equation is a good idea. I don’t want to pay more. I wish people would stop trying to tear down the model and help find a healthy balance and ecosystem online instead.
if I ever got a mobile advertising like the one preached by mr. expert, I’d sue the hell out of my mobile carrier and whoever is reading my sms, emails and location to send me sh*tty spam all day long…
(that said, I suppose we’ll start seeing a lot of that kind of crap advertising raising in the coming years… *sigh*)
“It’s not that we no longer need information to initiate or to complete a transaction; rather, we will no longer need advertising to obtain that information. We will see the information we want, when we want it, from sources that we trust more than paid advertising.”
Ads are not going to disappear, neither on fed media like tv, nor requested media like the internet. However, I think he’s made a good point: ads loose impact when we have on-demand access to trusted information, and ads will never be trusted.
I agree with Eric’s arguments almost entirely; he states the obvious. However, a couple of points to consider:
- Paid search, i.e., Google model:
Although ultimately unsustainable, it’ll continue to be massively profitable for many years to come; even as a legacy model.
Why?
-People understand it
-Companies do get OK ROI
-Branding happens
-Google owns it
It won’t die as quickly a death as the offline ad world has.
As far as a future ad model replacement, IMHO, social search… I’d pay $5 a month for a FriendFeed to have a killer way for me to search product info from sites like Amazon and then share it with my personal “trusted community”.
Advertising on the Internet does work and will continue to work and more effectively than anything that’s come before. The suggestion that we will ultimately get everything through recommendation engines, review sites or do everything our friends do is flawed. New products and services come along daily and need to be advertised (for people to find them). Maybe I want to find something new and not what my friends have done? Maybe I want a company with the perfect product for me to think about the exact keyword combination I’ll be searching for and find me?
Maybe the next article will be something about Operations and Information Management written by a Professor in Marketing at Wharton?
I see your points and have heard most of them plenty of times before. I think you are wrong, you might not like it, but advertising on the internet can and does work. Advertising has supported and therefore enabled more innovation on the web then paid applications.
sounds like a lot of guessing using second hand information, the fact is internet trends are not predictable!
Great article but I think the real problem is different:
IMHO the biggest problem with advertising on the web is this:
- Web usage grows exponentially
- Just about everthing runs on advertisement income.
- All advertisement has sales as a final target (Brand building is a means to create more sales)
- People don’t have an income that grows exponentially.
- Hence advertisement on the web becomes less effective.
In the early days this wasn’t so apparent because the growth of new users on the web could keep up but right now the apps and their usage grows much faster than new users in the system. Thus advertisment needs SOOO many views to even create some notion to the end user.
Imagine tv with 500 different beer commercials. People would go mad. But this is exactly what the web is and makes people incensitive.
Just my five cents. I think if we want to sell something we need to add value and have a real proposition. But the consumer wants things for free but doesn’t want to pay this will normalize but its a legacy from the old web where everything was done for free & ads could compensate all. Ads will remain but their power will diminish and paid content permission will grow again.
Wow a long one.
“- Web usage grows exponentially…
- People don’t have an income that grows exponentially.
- Hence advertisement on the web becomes less effective.”
good point.
Here is the bottom line.
Advertisements have no weight on the internet as they do in traditional media. No matter how much you optimize your placements for X customer, they are blind to the advert after years of exposure.
The weight of an advert on TV or in Newspapers determined it’s effectiveness. People are not ad blind to these adverts because they are not bombarded *enough* by them or at least not on the frequency that they are on the internet, if they are not using ad blocking technology.
MySpace is probably the closest platform to emulating advertising weight in the digital form to date.
Bargain and coupon sites are also very effective today as an alternate form of advertising.
In other words like a virus, most people have spent enough time on the internet now to have built up the necessary anti-bodies to ignore just about anything, even disparte content related to the content they are browsing.
That is why google is trying to get people’s INTENT.
Google bought doubleclick because of this.
Scanning the page content to place ads is no longer enough. they know people are largely blind to this now. Now they want to have large scale tracking in order to determine your intent across disparate pages on the internet.
