Is online advertising failing or is it just the recession?

March 23, 2009 Leave a Comment

Eric Clemons has just written a very thoughtful article on “Why Advertising Is Failing On The Internet” on TechCrunch. His high level argument is that the Internet shatters all forms of advertising because it allows consumers to bypass them. He provides evidence for why people don’t trust ads, why they don’t want them, and why they don’t need them. He then goes on to illustrate how the Internet provides ways for people to meaningfully get the information they need without them.

He then moves quickly from advertising to the ecommerce space where he talks about new monetization models around selling real things, selling virtual things, selling virtual experiences, and selling misdirection (a subject where he expresses a lack of faith in Google’s revenue model and sustainability.)

Unfortunately, he falls short in the end of providing a list of concrete replacements for advertising. Can you really imagine a world without ads? Surely they will exist, perhaps in different forms, but they will be omnipresent.  In addition, he sites declining online ad revenues to support his thesis at a time when the culprit may be nothing more than the current recession. Whatever the outcome, his sweeping approach to the landscape of online advertising bears reading.

Filed under advertising, eCommerce, Marketing, Retailing Tagged with , , , , , ,

Local ad spending expected to decline through 2013, interactive segment the only bright spot

March 17, 2009 Leave a Comment

According to the BIA and The Kelsey Group, economic conditions over the next few years will reduce overall local advertising spending through 2013.  Local advertising revenues in the United States are expected to decline from $155 billion in 2008 to $144 billion in 2013, representing a negative 1.4 percent compound annual growth rate.

Only one segment is expected to show growth over that time, which is interactive advertising.  The others should see marginal or rapid declines over the next 1.5 to 3 years. 

Tom Buono, president and CEO, BIA Advisory Services, sees an accelerating shift to online and an increasing demand for “accountability metrics”.   According to the survey, interactive share of local ad spending will grow from 9 percent ($14 billion) in 2008 to 22.2 percent ($32 billion) in 2013.   For purposes of the survey, “interactive” includes mobile, Internet Yellow Pages, local search, online verticals and classifieds, voice search, and email marketing.

In contrast, the “traditional segment” is expected to decrease from $141.3 billion in 2008 to $112.4 billion in 2013 (CAGR of -4.5%).  This area includes newspapers, direct mail, television, radio, print Yellow Pages, cable television and magazines.  Neal Polachek, CEO of The Kelsey Group, indicates that the share shift “could actually be more pronounced if the major traditional media are not able to integrate new interactive products into their bundle.”

With yet another major print newspaper (the Seattle Post Intelligencer) closing its doors, the transition already feels very real.  If traditional media companies are to thrive over the next 10 years they will need to continue to embrace interactive strategies far more aggressively.

For more information about the survey and its methodology, click here.

Filed under advertising, Business, Economy, Marketing Tagged with , , , , , , , , , ,

Focus on being a niche web site to earn higher eCPMs

March 16, 2009 Leave a Comment

 

Don’t let what happened to AOL happen to you.  AOL’s broad-based content mix including news, weather, sports, music, tv, movies and dozens of other categories meant it was good at one thing in terms of making money:  selling remnant advertising across its network.  That “success” probably helped hasten Randy Falco’s departure as CEO.

Without strong niche brands and content, AOL was never able to aggregate demographically targeted audiences in a way that advertisers were willing to pay a premium to reach.  So their sales people did what sales people do, they took lots of orders for low cost run-of-network ads.  In the last few months AOL’s now deposed CEO had made a push to move the business in the direction of niche content and premium ad-buys, but with little success.  As a result, he’s gone and there is a new sheriff in town – Tim Armstrong of Google.

The double-negative with launching a broad-based content site includes a) being of no interest to advertisers until you have lots of traffic volume, and b) once you get that volume being so mainstream as to be of little strategic value to buyers.

If you already have lots of content covering a variety of categories, consider launching individual destination sites which will have immediate appeal to both niche audiences and advertisers.  Replicating web sites is inexpensive these days, and the premium ad revenue should be worth the extra effort. 

If you are just starting out, think small to earn big.

Filed under advertising, Business, Editorial/Content, Marketing Tagged with , , , , , , , ,

Google announces expandable ad units to improve click-through rates

March 6, 2009 Leave a Comment

In an industry where display ads enjoy 0.25% click through rates and low CPMs, Google is stepping up the footprint of its Adsense units with the introduction of expandable rich-media ad units that grow larger after a user clicks.

Google is being careful at the moment to restrict the expansion to only when users click on the ads (some competitors allow it happen on simple rollover), and holding the size of the expansion to 2x the original width and height.  In addition, filters allow publishers to opt-out of having certain advertiser ads show up on their site.   This is the second relaxation of standards for Google ads in recent months.  In December the company allowed ads for alcoholic beverages to run in Britain. 

For more information about the new ad units and Google’s overall policies, click here.

Filed under Marketing, Search Engines Tagged with , , , , , , , ,

Survey Shows Frequent Online Shoppers Respond to Personalized Ads

February 5, 2009 Leave a Comment

 

ChoiceStream, a provider of personalized product and display ads for large retail and entertainment brands, released their latest online personalization survey.   In it they indicate that retailer’s most attractive prospects–those who spend the most money and shop most frequently–are more likely to click on personalized ads than non-personalized ads.

choicestream1Overall, 39 percent of consumers are more likely to click on an ad if it is personalized – a meaningful percentage in its own right.  But the number climbs to 58% for those who shop online at least several times a month.  And the bigger the spender the greater the interest in personalized ads, with 50% indicating they are more likely to click on them.   Contrast this with only 22% of infrequent shoppers who make that claim.  In addition, 50% of the biggest spenders indicate that they are more likely to click on personalized ads than on non-personalized ones, vs. 32% of the smallest spenders.  

The data also supports a similar pattern in terms of consumer attention to the ads.  Over 41% of those surveyed indicate that they will pay more attention to advertising if it is personalized based on their tastes and interests.   That number increases to 49% of consumers who spent more than $250 online over the past six months, and falls to 36% for those who spent between $1-100.

The survey was completed by 504 online shoppers across a variety of age categories.  The bottom line is that if you are a retailer or manufacturer with loyal customers and those customers shop online and spend over $100 with you, personalized advertising that exposes products they are interested in can yield positive results.

To see a summary of the ChoiceStream survey, click here.

Filed under eCommerce, Manufacturers, Market Research, Marketing, Retailing Tagged with , , , , , , , ,

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