Seems like every day I hear about a new way to stick ads in front of people online or through a mobile device.
Every new business model is advertising-based and is going to attract billions of dollars. Companies are out there buying other companies that are basically worth nothing for billions of dollars based on the promise of ad revenue. This despite the fact (for example) social media advertising has really sucked – and is getting worse. Plus, there’s the fact nobody will pay for social media services.
Further, ask yourself this question: what if social media advertising does suck and will always suck because it is simply always out of context? To be clear, by context I mean not the content surrounding the ad, but from the end user perspective. If people hate seeing your ads while they are trying to do personal stuff, won’t the advertising always be ineffective? That fundamentally, the advertising model for this kind of content is flawed and will not get better?
Can you say GeoCities?
This situation reminds me of the dot-com “ads on your car” thing, which got so ridiculous that companies were actually giving away FREE CARS to people as long as they drove them around with ads on them. How do you ever pay that back? And how are those ads effective? I guess there are a ton of marketing rubes out there who will buy any ad just to get the “exposure” – regardless of how out of context the exposure is. Do they still sell ads on matchbooks?
But let’s not stop there. For some reason I can’t get the economics of supply and demand out of my head. If every single display surface online becomes a display ad, doesn’t that mean there will be an unlimited supply of online display advertising and so the value of online display ads will drop close to zero? Perhaps a lot closer to the economic value most of these ads provide?
You tell me.
At least with eyeblack advertising, there is a limited supply – teams on televised sporting events (TV is actually the media, not the eyeblack). That is, until somebody comes up with the idea of paying people to wear eyeblack ads – which can’t be too far away, can it?
Hey, I have an idea…want to make a billion dollars? Know any marketing people just dying to buy this kind of “walking around” media? Fortunately, I think the buy side has pushed back and is a lot smarter as a whole.
The above is not to say that specific exotic media will not work for certain very targeted applications. The problem is in thinking any of this media is “mass” in nature, that it will be able to move the needle. If the applications for this advertising are very narrow, then only certain narrow portions of the inventory have value, meaning the value of the companies is a lot lower than what is perceived.
Personally, I think the same thing will happen in mobile. The killer advertising app for mobile is search, not display or audio, whether geo-intelligent or not. Search fits the context of the user, just as search does online. Free mobile services if you listen to an ad first? C’mon folks, that model has been played and played online and it never works. The combination of audience quality and the notion of being “forced” to pay attention do not equal great advertising results.
Your Ad Everywhere, as a whole, is an economically broken business model that delivers little value to either the advertiser or the audience. Let’s just stop creating business models based solely on delivering display ads to people.
I suggest to you the test for the viability of an “network effect” display ad business model is very simple: ask the audience, would you pay for this service / application / access? If the answer is no, the audience is not a viable advertising audience. If the answer is yes, then you can look for ways to reduce billing by introducing the right kind of advertising. This means, of course, that these networks will be much smaller, but have a high quality audience worth advertising to.
If you start with free, you have already poisoned the audience for any ad model relying on “impressions”.