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.
“The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed.”
Advertising is not solely about the message, but also who is receiving the message and in what context. Advertising as ad units and disruptions within an online experience is of course ineffective and will constantly fight the battle of conversion. But the right message, context and audience alignment can and does work — which is why I agree with the your point about contextual mobile ads, but feel that this can also carry over to the Internet with the appropriate permissions by audiences.
I find it ironic to say the least that the author’s link to “consumers do not need advertising” links to his article in ad-supported ‘forbes.com.’ Talk about biting the hand the hand that feeds him.
obvious for at least two years ..
Making a prediction like this in the middle of the rubble is not exactly prophetic.
I think what will change on the web is the arbitrary pricing of online inventory. If your rate card says $10CPM but you’re only making $2 then your price is, maybe, $2.25 CPM.
Online advertising will have to be based on real life supply/demand numbers— possibly something similar to the dutch auction system, or maybe just the stock market system we’re all familiar with.
I know from experience that there are a lot of publishers out there making .50 eCPM while holding out for their $10 rate card prices. This is bad for everyone. They would be better off to let the market decide what their CPMs are and let it rise and fall on it’s own merits.
@BrendaDireen smugly claims that she’s NEVER done any advertising and just wisely markets her product. And it shows. Her site has an alexa rating of 14 million and a page rank of 0.
Apparently she’s never paid for a web developer either (re: her homepage lands on /page1.aspx.. smells templated)
It’s smart to trim advertising spends right now. But it’s not smart to do so forever. Sooner or later, someone in Brenda Direen’s screen printing/embroidery business in the Columbus area will take a gamble on some advertising and will eat her lunch.
And pepsi and coke.
And toyota and hyundai.
Etc.
Companies will always want to show consumers their new products, they just need to force more cost effective options to emerge, and I think this recession will do just that.
We provide an event portal in the metropolitan region of Nueremberg. It`s not access cost for consumer, not an affiliating concept e.g. ticketing provision, it is completely ads free.
…but nevertheless the portal is one of the few profitable portal concept of an regional portal in germany.
A Slide of the business concept:
http://www.slid...-frankentippsde
It should only be an impuls how to develope and monetarizing content concepts. It has a great potential.
I believe in some points
- make a bill for digitalism and providing information, not only sell ads
- quality first, then quantity
- local first (think global, surf local)
- digitalism service!!!
a lots of companies have no time for internet, esp. web 2.0 workings.
last not least: I am sure, that we increase in future our pricelist for advertising, not reduce.
“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 exactly what TV advertisements are. How do you explain its success?
Sucks to say it, but it’s not about the customer. Advertising drives sales. That is, done effectively, it makes you, the advertiser, more money than you had before. Which is why you and I and everybody else will continue to do it, but no, not blindly.
Curious what Professor Clemons thinks about klickable.tv (founded by a Wharton grad). With Klickable, you watch videos you are interested in and if you see something in the video that you want, you click on it for more info and a way to purchase. Is it still advertising?
I had written a more detailed response, but I no longer think it’s worth posting.
This “guest post” is naive, simplistic, reductive, states a bunch of random claims as if they were self-evident, and ignores the past 50 years of media history in favor of the last 5 years of what’s hot among internet elite.
There are probably intelligent things to say on this subject but they ain’t here.
Its hard to take an article like this seriously from a person who has never had a commerical job in his whole life. Yes, he has consulted with companies, but its not the same as being employed by a company.
Click to see his CV:
http://opim.wha...mons_CV2006.pdf
Actually, its kind of fitting that I feel exactly the same way about this article as Dr. Clemons feels about advertising:
1) I dont trust his opinion
2) I dont want to hear/read his opinion
3) I dont need his opinion
Arrington, wrong forum for this type of guy.
