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With the way Adsense is going, and how the other networks are starting to reconfigure themselves to take on Big G, I feel like we're finally starting to come out the other side.
Online advertising has been forced to adapt under a brutal environment, and amazingly, successful solutions are starting to take shape. Once advertisers get used to this kind of success AND accountability, it's going to be hard for them to go back to traditional advertising.
I hope. :-)
I have been doing internet direct marketing for a few years, and now I am learning about direct mail, radio, and television. The conversions rates are typically 50% to 100% lower, but its more scalable than "we have #1 on google, yahoo, and msn - where else do we go?".
The internet is wonderful and the conversions can be great, but there is a good reason why online spending is a pittance compared to television, radio, and print.
Industries which have an international market but for which some companies cant or wont invest in local promotional infrastructure/agents/distributors are also looking good for online advertising. That's because of the international reach and low costs of the internet compared to physical marketing agents or country offices, mail, phone, travel etc.
Nevertheless, we have felt the online advertising market has gradually been getting healthier for the past 12 months, recovering from the hole it fell into in the dot com bust.
But once things really get rolling, I can see advertisers turning back on their traditional venues, saying "prove it", and receiving only blank stares.
Our reality is going to be much more stable than traditional media's fantasy.
There are thousands of websites with over 1 million visitors a month perhaps.
There are tens of thousands or maybe 100,000 or more sites with 100,000 visitors a month if you believe Alexa.
Adnetworks Fastclick and Tribalfusion both reach more than 50 million people a month.
You can reach more people online with greater ease than you can offline.
Just buy all the RON ads at Fastclick, Burst, Tribalfusion, 24/7 media and Maxworldmedia and you will reach more people than you could reach with buying advertising offline from only five entities in many instances.
Now if one wants highly targeted advertising and mass reach something has got to give. You can't compare largely untargeted mass reach Superbowl style buys offline with highly targeted buys online and then complain about a lack of reach.
The internet is/was a huge problem, because for a very long time, you couldn't prove it worked. It still lacks in many many areas.
I can go to my manager with a marketing proposal for direct mail and I could say, we can send this piece to demographic A and we will see a 4% rise in sales on product B because we have always, historically seen this rise from this demographic. This will result in a ROI of this which is why I need X amount of dollars. The best I could do on the internet is - well, we put this ad out and maybe 1% will click on it but I need X amount of money to do it. See some serious details lacking here? No demographics, no tested results, no industry standards.
Trust me, when I say traditional medias do prove what they can offer. Does the web have the potential to do it better, yes, but I'm not seeing it yet. Sure, you can rent an email list but nobody can give me very much information about the people on that list? Are they internet buyers? How much do they spend on the internet? What do they buy on the internet? Do they have kids? How old are their kids? And about a billion other questions that any other media can answer about their demographic that the internet just returns blank stares on.
Most offline buys are VERY targeted, which the internet is stll in babyland in it's ability to do.
What they are doing is building the brand so next time you are in Sainsburys (is it Wal-Mart for you US people) and going round the aisles you pick out, even subconsciously, the brands you have seen on the TV during the last few months. Whether you liked the advert or not, as long as it sticks in your mind that is the goal for the art director.
Even with the brands that you could track response rates for, car insurance that goes to a phone number etc again they are also building the brand so when car renewal time comes around they will say, well I'll give Norwich Union a chance to quote me happy (a current campaign that is all over the TV at the mo and I would say has a bery high recall rate for UK users here) so again a immediate tracking system wouldn't work as it doesn't take into account the branding value has.
Now on-line has been a very bad market, to be honest there were far too many people who set up websites on a whim hoping to make money and taking any old ad deal that came their way, and that is why the market is saturated with CPC deals (work of the devil), CPA (work of the devils devil) and not CPM. In reality what is happening is the advertisers are getting a huge amount of what adds up to free branding for their products.
Sometimes these are stand-alone agencies, sometimes they are put together as "integrated agency" or sometimes they are boutique agencies that do a little of either. The newcomer, online media, can be slotted into any of them (depending upon the type of online communication).
The BTL aspect often fits quite nicely with call to action online campaigns -- especially in the IT fields or in niche markets that can be identified on the web. One problem is though that there are only so many good, targeted sites with volume that companies can throw their money. If they throw 100,000 euro on an online campaign in Europe, they generally start having to throw ads up on non-targeted spots like yahoo or whatnot.
ATL is generally to launch a product, or to ensure it is in people's memories when they are standing in the store aisle and about to decide between Shredded Wheat and Weatee-Os. For most agency (and client) people that grew up in the ATL world, the online world is full of geeks. It ain't cool to do a banner campaign. How can you put that on a show reel? Now a TV ad, that's sexy. That's groovy. That's great for your career. You can get a good write up in "Campaign". You can show the add to everyone in teh agency in the monthly meeting -- including the CSD / MD who decide who gets promoted and who gets to work on the cool accounts.
I could spew out more, but that's enough for now. So as sad as it is, there are a lot of non-logical but real reasons for allocation of budgets. At least so thinks one cynical ex-"integrated" advertising Tigrou ;-I
The internet is wonderful and the conversions can be great, but there is a good reason why online spending is a pittance compared to television, radio, and print.
