Online advertising has been - along with online media- a smashing success, in record time to boot. Using its latest growth bellwhether Facebook as an example, the Web has reached critical mass faster than any other medium:
Monetization of online media - this far driven by advertising - has followed suit. Considering that between 1880 and 1990, advertising in newspaper grew from $39M in 1880 to $150M in 1900 (4x in 20 years), online advertising’s growth has been nothing but spectacular both in terms of absolute and relative terms:
Will Online Advertising Fail?
For anyone to suggest that online advertising fails or will fail is a bit off the mark. Sure, online advertising has not quite hit the proverbial bull’s eye, but it will outperform all traditional forms of advertising and annihilate the naysayers in the process for the following reasons:
1 - Online media and advertising professionals made a mistake by initially promoting the Web’s trackability in the early days.
Can online media be tracked and targeted? Yes. Does that mean that online advertising will create a positive ROI initially? No. All marketing is investment, advertising is a prime example of this, online advertising is no exception.
2 - Online advertising has hitherto been propelled by direct marketing (ie. search).
Search is a wonderful way to reach consumers who are looking to make purchases or get information on a particular subject. In other words, search is tremendously well-suited to capture intent, which is what John Battelle was referring to in his book on search market leader Google with regards to the database of intentions, but search is woefully bad at capturing interest.
Capturing interest is what has allowed content to flourish in print, radio, television, and on the internet. Which takes us to point 3.
3 -UGC Hurt Online Advertising
The explosion of user-generated content (UGC) allowed inventories to swell, but this represented bad inventory of low quality that marketers don’t want to associate themselves with.
As a result of this, despite plummeting CPMs, the ROI of campaigns faltered too.
4- Advertisers Follow Audiences, and Audiences are Migrating Online
But considering that the economic slowdown will also hinder the popularity of UGC (separate post for another day), we expect the value of professional content to rise precipitously in the upcoming months, quarters and years as marketers continue to look for more effective ways to advertise and pursue consumers online.
- But going back to #1, no advertising will provide a positive ROI in the short term over a long period of time.
- Considering that #2 most existing growth has come from direct performance oriented advertisers propelling search,
My bet is that online media and advertising has not even entered the third inning.
Once that period of the game starts, it will be lights out for the doubters.
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