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RSSIt is our fault.
The current growth issues facing online advertising are problems that we created and have let persist.
There is no question that the economy has been completely mismanaged. There is no denying the $14 trillion in U.S. debt, and there is no sugarcoating the 40% drop in the Dow over the last 12 months that wiped out trillions in shareholder value.
Yet, much as we would like to believe, the growth challenges in online advertising have little to do with the recent economic struggles.
According to IDC, the average user spends 32.7 hours each week on the Internet, and only 16.4 hours watching TV. So while Internet usage is double that of television, spend lags dramatically. In 2008, Internet advertising revenue will only be one fifth the size of television advertising, a third as big as newspaper advertising, and only half of magazine advertising, according to a recent Carat report.
Marketers are an opportunistic bunch. If there was money to be made by shifting spend, they would do so. So why aren't dollars shifting more rapidly?
As any drug addict will tell you, admitting you have a problem is the first step.
For the last several years we have been drinking from a fire hose, with perpetual growth our presumed destiny. Every chance they got, online publishers explained why spend would keep shifting online and "follow the eyeballs."
We cannot take credit for a lot of the growth, though. We rode the wave of increasing broadband penetration around the world, and watched time spent online skyrocket. As Web technology got better, we benefited from the ability to display high-quality video online, and we piggybacked off the tools that enabled Rich Internet applications.
Our biggest accomplishment as an industry was targeting. We brought an unprecedented level of data and analytics to the business of marketing. We layered data point on top of data point until we could measure every page view, click, demographic and behavior.
Yet all the science came at a price. We forgot about the true purpose of advertising: to create an emotional connection with the consumer that drives sales.
Let's face it; most banner advertising is about as effective as abstinence training in Wasilla, Ala. Text ads are not much better. They work fine for search, but look ugly and out of place on content sites.
90% of online ad dollars are spent on two media that fail to drive memorable engagement.
So what is the solution?
No more metrics: We need a return to basics. Marketers create endless metrics to measure success. Most of it is a distraction and a total waste of time.
There is only one metric in marketing that really matters: revenue.
Advertising may cause an immediate revenue impact, or it may have a delayed impact, but if it does not drive revenue, it was not successful.
Unleash the artists: As a technology guy, it pains me to say this, but we need more artists in this industry. We need more creative folks dreaming up ad formats that create a memorable user experience and drive consumer action. We need to create new ad formats that leverage the interactivity advantage of the Web.
Most importantly, we need some sex appeal. We need the type of ads that get talked about around the watercooler Monday morning.
Drive transactions: The Web is the best platform for getting consumers from awareness to transaction the world has ever seen, yet few advertisers leverage the Web as a transaction platform.
Publishers are still stuck in a page view and CPM world. This narrow focus ignores the opportunities that lie in leveraging the targeting information we have to help consumers find products and complete meaningful transactions.
College sites should assist you in finding a school, coach you on writing an essay, and even let you submit an application. Sports sites should let you buy merchandise without leaving the site. Dating sites should... well, use your imagination.
If we stop blaming the economy, and focus our energy inward, we can invent the ad models that will be both memorable and capable of driving transactions.
As the thought leaders in Internet advertising, we have the opportunity to position our industry for the next 10 years of growth. But first we need an honest dialogue about what we are doing right and where we could benefit from major improvements.
What do you think we need to do better? Let me know in the comments.
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Every day, someone else has something to say about what works, what doesn't; text ads are no good, banner ads work; all caps is shouting, u/l case is friendly; more consumers are online but spending less money; fewer consumers are spending more time online.
And I agree with an earlier commentor that the snide remark about "abstinence training in Wasilla, AK" was inappropriate; in fact, it pretty much diminished any credibility the writer may have had. He obviously has little or no propriety.
If there are any marketers seeking newer more effective ways to target the active 21-35 year old demographic, the cool, fashionable, influence-able 'what economy problem?' surfers of Internet then I encourage you to contact me: josh@baroptic.com
I agree with a lot of what you said about the lack of creativity, about the lack of engagement amid a river of those preaching it. I agree that many underutilize the transactional opportunities. But I hope you are not advocating digital media solely as a DR platform?
Marketing is about multiple touches that create a chain of influence - I say don't do away with measurement, but focus on measuring the influence chain and attribution to revenue and correlation to business growth. The multiple attribution protocol systems are emerging and will be evolving. How do we make them cross channel to include non-online channels, would be my billion dollar question. What channels influence and what channels activate and where does the value get assigned to each?
The problem is not publishers being "stuck in a page view and CPM world", it is that they got drunk on the currency of gross impressions and not audience. The value of online impressions continues to degrade no matter which direction the CPM's move. If publishers can offer consumers a value exchange - compelling content and experiences in exchange for attention, why should they be held to a standard of tracking immediate and online-only transactions? If that trend continues we will lose all the quality content online and consumers will have horrible experiences which will reflect in massive changes of behavior. Of course I don't see that happening.