This is the future, and only Google has access to it, largely because of it’s massive scope.
So with that, even intent based advertising will eventually fall to the same human reaction.
With that said, other revenue forms will start to take hold.
This is why I rarely listen with both ears to business professors. Either they never worked in the corporate world or it’s been a while. We all know that business moves pretty quickly. So much so that all the “experience” many professors bring with them to the classroom is outdated within a couple years. This whole article is a case in point.
Advertising will never die, regardless of the medium. Companies will go under. Products will fail. Blah, blah, blah. But advertising will never die, and the reason why is that everybody wants something. It doesn’t matter how you sling the hash as long as everyone’s getting fed.
The other thing to consider is this. Everybody’s falling all over themselves to take advantage of Web 2.0 – I swear to God if another client asks for “some Web 2.0″ again, none of this will matter since I’ll be rotting away in jail – and social marketing. You know what another word for all that is? Advertising.
The concept doesn’t change, only the delivery method. It will always be with us.
Again, give it five years. By the way, I am still advising several firms on internet advertising, so, at least, I fail you “years out of date” test. Think about the last time you sought out an ad, as opposed to the last time you channel-surfed or fast-forwarded past one. Think about the scientific studies (not mine) of Accenture, Forrester, and MIT’s Media Lab, on the loss of trust in advertising. If in five years the bulk of internet revenues still come from advertising I will publish a retraction.
Done! I’m marking the date – March 22nd, 2014.
If you don’t show up here for a retraction, Wharton’s gonna hear about this.
Five years in Internet time is an eternity, so things are bound to be different, but there is one sure thing and it’s that advertising on the Internet will absolutely exist.
Plus, if you look at the last time the online ad economy tanked, it was bigger than ever five years later when we had CPC and CPA ad models dominating over CPM. The same will be true again in five years, but with newer and better models that likely track ROI even better, both in brand and other forms.
Sorry to say that but this is nonsense Professor. Online advertising is and will be much bigger than any other form. It is a wrong place to give that kind of opinions because many of the people you see here have more experience than you do about the impacts of the internet. So you better analyze your ideas and do some research (I’m sure you’re pretty good at it) about it.
Once this article is indexed by Google, your ideas about advertisement will be potential material to make fun of!
Doubt it. Let’s give it five years and see. You may be right over the short term. But I doubt that internet advertising will seem anything but invasive and offensive in five years. But I was ridiculed in 1999 for ridiculing click throughs, eyeballs, online grocery sales and online pet food. But thanks for at least starting with an apology. I appreciate that. I will publish a retraction if and when it seems appropriate.
You are a total joke and do a great disservice to the Wharton School.
another ivory tower ‘thesis’ that has no ground in reality….no one will read your stupid blog if you charge access…ITS JUST NOT WORTH PAYING FOR…that’s the euphemism this guy misses…
The included link is to a book presently reading with much insight.
People are the ones that will make the necessary changes, not gov’t, internet, or advertisers.
What is it with this binary works or fails crap?
What the Internet is proving is that the Advertising industry has been successfully selling snake oil for decades.
Advertising works, but nowhere near as effectively as we’ve been led to believe. Now that we can measure return on investment, we have a better idea of what it’s actually worth. Lots of businesses, even entire industries that were predicated on this “value bubble” will fail. Others will emerge in their place.
Over time, new approaches to advertising will be tried and tested. Some, like “misdirection”, will fail. Others may prove more effective.
Advertising will evolve, not fail. Considering how badly it sucks now, that can only be a good thing.
Sorry if this seemed to be an all-or-nothing argument. The basic idea is that while there will always be some advertising, it will surely not be enough to fund everything we now do on the net. My headline, by the way, did not have the word fail in it. It was typical soft-pedal academic “surely there must be something other than advertising” kind of thing. I suspect if the Tech Crunch eds had used my heading no one would have read the article. But, of course, few things in life are binary. I think it is optimistic (or pessimistic) to pretend that there is any form of evolution that will allow advertising to be the primary revenue source for all internet apps! Connection is not advertising, and the net will provide connection.
