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February, 2009

Random Thoughts on Online Advertising

It might be selective, but it seems to me like online display advertising is a hot topic at the moment. I've got a whole big post in my head about the whole thing, but instead of writing it now I'm just going to throw a few interesting points from other folks your way.

First off, Brian Morrissey writes: "Advertisers, I think, are questioning the entire notion of buying bits of real estate on the periphery of content. It's just not that enticing - and with good reason. Despite all the studies showing banner ads increase search conversions and do some to lift brand metrics, consumers don't seem to care."

I think Brian is right on here. The economy is a good excuse for what's happening, but it's not the root cause. Who wants to live on the periphery of content when you can make yourself part of it? Back in November I wrote, "Maybe the answer is that advertisers need more variations on their creative. What I mean is, I think part of the banner blindness problem (and this is all speculation without any data behind it so take it with a grain of salt) is that we're all trained to recognize when something doesn't belong and, in the case of the web, to ignore it. Banners tend to be a different color, font and they move all around, add in the fact that they sit along the edges and they're just too easy to quickly spot and dismiss. But once in awhile someone like Apple comes along and does some fancy custom unit where they pay attention to everything including getting the NYTimes.com typeface right. That kind of stuff must make more of an impact than your run of the mill banner, no matter how cool it might be. Right?"

So that's one thing agencies can do, but Brian also ends the post with a good point from Harvard Business about publishers: They "need to think more like marketers and, like it or not, mesh advertising with their content." Precisely.

Okay, onto the next point, this one from Terry Heaton, "There's no incentive to change. When your life is based on broadcast and print CPMs, the only ad model you see is, well, CPMs." This is on both sides of the coin (both publisher and agency). Things are still all about scale (even more than ever now that media agencies are increasingly moving away from models based on taking a cut of spend). I've said it once and I'll say it again, the web works best when it's not used as a scale medium. Sure, it works sometimes (Barbarian Group is responsible for one of the more famous successes), but the more consistent and long term solution is to build great experiences for a very specific group of people, plain and simple (and scalable, actually, just not scalable in the same way a television buy is). [As a side note, scale is a problematic word since it's thrown around as a hard number (does it scale?) but has very different meanings to everyone. For whatever that's worth.]

Speaking of scale, there's a flip side to this situation. In January Fred Wilson wrote about super cheap CPMs. His prediction for 2009 was that "display advertising will get so cheap and the tools to target it will get so good that it will be shown that it can outperform search." It's an interesting one. When the media space gets cheap enough, it doesn't really matter what the click-through rate or anything else is. That's why spam works after all (some incredibly small fraction of those spammed has to actually act on it for the ROI to work out). Of course this kind of flies in the face of everything I said before, but hey, who's counting? The issue of course with super low CPMs is that it's hard to make a lot of money off them if you're a publisher (well that and really crappy banner ads hurt your brand as a publisher). But anyway, it's a different way of thinking about online advertising. (And honestly, the biggest thing that needs to happen is we need to stop thinking of it as advertising altogether. It's so different than print and television. But again, I am not here to talk about semantics.)

And yes, I understand that there is more to online display than click-throughs. But again, the branding stuff requires people noticing your creative, which gets me back to my earlier point about doing stuff that looks more like it belongs on the page.

I think that's pretty much it for now. Sorry about the random nature of this post, just had a bunch of different stuff I wanted to get out there.

For good measure here are two more things to read on the topic: One from Adweek.com and the other my friend Clay explainig the similarities between birth control and online advertising.

February 5, 2009
Noah Brier | Thanks for reading. | Don't fake the funk on a nasty dunk.