However, I believe the overall advertisement effectiveness measurement follows a very complex dynamics. Often advertisers or agencies are running a multimedia campaign in which one medium modifies the effectiveness of others. If you look at online medium in isolation, you may very well find that the medium is producing a positive or negative impact on consumers’ behavior or attitude, but you will never know if that has happened due to the interaction effect of other media. Also, if you look at any single media (online medium for instance) and find a large positive effect, you may get tempted (I have seen that happens in the market) to choose to invest more on that at the expense of other media (e.g., TV, Print, Radio, Direct Mail, Billboard, etc.). Then at the next quarter you may find a drop on everything, because now you paid less attention on the Offline. The challenge is how you look at everything at the same time (not just online) and attribute advertising effectiveness to all different media that are driving sales or consumers’ behavior and attitude.
I like your guy's thread here. What it is really about is storytelling. If the story isn't compelling then no one will care. Also, think about CPC, CPE (engage) and CPS (Share). How relevant would it be to have a Cost per Shre pricing to generate revenue. Nothing more targeted than to have Bob share a link with Sue who shares the link with Sam. It should all be interactive (not banner), engaging, relevant and non-intrusive. Have a great weekend.
Best, Scott - CEO of Veeple
I still feel that ads should not "be designed to generate clicks." They should be designed to generate revenue.
The cynic may say, "Yeah, right, because artists care SO MUCH about revenue." But that misses the point. What artists DO care about is the communication of ideas. Whether in poetry or painting, by using sympathetic strings or aggressive fonts, Artists are communicators and When good ideas are well communicated, revenue follows.
Unleash the Artists!
The answer you ask to be created has been created, you will hear more about Bright Neighbor as time marches on, but it is the answer you seek.
The problem most of you are stuck in is trying to figure out ways to make MONEY rather than real VALUE for HYPER LOCAL economies. The fate of the US economy is already written on the tombstone, it's just that many don't know they are dead yet.
There will be business survivors for sure, but nature's massive weeding out is well under way.
Users shouldn't be tricked into click through, they should want to. In essence, every advertisement should provide a service. Just like TV commercials will often entertain in a medium that's designed for entertainment, internet advertisements should provide a service relevant to the site on which they advertise. I'm not just talking about content-driven advertising, I'm talking about substantive advertising.
One of my favorite examples was a campaign that Burger King did for The Simpson's movie a year back. They advertised on MySpace and Facebook that users could upload pictures of themselves to their application, and it would generate a Simpsons-style picture of the user for them to put up on their profile page.
This kind of advertisement creates an experience that seamlessly fits into the user's online experience, and it's the type of creativity needed to drive online advertising through the doldrums of pre-rolls and banner ads.
I absolutly agree with you David with the SAME evaluation in 1997, as I saw the posibilites then, and here is the big but, NO ONE GOT IT then!
Now with patent in hand on local search, applied for in 1999, when NO ONE GOT IT and in '98 when IBM, yes, IBM told our company that "no one cares obout the local community, its a global audience" local has been one of the fastest growing segments of the Internet 10 YEARS later. WE GOT IT then.
So who else is going to miss the NEXT BIG Thing, because NO ONE GETS IT?
W
I'm not at all against tracking the metrics that lead to revenue. I was arguing against tracking metrics that *distract* from revenue.
Stated a different way: revenue is the only goal, so you should measure the metrics that help you refine your approach to achieve that goal.
Smart publishers are going to figure out how to help generate transactions and charge on a CPA model that is less risky for advertisers.
David.
Dave said... "No more metrics: We need a return to basics. Marketers create endless metrics to measure success. Most of it is a distraction and a total waste of time.
There is only one metric in marketing that really matters: revenue."
To which I disagree...revenue ISN'T the only metric that matters, as you have to know where and why you got that revenue to steadily increase that revenue.
While we don't need to keep creating metrics, there are basics that we need to continue to measure (i.e. conversion %, as a 1% conversion isn't the same with low-ticket vs. high-ticket items).
Needed? No, but I thought it was funny so I ran with it. :)
I hate politics, and wasn't trying to make any profound statements.
David.
Working on client side, I usually highly doubted the use of CPM while more focus, and recommend my clients so, on conversion rate and other metrix of "interaction".
"Let's face it; most banner advertising is about as effective as abstinence training in Wasilla, Ala. Text ads are not much better. They work fine for search, but look ugly and out of place on content sites."
Really needed? Keep to advertising and leave political comedy alone.
As for online, agencies need to start an education process, inhouse and with the client if they hope to maintain their agency of record status.
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