The Digitalists

New Perspectives on New Media

Posts Tagged ‘online advertising’

Subverting the ‘Mad Men’ Paradigm

Posted by Greg on May 2, 2009

In response to a post on the New York Times’ Bits blog about a well-targeted Facebook ad, commenter EJ tosses out an idea for behavioral targeting done right:

The approach to targeted advertising that would best serve consumers might be to have a central opt-in network where consumers enter information both about ads that they would be interested in and about ads that they don’t want to see…

The network could then disseminate that information to various advertising networks, who would identify your preferences via a single cookie.

Those who have privacy concerns or just don’t want to see targeted ads simply wouldn’t opt in, and would see the regular jumble of random ads (plus maybe an ad or two letting people know about the opt-in network.

I don’t know if advertisers would go for it, but it seems to me that it’s best for the consumers, who would control the information they are giving other companies, instead of those companies automatically trolling through their browsing history for whatever their bots can glean.

(And if anyone has any clue how to actually successfully implement this, Please Steal This Idea.)

I don’t like this idea. I love it. Yeah, there might be some workability issues — I suspect the biggest hurdles would be overcoming privacy fears about centralized data and getting enough people to sign up to make it worthwhile — but if something like this were ever implemented properly, it would provide a great deal of value to both consumers and (despite EJ’s misgivings) advertisers.

But what I like most about it is that it begins to move us past the paradigm that has permeated our culture since the rise of mass-market advertising in the ’50s and ’60s. According to this paradigm, which is so pervasive most of us hardly even give it a second thought, advertisers are mad geniuses who know us better than we know ourselves. They interrupt our media consumption to tell us about products and services we wouldn’t have otherwise considered, and through creativity, timing and sheer brute-force repetition manage to shape our tastes. Read the rest of this entry »

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The Committee to Annoy You

Posted by Greg on March 12, 2009

The Online Publishers Association has announced that the solution to ineffective banner ads is to yell even louder:

Twenty-seven top Internet publishers — including the New York Times, CNN, CBS Interactive, ESPN and the Wall Street Journal — say they’ll try the supersize ads in an attempt to get the attention of Web surfers who have learned to ignore banners …

The three new types of ads are the “fixed panel,” which looks like part of the page but scrolls up and down as a user does; the “XXL box,” in which users can turn pages within the ad; and the “pushdown,” which opens to display a larger ad.

I wonder if they’ve finally figured out a way to measure the cost of annoying people.

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CPC: Not the Answer

Posted by Greg on February 18, 2009

Businessweek’s Jeffrey Rayport thinks he has the answer to ineffective banner campaigns:

Some companies and ad networks sell advertising based on the number of times a person clicks on an ad, a so-called cost-per-click (CPC) basis, or on the number of times a person takes another action, such as making a purchase or filling out a form. This is known as a cost-per-action (CPA) basis. Turns out, sites that sell on a CPC or CPA basis are growing pricing power and overall revenue even as the online display ad market teeters on the precipice of a bottomless chasm.

Sounds easy, right? After all, as Rayport also points out, Google relies on CPC ads, and look how successful they’ve been.

In reality, Rayport doesn’t know what the hell he’s talking about. If every publisher switched their pricing structure to CPC, it wouldn’t do anything to change the effectiveness of advertising. To the extent that it did have any effect, it would be to change incentives in a way that could hurt publishers. Read the rest of this entry »

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More on Scale

Posted by Greg on February 17, 2009

I recently mentioned the importance of scale to advertisers. But it’s even more important (and more underrated) for publishers.

In the decade and a half since the birth of the commercial Internet, only two third-party advertising models have proved resilient. Search-engine marketing, as Dan has pointed out, has succeeded because of its effectiveness. Goto.com (which later became Overture,  was bought by Yahoo, and whose model was adopted by Google for its more-famous AdWords) figured out that turning search results over to the free market was an efficient way of producing relevant results that benefitted both the user and the advertiser (see, more stakeholder theory). Pay-per-click search advertising has almost single-handedly made Google the powerhouse it is today, though it is interesting to note that whereas AdWords (which places ads next to search results) has proved a successful revenue generator for Google, AdSense (which runs those same ads alongside targeted content on third-party sites) has been far less successful for publishers.

The second model that has withstood the test of time has lasted not because of its effectiveness but in spite of it. For years, we’ve been hearing about declining click-through rates on online banner ads, and also about how click-through is a poor metric on which to focus. In other words, banner ads are delivering the wrong thing, and they’re not even very good at that.

So why does the model persist? Because it’s scalable. Banner ads are a commodity, and commodity businesses require volume. There is simply no form of online advertising easier to set up than an untargeted banner campaign. Holy grails such as behavioral targeting or customized ad campaigns have never managed to break through; because they are complex and difficult to implement, they require committed, “smart” advertisers. But there aren’t enough smart advertisers to ensure a workable revenue model. You need the dumb ones as well.

The day may eventually come when banner advertising finally runs its course. But it won’t happen until a more effective, but equally scalable model is developed to supplant it.

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