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The Web is Not an Ad Supported Medium

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The web is the greatest marketing channel ever created but there is incredible irony in that. It was not created as a marketing channel. In fact, understanding that fact and even leveraging it is one of the best strategies you can undertake in online marketing.

Seth Godin said it best two years ago and I’ve included his quote in numerous presentations since. It is that important to understand: 

“This is the first mass marketing medium ever that isn't supported by ads. If a newspaper, a radio station or a TV station doesn't please advertisers, it disappears. It exists to make you (the marketer) happy. That's the reason the medium (and its rules) exist. To please the advertisers. But the Net is different. It wasn't invented by business people, and it doesn't exist to help your company make money.”

The recent debate about privacy is propagating the idea to consumers and the FTC that the Web needs third-party cookie tracking to survive. Frankly, I think it is demagoguery.

“Internet consumers have gotten used to free, vibrant content, yet content creators, have been hurt” - eXelate CEO Meir Zohar in AdExchanger 

“As long as enough people value targeted advertising in return for free content, the whole system will continue to work.” - BlueKai CEO OmarTawakol in AdAge 

Appealing to the value of content in the privacy battle is a losing proposition. Part of the reason Display is in this mess is that the content itself has become commoditized. A stronger more appealing argument would be around the value of the ads. Jarvis Coffin has the best take on that however, even he alludes to the “brand destruction” that can be caused by targeting. Advertising people I’ve spoken with have mentioned Advertiser concern about having their brand be seen as tracking consumers. The bottom line is expressing the value of banner ads is really hard when 99% of the time people are not clicking them.

The free content argument is also a bit disingenuous since the rise of audience based targeting is all about buying the lowest cost media possible. How does this make sense with an argument about advertiser supported content? Ad exchanges are hardly a bastion of  “vibrant” content.

Search is free to use and doing splendid as an advertiser supported medium. Email, also free, is doing quite fine thank you as well. As far as Display, Site level direct deals with the top publishers still account for 75% of the ad spend (JEGI IAB 2/10).

The challenge that needs to be embraced is making targeted advertising as helpful, useful and valuable as the underlying content. Get that to happen the issues of privacy disappear. Personally, I don’t believe that level of relevance is possible with third party cookie data but whatever happens have no fear. The web will survive and prosper with or without whatever ad targeting technologies exist at the time. My own included.

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Comments

I very thoroughly disagree.

From a technical stance, neither television nor the web are created with advertising in mind. They were both technical innovations without a mind towards the specific business model involved.

From a business standpoint, they both are extremely similar also. A television station *can* exist without advertisers. In fact, there are some that do. There are websites that exist without advertisers.

Seth can say that the mass market isn't supported by advertising, but I'm curious where he thinks every significant website gets the *vast* majority of its revenue. No ad revenue and almost all of the top 1000 sites on the internet fold. Sure, Joe's Blog still exists, as long as he takes up paying for the hosting himself.

Also, I have to disagree with the point of audience targeting. Of course, the goal is to buy as cheaply as possible. In any advertising medium, you want to reach the right people as cheaply as possible. But you are always willing to pay *more* for the right audience to a point. A valuable audience can turn a dirt cheap impression into something high paying for a publisher (and conversely it can turn what used to be considered a high value impression into nothing potentially).

Can you explain to me how search would work if the free content sites being searched through had no source of revenue? Seems like the only sites left would be corporate, political, ecommerce and endless string of pay walls.

Zach - The top 1000 sites get what, 99% of the ad revenue. There are 121M active top level domains on the web.

In fact with the rise of content farms and MFA sites one could argue the Search experience would be improved if certain ad supported sites were removed.

James - If you think back to ARPANET or even more on point to the work of Berners-Lee the web was built as a service. Services are not typically ad supported businesses (your PBS example as case in point). Services are typically pay for or subscription. It think this differs significantly from the origins of TV.

Pretty telling as well is that Slide (who were just bought by Google) completely shifted away from social ads to virtual goods: http://techcrunch.com/2010/02/01/davos-slide-max-levchin/.

Full disclosure: I have an agenda, but a most altruistic one. My thoughts on this subject stem from being an artist/songwriter. The following was my best attempt at a compromise.

The current solutions put forth by the media and marketing industries; pay-walls/subscriptions, data collection/behavioral targeting and social networks, in addition to providing sub-par ad revenue, exhibit significant flaws. Pay-walls and subscriptions reduce the size of an audience. Data collection and behavioral advertising use advanced modeling to make flawed predictions and are awash in privacy concerns. A limited, if not single, player dominates social networks. Pay-per-download is currently monopolized by iTunes, and thanks, I always knew I could buy it, but that again limits audience reach.

Nowhere along the line have I seen what consumers would like to see. Isn't there a compromise somewhere?

Here's my proposal:

I'll give your the most intimate of details about myself, even help you do market research. If I choose to consume some content (video, music, books, publications, blogs, games, code, et.al.) a stock market-like mechanism determines in real-time what I am worth to marketers. If I'm valuable enough, show me targeted advertising and let me have my content free, in an ad supported format (or I can pay that same amount to have my content ad-free)....if my profile doesn't generate enough revenue to cover the cost of that content, I need to pay for it. Simple enough.

Everybody is happy. Publishers and artists get paid, marketers get the eyeballs they want and I'm given a choice. Plus, I'm only supporting the artists I choose to and I'm not subsidizing free access for someone else. Sounds fair to me. Not only does this level the playing field for consumers by offering them choices while respecting their privacy, but it also works for artists and publishers. Finally a way to truly value digital content.

Here's a nice unintended consequence of all of this. I get to explore what people like me are reading, watching and listening to. I don't need to rely on my network of friends. I can anonymously make new ones with which to share thoughts and opinions.

The Internet, the most addressable form of media transmission ever created, has failed to provide publishers of all forms of digital content enough advertising revenue to be consistently profitable.

Isn't it time to try something new?

Internet is a a very wide channel, with a lot of options for all - which includes a spot for businesses. And the advertisers/marketers had taken the opportunity for promotion. However, these players are playing the game according to their rules.

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