Advertising has always had a problem, no matter which medium it is from. The problem is it is an “interruption”. When we are midway through our favourite TV programme, engrossed by the action, suddenly our brain is hit by an interruption about a new car, or some breakfast cereal. When we are reading a good article in a magazine we turn the page eager to read the next section when – wham – we are interrupted by an advert for a new laptop, or whatever. This is a real problem for advertisers because most people hate being interripted in what they are currently motivated to do. That’s why most advertising fails. Luckily, the big brands can make money because the few people who do accept the interruption part with their money. Study after study shows consistently that most people ignore or distrust advertising. However, as an advertiser if you spend enough, have loads of different kinds of interruptions, eventually you get noticed by enough people and you can sell more of your products and services.
Online, though, there’s a real problem for the advertisers. It appears that the online reader pays even less attention to interruptions – except those for which they are mentally prepared (such as Facebook pokes, contacts from friends, emails, instant messages etc). In other words, we are (online) much happier to accept interruptions but they must come from people we want to be interrupted by.
Traditional forms of advertising – transferring the offline world to the online world – will fail, as this article suggests – in the Web 2.0, interactive world we now inhabit. But if advertisers turn themselves in to trusted friends, their interruptions will be accepted. Not only that, they will be more likely to be acted upon than traditional adverts. In other words, if advertisers ditch their old fashioned methods and become “social” they will make more money than they ever dreamed possible. The problem is that, still, the advertising industry has clients which don’t “get” the interactive online world and think that all they need to do is have a banner with a link, as though that is “interaction”.
Traditional advertising will die – just as those old fashioned TV adverts from black and white TV days died. Online advertising will change – it is just at the moment that the advertisers themselves are struggling to accept they now live in a different world.
I though the focus on advertising was more on “brand recognition” of a companys products or services.
the fact that canon has an ad blurting at me doesnt mean that i’ll go out and buy myself a canon camera – its just that i know it exists, and its a big enough company to afford that slot. And if i already own a canon, wow, i feel great that i made a good popular purchase (this last point is open to interpretation).
i remember i bought an external hard drive of a company i hadn’t heard of before (but i read many many positive reviews). a week or two later, i saw its ad. and i felt happy, that i made a good purchase. probably ill buy it again, or tell others that that brand exists!!
What a hot topic!
I think we are all going to be just fine though and things will pick up at the end of 2009 hopefully.
Despite there being very different opinions, this article stimulated some creative thought in my head. And imagination is what marketers need.
So I give props to the prof! Thx Dr. Clemons and I look forward to more.
Misdirection is clearly Google’s business model. Why would anyone buy ads if their products/websites would show up on top of search results anyway?
Just try to search for a certain product – you will most certainly find ads for competitor offerings in the ad section.
The more important question is: Will the misdirectional business model of advertising be replaced by something else in the future? This will depend on the ratio of [Transaction costs to gather trusted information] vs. [Consumer acceptance level for trusting potentially misguiding advertising] – be it banner ads, search ads or whatever…
What a strange article – considering ad tracking becoming smarter and smarter – surely online is the only way of advertising that will grow just because of this?
Think few could actually say that advertising is failing on the internet… most of my friends would be out of jobs!
Excellent post but a bit extreme right now
Excellent post to prude over but conclusively lacking a lot. Nonetheless, appreciate such debatable topics!
All this makes sense, but I think this article essentially states the obvious from a very rational and academic point of view. The author (a very rational person) relies a bit too much on his own experience and preferences to draw conclusions. This type of rational analysis doesn’t convince me because much of how advertising works is irrational. It reminds me of a story I heard about the newspaper that the US army was distributing during the Vietnam war. (My memory of the details might be fuzzy.) At first, the army had no ads in it. Rationally speaking this makes perfect sense. Nobody is supposed to want to see ads, and these soldiers can’t go shopping anyway. But oddly, they all missed advertising and requested that they be added.
Seduction is a game we play and enjoy in life. We have a love-and-hate relationship with it. So, we might say we hate ads when we think about it rationally, but when they are completely gone, we realize that we miss them because we all secretly love to be seduced.
So, my sense is that advertising is not going away any time soon, not on any mediums. What we are seeing is a massive musical chair where the power structure of the advertising industry is collapsing. We are in the middle of a “creative destruction”. This does not mean that the industry as a whole will fail.
