Online advertising is evolving to better meet the needs of both advertisers and publishers.
When advertising first moved online the traditional advertising agencies determined how it was bought and sold. They wanted to replicate the models they knew and understood form the offline world with the result they focused on banner ads sold on a CPM basis. Initially the results were poor, but over time the performance of display ads has steadily deteriorated. Today many online ads record zero percent clickthrough rates.
The only companies who still buy display ads in any quantity are large gullible organisations who leave their budgets in the hands of incompetent ad agencies. Away from this fools market advertising is changing, mostly for the better:
The one trend which is making advertising worse is being driven by people who don't have a clue about what they are doing. Traditional publishers moving online are fighting ‘banner blindness’ - the increasing ability of web users to ignore ads - by increasing the intrusiveness of the ads they serve. Some sites now cover the whole of their home page with an ad which visitors have to actively close before reaching the content. Often the close button is small and not obvious to force the visitor to spend more time looking at the ad. The practitioners of this ill-conceived activity believe the more intrusive an ad is the better it is.
We went through a similar experience with pop-up ads and they have disappeared from mainstream advertising.
Web users will have to tolerate more of these appalling intrusive ads until publishers and advertisers realize how damaging they are to their brands.
The clever software underlying Google Adsense which serves ads based on the context of a webpage has changed online advertising forever. Ads randomly served without context, which can see McDonalds appear on a vegetarian site and Poker ads displayed on Muslim sites, have such poor performance they will continue to decline.
The race is on for more companies to introduce intelligent, context-related ad serving, so they can compete with Google.
The Marketing Director of Amazon recently said, “If a company can pay for an advertisement only if it generates revenue for their business, why would they ever pay for advertising that is not performance based ever again?”
Hundreds of companies are shifting from CPM based advertising to affiliate marketing where they only pay publishers when they get a sale. This trend will continue over the next five years until nearly all online advertising is paid on results. This is a major and important shift for advertisers and online publishers.
Large advertisers are starting to ask themselves why are we paying other website owners to reach their audience when we can now use the web to build an audience of our own?
A good example is Babycenter.com run by Johnson and Johnson. The site offers professional advice created by journalists and experts. It is every bit as good as most magazines found on a newsstand and is completely free. J&J use the site to gather the birth dates of babies by offering expectant parents free gifts. Once they have this hugely valuable bit of data they can market and promote their products to a relevant audience for years to come.
More companies will realize the benefit of building their own audiences and start diverting marketing budgets to creating their own sites. This is not a good trend for publishers who solely rely on ad spend for their income. Their previous customers could become competitors.
Sponsorship has been around for years but has never been big online. This is changing as companies start seeing the benefit of reaching their audience through association with sites and individuals who align with their brand message and values.
In the music sector this is taking off quickly. Brands such as Durex and Red Bull are reaching their target demographic by sponsoring musicians who have an established following.
The web makes it much easier for advertisers to identify sponsorship opportunities and because the market is so new and uncompetitive sponsorship deals can offer outstanding value.
The next step in this trend will be the creation of sponsorship marketplaces where established brands can identify sites, bands or individuals to sponsor.
Online advertising is moving out of the shadow of the large advertising agencies who have dominated the distribution of online ad spend for the last decade. Google Adwords/Adsense introduced a viable alternative to display ads and made it easy for large and small advertisers to take more control of their marketing budgets. Since this shift started to happen, advertisers have become more aware of the opportunities that exist and the limitations of what ad agencies have to offer. These changes are leading to rapid innovation…or at least the more rapid uptake of alternatives to traditional display advertising by a larger number of companies.
This innovation is great for everyone except the ad agencies, but they’ve been fleecing their clients for far too long anyway, so few people will shed any tears.
When advertising first moved online the traditional advertising agencies determined how it was bought and sold. They wanted to replicate the models they knew and understood form the offline world with the result they focused on banner ads sold on a CPM basis. Initially the results were poor, but over time the performance of display ads has steadily deteriorated. Today many online ads record zero percent clickthrough rates.
The only companies who still buy display ads in any quantity are large gullible organisations who leave their budgets in the hands of incompetent ad agencies. Away from this fools market advertising is changing, mostly for the better:
More Intrusive Ads
The one trend which is making advertising worse is being driven by people who don't have a clue about what they are doing. Traditional publishers moving online are fighting ‘banner blindness’ - the increasing ability of web users to ignore ads - by increasing the intrusiveness of the ads they serve. Some sites now cover the whole of their home page with an ad which visitors have to actively close before reaching the content. Often the close button is small and not obvious to force the visitor to spend more time looking at the ad. The practitioners of this ill-conceived activity believe the more intrusive an ad is the better it is.
We went through a similar experience with pop-up ads and they have disappeared from mainstream advertising.
Web users will have to tolerate more of these appalling intrusive ads until publishers and advertisers realize how damaging they are to their brands.
Out Of Context Ads In Rapid Decline
The clever software underlying Google Adsense which serves ads based on the context of a webpage has changed online advertising forever. Ads randomly served without context, which can see McDonalds appear on a vegetarian site and Poker ads displayed on Muslim sites, have such poor performance they will continue to decline.
The race is on for more companies to introduce intelligent, context-related ad serving, so they can compete with Google.
Paid On Results
The Marketing Director of Amazon recently said, “If a company can pay for an advertisement only if it generates revenue for their business, why would they ever pay for advertising that is not performance based ever again?”
Hundreds of companies are shifting from CPM based advertising to affiliate marketing where they only pay publishers when they get a sale. This trend will continue over the next five years until nearly all online advertising is paid on results. This is a major and important shift for advertisers and online publishers.
Private Label Media
Large advertisers are starting to ask themselves why are we paying other website owners to reach their audience when we can now use the web to build an audience of our own?
A good example is Babycenter.com run by Johnson and Johnson. The site offers professional advice created by journalists and experts. It is every bit as good as most magazines found on a newsstand and is completely free. J&J use the site to gather the birth dates of babies by offering expectant parents free gifts. Once they have this hugely valuable bit of data they can market and promote their products to a relevant audience for years to come.
More companies will realize the benefit of building their own audiences and start diverting marketing budgets to creating their own sites. This is not a good trend for publishers who solely rely on ad spend for their income. Their previous customers could become competitors.
Sponsorship
Sponsorship has been around for years but has never been big online. This is changing as companies start seeing the benefit of reaching their audience through association with sites and individuals who align with their brand message and values.
In the music sector this is taking off quickly. Brands such as Durex and Red Bull are reaching their target demographic by sponsoring musicians who have an established following.
The web makes it much easier for advertisers to identify sponsorship opportunities and because the market is so new and uncompetitive sponsorship deals can offer outstanding value.
The next step in this trend will be the creation of sponsorship marketplaces where established brands can identify sites, bands or individuals to sponsor.
Conclusion
Online advertising is moving out of the shadow of the large advertising agencies who have dominated the distribution of online ad spend for the last decade. Google Adwords/Adsense introduced a viable alternative to display ads and made it easy for large and small advertisers to take more control of their marketing budgets. Since this shift started to happen, advertisers have become more aware of the opportunities that exist and the limitations of what ad agencies have to offer. These changes are leading to rapid innovation…or at least the more rapid uptake of alternatives to traditional display advertising by a larger number of companies.
This innovation is great for everyone except the ad agencies, but they’ve been fleecing their clients for far too long anyway, so few people will shed any tears.