Internet Advertising What Went Wrong

Internet Advertising What Went Wrong



Internet Advertising What Went Wrong?
Spielbergs blockbuster, Minority Report, is​ set in​ the​ year 2054. the​ future at​ least according to​ a​ team of​ MIT futurologists, hired by the​ cinematic genius is​ the​ captive of​ embarrassingly personalized and​ disturbingly intrusive, mostly outdoor, interactive advertising.
The way Internet advertising has behaved lately, it​ may well take 50 years to​ get there.
More than 1 billion people frequent the​ Internet daily. Americans alone spent $69 billion buying things online in​ 2004. eMarketer, a​ market research firm, predicts that ecommerce will climb to​ $139 billion in​ 2018. American Internet advertising revenues boomed to​ $7. 3 billion in​ 2003 and​ $9. 6 billion in​ 2004. Shares of​ companies like Yahoo! and​ Google sellers of​ online advertising space and​ technologies have skyrocketed.
This is​ a​ remarkable reversal from just a​ few years ago.
All forms of​ advertising both online and​ print have been in​ decline in​ 20002. a​ survey conducted by the​ New Media Group of​ PricewaterhouseCoopers PwC the​ Internet Ad Revenue Report sponsored by the​ Interactive Advertising Bureau IAB found a​ 12 percent decline to​ $7. 2 billion in​ Internet advertising in​ 2001. CMR, the​ Myers Report, and​ McCann Erickson have all recorded drops of​ between 12 and​ 14 percent in​ broadcast advertising and​ of​ c. 20 percent in​ radio spots in​ 2001.
The following year 2002 may have been the​ turning point. a​ March 2002 Nielsen NetRatings report registered a​ sharp turnaround in​ the​ first quarter of​ 2002. the​ number of​ unique online ads shot up by one third to​ 70,000. Jupiter Media Matrix predicted a​ 10 percent increase in​ online classified ads to​ $1. 2 billion in​ 2002. By 2018, it​ said, online ads will account for​ 7 percent of​ total advertising dollars some $16 billion. Both IDC and​ INT Media Group spawned similar prognostications for​ the​ weaker AsiaPacific market.
CMR forecast a​ 5. 3 percent growth in​ online ad revenues in​ 2002 compared to​ an overall average of​ 2. 5 percent. This optimistic projection is​ based on​ expected performance in​ the​ hopefully, more buoyant third and​ fourth quarters of​ 2002.
Still, it​ was clear in​ early 2002 that ,even if​ this surge materializes, online advertising would be almost 7 percent below its level only two years before and​ vertiginously below projections touted by professionals as​ late as​ January 2001. Internet. com quoted another gloomy prediction, by Goldman Sachs analyst, Anthony Noto the​ likelihood of​ an online ad rebound remains questionable in​ the​ near term. Moreover, growth in​ advertising in​ local papers, radio spots, and​ TV spots was expected to​ outpace the​ recovery in​ online ads.
In hindsight, some advertising categories indeed didnt make it. Cable, syndication, consumer magazines, national newspapers, outdoor, and​ B2B magazines continued to​ post sharp decreases.
A sign of​ the​ times in​ 2002 may have been IABs multimillion dollar advertising campaign. IAB is​ the​ online publishing and​ ad sales industrys largest trade association. in​ 2002, it​ tried to​ pitch the​ Internet to​ advertisers in​ what looked like a​ desperate effort to​ increase online ad spending.
Internet. com reviewed the​ campaign in​ a​ June 24, 2002 article
The gist of​ the​ work is​ that by encouraging consumers to​ interact with brand elements, marketers can foster greater awareness, favorability and​ purchase intent more so than can static media. the​ executions share the​ tagline, Interactive is​ the​ active ingredient in​ the​ marketing mix.
They quoted IAB President and​ Chief Executive Greg Stuart as​ saying
As we continue to​ mature as​ a​ medium, we need to​ treat interactive as​ a​ brand, and​ the​ manner in​ which we position ourselves as​ an industry is​ critical to​ driving the​ success and​ adoption of​ interactive advertising and​ marketing in​ the​ years ahead. We have to​ speak with the​ same voice so that we clearly communicate our unique value to​ all parties.
The collapse in​ Internet advertising had serious and, in​ some cases, irreversible implications.
In a​ report for​ eBookWeb. org I ​ wrote
