Is Traditional Online Advertisning Dead?

Visit the unedited version of the original blog post: LINK

Is There Something Other Than Advertising:

The expected drop in internet advertising revenues this year was neither unpredictable nor unpredicted, nor was it caused solely by the general recession and the decline in retail sales.  Internet advertising will rapidly lose its value and its impact, for reasons that can easily be understood.  Traditional advertising simply cannot be carried over to the internet, replacing full-page ads on the back of The New York Times or 30-second spots on the Super Bowl broadcast with pop-ups, banners, click-throughs on side bars.

Pushing a message at a potential customer when it has not been requested and when the consumer is in the midst of something else on the net, will fail as a major revenue source for most internet sites.  This is particularly true when the consumer knows that the sponsor of the ad has paid to have this information, which was verified by no one, thrust at him.

Advertising will fail for three reasons:

There are three problems with advertising in any form, whether broadcast or online:

  • •Consumers do not trust advertising. Dan Ariely has demonstrated that messages attributed to a commercial source have much lower credibility and much lower impact on the perception of product quality than the same message attributed to a rating service.
  • Consumers do not want to view advertising. If network executives believed we all wanted to see the ads they would be staggered, so that users could channel surf to view the ads; ads are synchronized so that users cannot channel surf to avoid the ads.
  • And mostly consumers do not need advertising.

Yes, both network executives and their ad agencies have noted that we are not watching traditional ads, and they attribute this to the fact that we have moved beyond newspapers, televised network news, and broadcast movies, to video games, iPods, and the internet.  Porting ads to a new medium will not solve the three problems noted above.  The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed.

Alternative models for monetization:

Many of the best-known perform aggregation of demand, so that there will be enough customers to justify stocking and selling items for which there is only limited demand. Sites like Amazon and Zappos are especially good for long tail items. Other websites sell virtual things.  These activities fall into three categories:

  • Selling content and information, from digital music to news and information
  • Selling experience and participation in a virtual community.
  • Selling accessories for virtual communities.

Finally, some websites create and sell access to customers.

Again, this can be divided into multiple categories.

  • Misdirection, or sending customers to web locations other than the ones for which they are searching.  • Evaluation, assessment, and validation. • Social search. Social search is a way of tailoring search based on the user’s network of friends.
  • Contextual mobile ads.

I would offer the following guesses for successfully monetizing the net in the future:

  • Selling Virtual Things: People will pay for superior, timely, original content and for superior online experiences.
  • Selling Access. Misdirection will fail totally and completely.

The internet is about freedom, and I suspect that a truly free population will not be held captive and forced to watch ads.  We always knew that freedom comes at a price; perhaps the price of internet freedom and the failure of ads will be paying a fair price for the content and the experience and the recommendations that we value.

If you would like to read more please check out the links below.

Original Report: LINK

Further reading 1: Online Ads LINK:

Further reading 2: Pay Me for My Content LINK: