In a recent opinion piece in The Wall Street Journal, Esther Dyson described the growing irrelevance of traditional online ads, and the growing importance of advertising on social networks. She contended that Internet users have become inattentive to ads due to their lack of relevance to site visitors (so-called "banner fatigue"). She also predicted that someday (soon?) people will be able to "friend" advertisers and only see their ads -- or offers tailored to the information users have chosen to supply -- on pages of specific sites they visit.
I couldn't agree with Dyson more regarding the irrelevance of ads. In my weekly Search Engine Watch column, I've repeatedly underscored the fact that everyone loses -- site visitor, advertiser and publisher -- when displayed ads aren't relevant to the page content, and hence to the site visitor. The visitor breezes right by the ad (or worse, is turned off by the severity of its irrelevance), the advertiser doesn't get the click, and the site publisher doesn't get the revenue that Google or Yahoo would have paid.
Here's an example of how bad the situation's become: one of our clients is a book author whose first novel was recently reviewed in the New York Times Sunday book section. Since the Times serves ads in non-premium positions (like the bottom of the page) using Google's self-serve AdSense system, I tried to use Google AdWords to display ads on the online book section pages (as well as other pages on the Times site). Result: No dice. No matter how high I placed my click bids (within a reasonable range), my ads wouldn't appear on the page. Why? Most likely because other advertisers were bidding higher.
I noticed that each of the book section pages displayed ads from a prominent mortgage company, a well-known computer manufacturer, and a ringtone vendor. None of which was relevant in any way to the content of the page, much less in any direct way to book readers in general.
As a trend, nobody is served well by this phenomenon. Advertisers get fewer responses when content and ad/offer don't match. Publishers get less revenue when ads are paid for on a CPC basis -- which is becoming more prevalent, especially with the meteoric growth of the Google AdWords network. And site visitors lose because the ads have become a negative experience and at best are ignored and at worst an annoying distraction, like an ad for a massage parlor in a religious magazine.
While I agree with Dyson that the future looks bleak for online contextual advertising, I think the various ad-serving players can and will wise up and incorporate technology and policies that will reverse the trend. Smaller contextual networks like ADSDAQ claim to use algorithms that more closely match page content with relevant ads. Google AdWords recently rolled out a tool that lets advertisers choose to exclude their ads from whole categories and topics of sites that they deem irrelevant.
In the premium ad space segment, manual review and more-stringent publisher policies may be required to ensure irrelevant ads aren't served. This is a difficult function to express algorithmically and build into ad service software - but let's never underestimate the ingenuity of properly motivated software developers humming with Red Bull, and the creative energy that's humming through the online advertising industry.