Most content dot. coms were based on​ addriven revenue models. Online advertising was supposed to​ amortize startup and​ operational costs and​ lead to​ profitability even as​ it​ subsidized free access to​ costly content. a​ similar revenue model has been successfully propping up print periodicals for​ at​ least two centuries. But, as​ opposed to​ their online counterparts, print products have a​ few streams of​ income, not least among them paid subscriptions. Moreover, print media kept their costs down in​ good times and​ bad. Dot. coms devoured their investors money in​ a​ selfdestructive and​ avaricious bacchanalia.
Surprisingly, online advertising did not shrivel only or​ mainly due to​ its inefficacy or​ avantgarde nature. in​ a​ survey conducted in​ early 2002 by Stein Rogan and​ Insight Express, an overwhelming four fifths of​ brand marketers and​ agency executives felt the​ the Internet is​ a​ mainstream medium and​ an integral part of​ the​ conventional marketing mix. Close to​ 70 percent rated their opinion regarding the​ effectiveness of​ online advertising as​ more positive now than it​ was 12 months before. a​ full sixty percent said that their clients are less resistant to​ interactive marketing than they were.
So, what went wrong?
According to​ classical thinking, advertising is​ concerned with both information and​ motivation. it​ imparts information to​ potential consumers, users, suppliers, investors, the​ community, or​ other stakeholders. it​ motivates consumers to​ consume, investors to​ invest, voters to​ vote, and​ so on.
Yet, modern economic signal theory allocates to​ advertising an entirely different though by no means counterintuitive role.
From the​ eBookweb. org report
Advertising signals to​ the​ marketplace the​ advertisers resilience, longevity, wealth, clout, and​ dominance. By splurging money of​ advertising, the​ advertiser actually informs us the​ eyeballs that it​ is​ here to​ stay, sufficiently affluent to​ finance its ads, stable, reliable, and​ dominant. if​ firm X invested a​ million bucks in​ advertising it​ must be worth more than a​ million bucks goes the​ signal. if​ it​ invested so much money in​ promoting its products, it​ is​ not a​ flybynight. if​ it​ can throw money at​ an ad campaign, it​ is​ stable and​ resilient.
Online advertising dilutes this crucial signal and​ drowns it​ in​ noise. Advertisers stopped advertising online because the​ mediums noise to​ signal ratio rendered their ads ineffective or​ even repulsive. Internet users a​ captive audience not only became inured to​ the​ messages both explicit and​ implicit but found the​ technology irritating.
Many react with hostility to​ popup ads, for​ instance. They simply tune off or​ install adfiltering software. All major Web browsers allow their users to​ avoid popup ads altogether. But banner ads and​ embedded ads are an integral part of​ the​ Web page and​ cannot be avoided easily.
Thus desensitized, users rebel.
They resent the​ intrusion, are incensed by the​ coercive tactics of​ advertisers, nerve wrecked by protracted download times, and​ unnerved by the​ content of​ many of​ the​ ads. This is​ not an environment conducive to​ clinching deals or​ converting to​ sales.
There are two sources of​ noise in​ Internet advertising.
Free advertising misses a​ critical element in​ the​ aforementioned signal. Information about the​ purported financial health and​ future prospects of​ advertisers is​ conveyed only by paid ads. Free adverts tell us nothing about the​ advertiser. This simple lesson seems to​ be lost on​ the​ Internet which is​ swamped by free hoardings free classifieds, free banner ads, free ad exchanges. Worse, it​ is​ often difficult to​ tell a​ paid ad from a​ free one.
Then there is​ the​ issue of​ credibility. Dot. coms the​ leading online advertisers are rarely associated with truth in​ advertising. Internet ads are still afflicted by scams, false promises, faulty products, shoddy or​ nonexistent customer care, broken links, or​ all of​ the​ above. Users distrust Web advertising and​ ignore it.
The Internet is​ being appropriated by brickandmortar corporations and​ governments. Global branding will transform online ads into interactive renditions and​ facsimiles of​ offline fare. Revenue models are likely to​ change as​ well. Subscription fees and​ authorpays will substitute for​ ad revenues. the​ days of​ advertisingsponsored free content are numbered.




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