Another thing that this author fails to address is the needs on the advertiser’s side. The article is written strictly from the consumer’s point of view. We all have a fundamental need to let other people know that we exist. Our resumes and business cards are a very basic form of advertising in this sense. This need is so great that many advertisers are willing to pay to advertise despite the fact that advertising doesn’t make much rational sense.
So much of what we do socially are irrational and inefficient. I often get annoyed by how long it takes for people to leave a party because everyone has to say goodbye to everyone else. Most of us don’t really enjoy this process and are itching to get out as fast as possible. But at the same time, we feel a bit hurt if someone leaves the party without saying goodbye to us. If we were all perfectly rational, we could establish a policy for the party that says, “No saying goodbye to anyone.” If it’s a policy that everyone follows, we don’t need to feel hurt, and we can all get out very quickly. But are we so rational?
Advertising is a social dialogue much like saying goodbye at a party. We don’t hate it as much as we think we do. And, so, we cannot analyze it with a rational and efficiency-based model. I do not believe that advertising on the Internet is failing. I think it will succeed fine.
Selling access, already done at seobook.com, seems to be doing ok for Aaron.
The advertising I do through Authorbuzz.com for books proves quite the opposite of this article.
Our ads are announcements -hopefully creatively done – that let readers know about what’s out there. A key to having it work it placement – the right site/blog for the right book.
Last month we got the highest ever click through rate on an ad at Huffpo -3.8% and my client saw the results in actual sales at Amazon all week long since the ad linked there. There is absolutely nothing in tradtiional media that works as well as an ad like that.
Like everything else we’re in the midst of a digital revolution and we won’t know for a while what works best – but there are certainly things working right now.
internet advertising is falling this year??
I don’t really see this as advertisement failing…
Suppose we entertain the notion, for a moment, that consumers are not reacting to the same branding techniques that have worked for decades. This is an age where everything is about being fresh, new, eco-friendly, healthy, and functional.
I’ll give an example. I was in the supermarket yesterday, and I saw two brands of coffee sweetener on the shelf. One was regular sugar packets in a yellow and white (quite ugly) package. The other was Coca-Cola’s brilliantly packaged Truvia. I remembered seeing it around, and on reading the back of the package I found it was made from the plant, Stevia. This immediately fired something off in my mind of once following a link to an article about that particular plant and how derivatives can help prevent diabetes. I suppose I don’t need to mention that Truvia went into my basket, while the old sugar stayed on the shelf.
I could go into analysis on why I picked up that package… but I think you guys are smart enough to think it through yourself if you so wish.
It’s interesting to see the level of vitriol from some about Clemons’ points.
While I think he may have focused on extremes, I also believe he is on to something. Transferring traditional advertising models online has not and will not work. I’m surprised he didn’t bring up ad blocking and horrible click-thru rates, recall, and banner blindness studies to back up more of his argument about people never even seeing the ads thrown at them.
The larger point is that advertisers online need to better understand how consumers digest brands and products and adjust their approach. Search, Social Media, Conversations, etc. It’s about conforming to the culture online and figuring out how to touch your consumers online.
Oh why not. People zip-through-TV-ads thoughts are at most not terribly relevant. Saving time–and the amount of commercials allowed is ridiculous. Avoiding loud, oft-crummy commercials is something entirely different from seeing ads on a site.
Will enough people pay for content in the FT model? Good question, though seeming to use a personal willingness in some cases to extrapolate broader use feels questionable. Dunno if enough people will do it to fund FT, etc., or nichier things like a site for boxing or sailing or 16-century Scottish poetry.
In that realm, a sense that enough people aren’t kooks, realize that the ads they see, be they plumbed in by Google or sold by the site–and may find useful because they are targeted to a niche audience–are a necessary part of the site’s existence.
The big one, newspapers, is a massive question. I would be willing to give a couple newspaper sites something like $5-$10, go through that at something like a nickel, dime or quarter per article, I’ve no guess if enough other people would, nobody else seems to know, but we may well find out.
Specific points aside, this reads like a lot of grand claims with little to back up the contentions or at least a lot of really questionable supporting evidence.