As Chiyo says, it depends on the category. Travel is the perfect example of a category where the Internet is superior to traditional media unless you're a mass-market advertiser such as an airline or a major hotel chain. For the owner of a villa in Umbria or a hotel in Zermatt, targeted advertising from AdWords or AdSense isn't just more effective than running an ad on television or in TRAVEL & LEISURE--it may be the only practical way to reach consumers directly. And it may be all the advertising that the business needs to maintain a high occupancy rate during the tourist season.
Specialty foods are another good example. An artisan cheesemaker may not find it practical to buy an ad in GOURMET or BON APPETIT, but AdWords/AdSense can help him reach people who enjoy reading about (and eating) fine cheeses. He doesn't need to reach a million readers; he needs only to reach enough cheese buyers to meet his production and sales goals.
Now for a personal observation: In the last several years, I've witnessed a huge increase in "Internet awareness" among smaller travel vendors. Hotels and B&Bs that once had pages at CompuServe, GeoCities, or local ISP addresses now have their own domains, and travel businesses that subsisted for years on referrals from ads in the back of THE NEW YORKER or travel magazines are now using AdWords (and, more recently, AdSense) to drive traffic to their own Web sites. In another five or 10 years, will Bob's Burgundy Barge Cruises or Velma's Villas in Tuscany even bother to advertise in THE NEW YORKER or TRAVEL & LEISURE? I don't know, but I believe strongly that the Internet will be their primary (and most profitable) advertising medium in the not too distant future.
Why do people try to sell you ads to advertise your advertising?
The audience may be small but they find you in a search engine for only one reason. They are interested in your product or service and searched for it!
You can't compare it to magazine, television or radio advertising. If you want to compare it to something then I guess the yellow pages is the only thing that comes close in the offline world.
On the web, the company website IS the advertising.
A company Web site can be a lot of things, but it isn't advertising, which my dictionary defines as "the action of calling something to the attention of the public esp. by paid announcements." A company Web site is more of a fulfillment vehicle: Users are driven to it by various means (including advertising), in much the same way as users are driven to call an 800 number, circle numbers on a bingo card, or mail a business reply card through advertising or direct mail.
For e-commerce sites, the closest offline equivalent would be a mail-order catalog. Elise's Exquisite Undies might run an advertisement in the back of COSMOPOLITAN, for example, with the call to action being "Call for our free catalog or visit elises-exquisite-undies.com."
the fundamentals of the internet infrastructure, plus the development of the Web and the web browser are all about niches. From the military trading info on a disaggregated network, to early researchers connecting with other researchers in their specialised area in countries far away, the internet is a natural for niche communication, and as the comemrcial world caught up from the late 1990's, for niche marketing.
For that it is a brilliant medium, far exceeding the cost effectiveness of mass media such as TV and mainstream newspapers, especially as the Web browser demographics have become more mainstream.
However very few early "misentreprenuers" built on that USP. They were either from print/old media backgrounds who used old models and knew nothing of the Internet or Web, or young wet-behind-the-ears-in-business tech types who knew nothing about marketing, let alone business as a whole.
The result was mass media models transplanted on to a niche medium. Run of site ads, mass market appeals, bulk dicounts for idiotically broad spins.
Hence part of the reason that on-line advertising crumbled before it even got started.
Now the medium is more developed, some have learned lessons, search engines even have moved to the reality of niche targeting with better algos and such.
Affiliate marketing will always exist, but will never again provide the opportunities that early entreprenuers got from it. Simply put, PPC and improved search engine targeting have made it easier for merchants to sell direct, or create their own sites, rather than through intermediaries. If the AdSense and OV content advertising models prove sustainable, its another blow to the affiliate area. But they will survive, again in niche areas..
As mainstream use increases, the importance of branding on the web for mainstream products, with triggers at POS, also increases in value as Tigoru mentioned in his/her excellent post.
Speciality mags better watch out, as they just now have a serious maturing media competitor.
Key for me is that if you build on the niche characteristics on this new media, build credibility for that niche, and make sure that it is a niche with disposable income (e.g. joke sites are OUT!, not only because they cannot be targeetd well) you are good for a long term business model which includes serious income from selling niched ad inventory.
- It seems advertisers have a strong herd instinct. When banner ads were the "kewl" new thing, advertisers wasted tons of money... but everyone thought they were kewl dudes. The pendulum swung away and is now swinging back. Hopefully, online ads will be cool again soon and advertisers will happily pay more than the ads are worth again... kinda like newspaper ads.
- I suspect local newspapers, television and radio stations get a huge percentage of the money spent on advertising. I also think the web has been terrible at capturing these local advertising dollars.
Yahoo on Monday introduced a specialty research service that allows retailers to track offline sales spurred by online ad campaigns
[news.com.com...]
Well I guess this is true. I was thinking more along the lines of service businesses. You need a doctor, lawyer, contractor you look at some little ad in the phone book that gives you very little information. You look on the Internet you hopefully get a lot more information on the business. This is advertising. If the web site can be found in a search engine by someone who needs the service the site should be good enough to convince someone to call.
People are always trying to sell advertising to these kinds of sites. Their money is better spent on site design and SEO than a banner or radio ad.