I’m just a regular guy that uses the internet, and I’m telling you. I never click on banners, google ads, etc. When I want something, I research it and use the information from trusted sources to help make my purchasing decision.
Rest assured, you are not the average consumer.
Alex, you are definitely in the minority. The large chunk of ppl who use the internet are not like you.
And thankfully so.
Thankfully so … only if you are in the advertising business. I’m a lot like Alex I think.
That must be why Google is so poor
Or the publishing business, if your content is ‘free’ i.e. – made possible by sponsors.
So do I, at least when it comes to researching. And yet, lets assume that I finally find two products with great recommendations that I trust, similiar price and features etc. However, one of them has a known brand and the other one doesn’t. Which one I’d most propably choose? The first one, probably, because brands are still something that lots of people trust. And you still need to advertise; moreover – to advertise extensively to create the brand, especially when it’s new and meant to reach broader target than just some niche of experts.
Since the article metioned IPod, lets use that example – is it just a great product that’d do just as fine without any advertising at all or a great brand created with even greater effort? Personally, I don’t know, I prefer Creative
Oh, BTW. There is such a thing as Word Of Mouth Marketing, there are more and more people who get paid to write commets/recommendation and more and more people who are aware of that.
People will put up with ads even if they are not relevent to their needs, especially if it means free content,
Ads are not about instant sales there more about brand recognision, and stamping that recognision in peoples hearts and mind, so should you later have a need for a product or service, i’m sure one will come to mind.
Maybe. But when is the last time you fast-forwarded over an ad, or channel-hopped to avoid one? The scientific data (not just my short summary of it here) suggests that we are having less and less patience with ads. Do you prefer movies on broadcast with commercials or on premium channels without? There will always be a need for some ads. But surely this will not be enough to fund all the content we currently enjoy on the net.
I read your brief summary again, on responce to your reply and through the art of contrary thinking I have to agree on your thesis as it points to the decentralisation effect of the web as a whole, there is strong reason why advertising will become more user-generated from a seek and find perspective.
‘Then the Gods of the Market tumbled, and their smoothed-tounged wizards withdrew,
And the hearts of the meanest were humbled and began to believe it was true,
That all is not Gold that Glitters, and Two and Two make Four-
And the Gods of the Copybook Headings limped up to explain once more’……Kipling.
What if the internet saw socialism ???
What if rich areas were forced to pay a high fee to access thousands of websites’ content on X block of IPs ???
This would be determined by their source IP address.
What if that happened and the websites made a profit based off of their flat hits.
What if CDNs’ roll was reversed. What if CDNs paid content creators?
These questions are the questions of the future.
In Canada the government takes everybody’s money and incentive to continue living and puts everyone on welfare and has them live with subsidies.
Eventually people give up and accept it because they tell themselves they can’t do better.
Why can’t we apply this model to the internet and take projects and websites that have failed and give them welfare ???
Keeping them online and highly available indefinitely in a reduced state?
If this ever comes to fruition forget RSS or any automated content to exponentially multiply the revenue.
Only manually created content will be allowed past a human approval mechanism.
People will have to manually work for their internet welfare “cheque” in this paradigm.
Imagine if several DNS “zones” with several thousands of custom websites lived had a Swisscom Euronet style redirect to a payment page before logging in???
The way porn sites give access to 40 or so websites with network access keys.
Each content provider in this network paradigm makes pennies on the dollar.
This is the new Google. This is So33t CDN. This is coming soon. So33t mobile is something different.
Our LA region will be up by April 30. Our NYC region will be up by June.
We still need a European and Asian regional center, so if you are interested contact me at soeet.com@gmail.com
recap-
X website wants to make revenue. Advertising does not work. They sign up to the CDN. The CDN provides their content at high availability through world wide CDN.
X website readers are redirected to page where they can pay for access to an entire block of websites, several thousands like you would be directed to pay for internet access in an airport or hotel via DHCP and DNS.
X website makes a few cents on the dollar, the CDN makes most of the money. The partners that provide CDN regions share the money with us.
Our initial investment is already in the tens of thousands of dollars for both this and mobile.