Oh, lapsing into something pretty much “I said in ‘99 that Pets.com and Webvan wouldn’t work so I are smart” does not enhance your position. More than a few people were saying as much on the time and plenty of people in the street were chortling at some length.
1995 called. They want their irrational fear of Web advertising back.
Well thought post, interesting hypothesis, and enjoyable read, thanks.
A true predictor will wager that their predictions are correct. I’m not sure this article belongs here, maybe on a paid content or “free” site?
If advertising is failing, would you mind if I ran a banner ad on your site for free? Thanks in advance!
Apart from the fact that this is true, isn’t this a bit outdated? When was this written? I think everyone has understood by now that there is no market for messages anymore, right and that there are better ways to ensure brand success than to create single-mindet 1:Many messaging.
You say the internet is about freedom yet you say that your willing to pay. I do not understand this concept.
By using money to access freedom, you are putting a restriction on freedom. Which makes that freedom, not free. In more ways then one.
If the internet did really represent freedom then you wouldn’t have to pay to access anything. Money should not buy freedom. Freedom should be free.
The things that really need to be free can be free without advertisement… and always have. Open source projects and free culture can run off of the industriousness of the participants.
The only thing paying for web content does is increase the quality of the content and prove that you have a job. Whinging about having to pay for premium content is about as effective (and respectable) as whinging about paying monthly fees for online games.
An interesting commentary with a lot of unsupported claims.
A modest rebuttal with a personal angle. Clemons wrote a good article, but it paints too bleak a picture of this exciting field.
didn’t read the post but I’d guess ad-block plus and noscript.
I wonder about some of the negative reactions to this article. Do they feel personally threatened by the views of the author? I find that quite revealing.
I think the first thing we will see before the “death” of advertising is larger bigger brasher online ads. As screen space becomes cheaper, we’ll see them take up more space on our screens.
Building a brand is important, it’s why companies sponsor events, sports etc, and with the internet, why more agencies are looking towards things like Alternate Reality Games. It’s not overt advertising at all. “be proud, not loud” is one of the mantras – sometimes the sponsoring company isn’t revealed until the very end. The idea being that they would rather have one person with a very favourable view of their brand, than ten hundred who don’t care one way or the other. That one positive person will transmit their views to others around him, to his social network. This is how a brand can grow.
So, we could see advertisers playing a greater role in creative on-line endeavours, open source projects – anywhere there is a community online.
I totally agree with the article. Advertisers have become complacent by assuming that the big clients will continue to fund their businesses with repeat orders. As the internet has begun to take over and become more effective than print advertising, it has created the classic ’sink or swim’ scenario. In a similar way to the economic recession exposing the pretenders & urging the entrepreneurs to rise out of the ashes, the internet is allowing the innovators to rise to the top leaving companies unwilling to change in their wake.
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I agree with this article. Period. I flat out agree. Sure it is going to take time for all of this to happen, but it will.
this post is pretty much right on the money with regards to the future of advertising on the web. The question is what happens to Google in all this.
Much of this article is well thought through, well written and on the money.
One thing where the author misses the point about advertising is that a massive aspect of advertising is the brand building aspect.
The author assumes that (very soon) we will be living in the world of ‘perfect search’, which isn’t the case.
Finding right things online will become more difficult with time, as different types of data come to existence.
My point is that often a time ‘the search’ itself will be the advertised item.
I will be running a web site (a mini-social network) for example about Fly-Fishing in UK and it will have 50000 users whose opinions I will value.
To get to that web site I will need to be aware of it’s ‘brand’ (i.e. the domain name).
Once I know the domain name I will go there directly all the time, but I NEED to first know the domain name off by heart and that’s where advertising plays a massive part.
Human mind (if it doesn’t know how to find something) will go to the most trusted source they know of.
People often type in the brand name of Amazon into Google to go to Amazon.com to buy an iPod although they know that they can find cheaper deal through Google Shopping from some_unknown_retailer.com where they don’t want to leave their credit card details to be stored forever.
What am I saying? The very notion of advertising is neuro linguistic programming of human mind to remember a given brand, so that when they are hungry they first think of McDonalds and that when they are thirsty they first think of Coca Cola (or any other Coca Cola owned ‘healthy’ beverage).
