Online Advertising is Dying as we know it…
When I started writing about interactive advertising in 1999, the industry was “baby new” and the Wild Wild West. Sometimes it even smelled like a baby. It seemed at the time one of the ways to control the negative effects on myself was the write about the industry, and to analyze (expose!) some of the negative practices. The industry was rife with scam artists trying to make a quick buck, because there were very few regulations or standards in the industry. People always ask me, “Pace, you are such a genius; you know this industry inside and out, please share some of your knowledge….” Ok, it doesn’t always go like that. Well, never really like that.
“Pace, what has changed about the industry?”
I did some thinking about this question, posed by my throngs of adoring fans (10 of them on facebook!) and I came up with some really very interesting thoughts.
1) Lead generation is just as important as it has ever been. Some of the top interactive advertisers, from Lowermybills to University of Phoenix, are mainly engaged in lead generation. Facebook and Myspace are overloaded with Education, which are often just back end lead generation companies that sell the leads to a variety of online schools. Much of the insurance industry lives on the leads generated online. The industry even has its own expo, LeadsCon, run by my friend Jay Weintraub, being hosted at the fabulous Mirage Hotel & Casino! (Yes, you too can learn about the lead generation business, while losing your business!)
2) CPA & ROI has become more and more important, as advertisers want to stretch their dollars and realize that there are too many methods to scam advertisers. Many people claimed that brand advertising was going to take over the industry that people would just pay for eyeballs. While the CPM base is still how people gauge the industry, a larger segment of the industry bases its success rate on a backend CPA. Companies like Dominos determine success or failure now based on a back end equation of people who actually order Pizzas online. Half of the network advertising is now composed of CPA backends, from IQ Quizes to Downloadable Games. CPC advertising companies from Adsonar to Pulse360 are overloaded with Acai and Work from Home Offers.
3) Rich Media has taken the industry by storm, but not as much as we thought. Yes, we have seen all the cool examples of rich media, video advertising and interactive games, but still the industry is pretty damn basic. Most of google is still mainly based on text advertising, Facebook opted to mainly have text ads, and despite all the wishes for truly “interactive” advertising, animated banners seem to still dominate the space.
4) No one really dominates the industry. Despite the claims through the last tens years that companies like AOL/Time Warner (What happened there?!) or Myspace, would dominate interactive advertising budgets, none of this really happened. As soon as someone seems to be a dominate player, another person pops up with a great new technology, a wonderf?ul new website and an easier way to reach.
5) No one wants to advertise on PodCasts. I read on a major podcasting site that 74% of the Chinese use podcasts, which seems to be made completely up, since only 25% of the population actually go online, according to InternetWorldStats. Despite the growth of podcasts, it’s still a very insignificant amount of people who actually use them on a daily basis. Companies like WizardMedia claim millions of downloads, but are ranked 351,000 on alexa. The only people who seem to be making real money from Podcasting are those people who still sell books on how to make money from Podcasting.
What does this mean? Nothing really, except that things are always changing, one way or another. The internet has helped us realize a universal truth about everything: everything is always changing. If you think you have your handle on something, whether it be interactive advertising or your life, you’ll be started someday to find that things have changed significantly since you last took a serious look.
So, why the title “Online Advertising is Dying as we know it?” Because everything is dying, being reborn, changing. Nothing remains the same, is in a constant state of flux and more importantly, entropy. This is the foundation of our universe and a universal fact… and one every business person should always pay attention to.
This means one thing, and I beg for more and more investors to think about this: Don’t put all your eggs in one basket, based on one fad. Just because Twitter advertising seems really cool, it doesn’t mean that tomorrow Twitter might not just ban it. If you think that Chinese Social Monetization seems like a way to make money, realize that China already banned virtual money for real-world goods.
3 Responses to “Online Advertising is Dying as we know it…”
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(C) 2010 Pace Lattin. It is the policy of this blogger to not edit or remove any content and comments, unless it is specifically attacking a protected group or irrelevant to the conversation, such as a spam. These are the OPINIONS of the respective writers, posters, commentators. All DCMA Notices shoudl be sent to pace@pacelattin.com
This artical is one that mirrors our day to day work. We are shifting to more lead generation than anything… Then actually calling to convert the leads to clents
thanks
bil
teethwhitening.net
Hi Pace… when you stared writing about online advertising The Auto Channel already had three years of on line experience under our belts. My early comments to you are still relevant…Online CPMs need to be equated to Direct Mail costs not any other media. When this happens revenue to publishers will be in line with the value given to the advetisers…when a company deciedes that Diredt Mail is the way they want to generate business THEY HAVE TO RISK investment in creatiuvew in production and distribution..the way the Internet is now the only risk is being taken by the publisher and generator of the eyeballs.
So until that paradyme changes we publishers will be risking it all…thankk to Google at least we can hang in there until the next ad revolution occurs …being paid for the eyeballs we deliiver…hang in there .. we are!
Hi Pace (although you’ll always be Pesach to me!)
I’m happy to see you contributing again as I was always a big fan of Adbumb as a non-nonsense source of who to work with who to steer clear of.
Good luck and keep it coming!
Jen