You are the biggest idiot on this site and that is saying something.
You are making some very broad based assumptions and trying to prove your case by “assuming” there is no innovation or entrepreneurial spirit left in advertising.
We are not socialists yet sir.
Content IS King…That holds true for advertising as well sir. IF you deliver what advertising the consumer wants, WHEN THEY WANT IT…you will NOT be intruding but empowering the consumer.
Yes IF you bombard them with junk it becomes noise just like most TV/radio/print ads. BTW, Newspapers are failing because they no longer print NEWS they only print COMMENTARY. There is no balanced journalism. THAT is why people no longer subscribe. On the internet people can chose to read what supports their own position much easier. So if they disagree they just click over to something else.
Advertising on the internet will become THE medium. It will grow, not at insane CAGR but at reasonable ones. The ad rates will vary WILDLY, because of the medium but it will be THE ONLY way to reach those extremely important micro-segments that will make all the difference. AND THAT sir is where the future is.
Tim, I agree with your point of view.
Content is ultimately the unique selling point. Whether it be the content of a website or the content of an advertisement.
Just because consumers have more choice and control does not kill advertising. In fact we are fortunate that the decline in online advertising is actually substantially less then many other industries. Without advertising a lot of the content online would not have been created.
What we are seeing in terms of ad spend is a correction being driven by the challenges in the global economy. Hopefully this will drive innovation and create new opportunities.
Advertising is by no means dying… it is merely evolving!
I agree with Tim and Robert. I have learned as an advertising art director– there are no sacred cows in this industry (save sarcasm). This post brings up some amazing points and I think we all get it– push is dead. Agencies like AKQA and Crispin Porter get it too and have created amazing online efforts in order to get consumers to participate and connect with their brands and its creation (BK’s subservientchicken.com and sprint’s now page, http://now.sprint.com). While this does somewhat democratize the brand, it still has a voice (and the time and money) to communicate with consumers. What’s important to note, though, that this content, because of its demand, will be included in any natural search and discussed within the larger social community. And, not as annoyance, but as a form of infotainment. Again, making content king and form it’s ambassador.
Of course, these efforts are just in its infancy and deal more with branding than monetization. Though I’m sure we can figure this out in the next couple of years (chotchkes anyone?:)). Good post.
Sorry, but Clemons conclusion just does’t hold water. 1) The fact we don’t like or trust ads is old, but hasn’t stopped old media from raking in ad money for generations. 2) Advertising has always been hypercyclic, and Clemons offers no proof that internet ads would be down this year even without a recession. 3) Newspapers are getting killed because they lost classified ads to the internet – Craig’s List costs Bay Area papers $30M+ a year. 4) The internet is so fragmented that ad space sellers lack pricing power, which old media had due to barriers to entry. 5) Ad buyers are lazy or efficient – they still overpay for network TV because they can buy large blocks of eyeballs. Too much work to buy 1000 at a time, at 5,000 websites even at cheaper rates.
4) AdBlock
Too bad he didn’t discuss organic search(and it’s massive role in this), the concept of relevancy or how content is potentially the new advertising…if he had I’d engage in a deeper conversation.
That’s a different paper and one I am indeed pursuing. This one is about everything but organic search, hence the absence of discussion of organic search! I do have a team studying that, and perhaps we can have our discussion when you want. Thanks!
Yes, it would be interesting, because organic search is THE FUTURE. And those who change faster would be most benefited. It would be nice to read an article on this topic. David Dalka, you are welcome.
David,
Nice to see your name and hope you are well. I think this article, which was brought to my attention, reiterates the problems I have seen. I agree that search should be part of the mix, not a separate media like Google, as that is just part of the answer. The problem as I have seen it, is trust: trust in the site that is delivering the ad and trust in the actual ad. As you may know, I have since patented my software application to answer pretty much all of the issues brought up in this article. Still looking for $$$ but it has to be the “right people” behind the money, as I have had too many of the wrong ones willing to invest.
I would reccomend Cost per click advertising but banners ads are best left for affiliate campaigns where the risk is low.