For these purposes we need the glossy, polar bear, big, fancy, well-inspired, cool-image based ‘no return’ ads, which are actually the very concept of ‘product building’ itself.
Hope this makes sense.
The problems you state have been around for a long time
1. That consumers have lower trust for commercial messages has been shown in research going back decades, yet advertising still exists
2. Consumers have rarely “wanted” to view advertising, except at the Super Bowl
3. Consumers never really “needed” advertising and have always gotten information from other sources. The internet has made that easier, but this isn’t a new problem.
It seems that these are old arguments, possibly with some new urgency. But why not look at this from a marketing perspective. That is, the purpose of advertising has been to build brand name awareness as well as support brand attitudes.
In short, like a lot of other proclamations about the end of things (the end of paper, the end of radio, the end of big companies, the end of vertical integration, etc.), isn’t this a bit overstated?
I dearly hope more time and money goes into research and testing of new models online and not just attempts to save traditional advertising.
Advertising seems too much like an inefficient solution in this day and age to warrant survival. There are other systems that are out pacing advertising, which have been steadily gaining for years. It was just a matter of time.
Nice piece, but the idea that “advertising is dead” is more an academic exercise than anything else. Anyone IN advertising already knows that consumers don’t need it, don’t want it, and don’t trust it. Yet, they continually respond to it, talk about it, and in some cases ask for it.
Professors love to chat about the death of advertising, it gives them something to do (since they generally aren’t working all that hard), it’s fun , and it’s “controversial.”
The job of someone in advertising is to come up with ways to engage consumers in a brand — this has changed over the years, and will continue to do so. The form may shift, but the ultimate strategy does not — in the very simplest of terms, the job of someone in advertising is to get people to buy the brands’ stuff, tell a friend about it, and buy it again. Using that model means that we use whatever we can to get in front of the consumer. The medium (and media) may change, but that’s not the point, is it? Good advertisers focus on the core element — selling shit – and then coming up with ways to sell said shit.
A very interesting article and an even more interesting amount of feedbacks.
I agree with the author, that advertising need to change when it comes to the web.
Here my 5 cents:
- it must fit with the content (luxury ads in e.g. fashion titles)
- it must fit the style of the content (almost leads to an auction to accept ads instead of begging for it)
- the web is multi-channel medium, so advertisers need to accept that users even comment on their ads
- if the ad (be it static, be it dynamic (Flash, Video)) the end user must have the ability to take it along, if he/she likes it
- a few more things to consider
Most of which we enabled in our publishing platform – howver, the advertiser needs to “play” along … an evangelist task …
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Trusted, needed, and wanted.
So the goal of successful advertising, then, is to make it trusted and needed and , therefore, wanted.
True of all advertising, no matter the medium.
First off online advertising won’t die. It might get regulated but won’t die. Even if it died, us affiliate marketers will find ways to reach out to the audience and still make money. How do you suppose the 20 years affiliate marketers are making $5000 a day through online advertising? There are ways.
I read your post twice. During second time I did a thought experiment where I imagined it was written in the time of radio as the established media, considering the emergence of TV as new media, and the consequences to advertising — effectively doing a mental replace of “internet” with “TV.” Of course nuance and details are different, but I could imagine the fundamental issues with advertising you raise were true then as we made that media jump with our attention. That is, advertising is not very satisfying in terms of trust, effectiveness, value, etc. We have not yet invented scalable, better alternatives for companies. Please do.
Second, we do not realize how accustomed we are to ambient advertisements and how gray our surroundings would be without them. This struck me as I watched a company build a virtual replica of a baseball stadium in Second Life. Without the signs, banners and logos of advertisers, it simply did not look right. I had the same reaction seeing the streets of some Eastern European cities before their economies opened up, including opening to brands and advertisers.
I look forward to new, better and more engaging ways for companies and customers to get together, and hope you’ll point your brightest students at the challenge. db
Too high level. Proves, nor points out anything of substance. Should probably spend a little more time in the field to figure out exactly how the advertising strategies and systems work.
While you make some valid points about the role of independent research in consumer purchasing decisions– a very radical change in behavior enabled by the internet– I think your argument has a serious blind spot in regards to brand or image advertising.
Consumer recommendations, expert reviews, et al, are fine when there is a clear distinction between products.
But when several products in a category are equal, it will be the brand image advertising message that distinguishes one from the other.
Similarly, if I am starting to research what car I should buy, the cars whose ads project the image that best suits my needs will be the ones I google (or ClemonsSearch™) first.
The good news is that image advertising is generally the kind we don’t mind seeing: it’s not particularly hardsell and often clever, charming and funny.
As Howard Gossage, a legendary adman of the 1950s said many years ago: “People read what interests them. Sometimes it’s an ad.”
The internet doesn’t change that truth.
Actually it was a very insightful article and I think everyone who took a very defensive position is either involved in the online ad business or cannot see past a 1 year timeframe. Mike was very courageous to have that article up since he makes his money through advertising.
Anyways, advertising does work to a point by getting the company name and brand out there. But I think this works best on TV and radio with print magazines/newspapers coming in a far second where you are casually browsing or reading. On the web, people are actually doing something whether it be searching for something, reading a blog, or whatever. This is different in the sense that when you are relaxing you may just listen to a commercial because it entertains you. When you are actively doing something, you don’t want any distractions and just want to complete the task on hand. This is simply why I have never clicked or even look at ads on the web.
And the argument that models like Google are working is not a good argument. Just because something may work in the meantime does not mean it is a great idea that will always work. There may just not be a better solution which is the current case. There are many companies trying to find this better solution because when you are doing a search for something on Google, how relevant are the ads on the side? Do you ever click on them? And if you do, does it lead to a transaction?
I think this professor knows exactly what he is talking about and is years ahead of his time. People that disagree either can’t or don’t want to see it. But years from now, you’ll realize just how wrong you were.
One more point. I do disagree when he says all people find ads untrustworthy. But he is right to a point. People are skeptical when someone is trying to sell them something. The problem is that people don’t do their won research or due diligence to find a solution that works for them. So they may sign up for something and then complain about it rather than doing the proper research to find the best solution. Anyways, ads can help by letting people know of the company so they can check out what they offer and research them. But as I said before, this works best on TV/radio rather than on the net. And this may be due to the fact that so many small, unknown companies can advertise for very little money while large well known companies advertise on tv/radio. This may lead to the untrustworthy feelings.
While it is good that small companies have a chance to advertise, it does lead to many websites that either scam the user or don’t offer exactly what they want.
I can agree to the fact that no one likes to be interrupted via eblast or pop up banners etc… I also agree that most of us a capable of searching for relevant information when we are motivated to buy. We visit the corporate website, ask friends, post comments in various social communities we are involved in, etc… so this is all valid.
There is one point that I would like to challenge. If no one (literally) ever gets advertising messages, then where does anyone get information or content to share or to blog about? What do we end up posting on Facebook or Twitter about? Just think of the how greatly the amount of information sharing will be reduced if no one ever got advertising messages. I mean come on… how many people actually have time to sit there all day searching for product information and sharing it?? If we never got advertising messages, then how would we ever know that a product exists? or if our favorite brand has just released a new product.
As much as we, as consumers, don’t like getting interrupted by advertising messages, we need it. We may not admit it or deny it, but we love getting advertised to.
In my opinion, internet advertising only fails if there is a lack of relevance. As marketers/advertisers, we must understand that we should only communicate content that is relevant to the target. There are lots of great tools for targeted advertising available.
I agree with Professor Clemons.
Two years ago I attended a panel of 4 VCs (here in Silicon Valley) who all claimed the billions of dollars of offline advertising was going to move to the internet, that the only issue was the mechanism wasn’t yet perfected. A few brave souls in the audience attempted to challenge that belief…and were immediately shot down.
http://www.sdfo...p;eventID=12864
It’s two years later and where is this miraculous online advertising mechanism?
What’s bizarre is that it’s pretty obvious advertising (except for search) doesn’t work on the internet by simply watching one’s own behavior! And no, those of us reading TechCrunch are not smarter than everyone else.