Why We're Not Seeing More Online Ad Revenue -- Part I
Posted on Wednesday, May 05, 2010 at 3:30 PM
It comes down to this: online ads just aren't working for too many
advertisers.
By William Dunkerley
How many
times have you heard that advertising money is migrating to online?
According to Advertising Age, during 2009, print and broadcast
advertising was down, but Internet advertising was up. J.P. Morgan is
forecasting more growth in online advertising for this year.
According
to Bill Keller, executive editor of the New York Times, "...Web
audience is growing at a great clip, while print circulation is not. And
online revenues are growing faster, too, albeit from a smaller base. If
the trend continues, there's little doubt that -- eventually -- online
becomes the main business."
At the same time, other
publishing executives are throwing up their hands on online ad revenue,
and looking for ways to monetize their content. Media mogul Rupert
Murdoch has been especially outspoken in his belief that future
prosperity for publishing will be dependent upon selling content, not
ads. "The old business model based on advertising-only is dead," he
resolutely proclaimed. Murdoch seems to believe that his new
pay-as-you-read model will lead to salvation of the industry.
So
there you have it. The future is in online ad revenue. But, then, it's
not.
Who's Making Money Online?
Perhaps the most
relevant question is how many fellow publishers have told you that
they're making enough money from online advertising to support their
operations and produce a good profit? I'm talking about money on the
bottom line, not hype, expectations, or blind hope.
One answer
comes from Hearst Magazines president Cathie Black. She's said that
"...digital advertising revenue is still pennies on the dollar." For
many publishers it seems hard to get a good price for online ads.
But
think about it. If advertisers were making good money from their online
ads, wouldn't they be willing to pay good money to advertise? What's
wrong here?
Advertising That Bears No Fruit
Advertising
Age for January 27, 2010, ran the headline, "Why Most Digital Ads
Still Fail to Work." The story goes on to list seven mistakes found in
today's digital ads. They include excessive complexity, ambiguity, and
meaningless use of techno bells and whistles. A PEW study of online
users found that "79 percent say they never or hardly ever click on
advertisements." In February, Bokardo, a social media design blog,
published a piece on "Why Social Ads Don't Work." The gist of it is
summed up in one line that asserts it's "because people are being
social, not searching for something."
The idea that online
ads aren't working isn't new. Back in 2003, BBC News carried a story,
"Why Online Ads Do Not Work." It quotes technology analyst Bill Thompson
saying, "...when I am online, looking for information, reading the news,
or simply surfing around aimlessly, the ads are in the way and I block
them out."
The story told by these articles is basically
that most online users don't want to see ads, they try to ignore them,
but even if they took to time to read them, they'd find them confusing,
intrusive, not pertinent, and pointless.
Contrast that reaction
with the experience of print ad consumers. For many print readers, the
ads are a desired part of the publication. For the newspaper reader,
that may mean seeing ads trumpeting sales at the supermarket or the car
dealership. For the specialized magazine reader, it may be ads
announcing new products or just showing what's available. Some print
readers even report in surveys that they read a magazine from back to
font because they want to see the ads first!
But if ads can have
such intrinsic value to readers, why should they lose that value online?
There's
More to the Story
The business function of any
advertising-driven publication, print or online, is to connect buyers
and sellers. How well that is done has been the dividing line for some
time between many successful and unsuccessful print publications. The
same rule applies to online. However, many of the online content
providers may not be operating with this concept in mind.
The
fundamental strategy here is that the publication's content is used to
attract readers who in turn will be attracted by the advertisements. The
readers need to have a propensity and proclivity to buy.
If an
online publication seeks to attract readers just to build traffic
statistics, it is not fulfilling its responsibility to the advertisers.
You can't blame the publication entirely, though. Advertisers clamor for
more and more metrics that are by nature quantitative, not qualitative.
And that's what the advertisers get: quantity, not quality. That can
result in an audience made up largely of non-buyers. Regardless of
whoever is to blame, this is one reason why online ads don't work. And
in the end, it is both the advertiser and publisher who suffer as a
result of this malfunction of strategy.
Another factor is that
much online advertising ignores some of the basic principles that have
been known to make advertising successful. They've been identified
through extensive research with print advertising. What are they? They
are color, size, and repeat exposure. They create effectiveness for an
advertisement. Many online ads make ample use of color. There's no
disadvantage there (except that some of the color usage may lack
aesthetic appeal).
The idea that a banner ad, small as it is, can
be effective, however, evades good sense based upon proven advertising
practice. Indeed, effectiveness is proportionate to size.
Then
there's the matter of repeat exposure. On one hand you might think that
online has it all over print in this respect. Who doesn't have a
recollection of seeing certain online ads over and over again, almost
endlessly? Many of those ads are dynamically served on a rotating basis.
That certainly offers new possibilities for targeting.
But
consider this comparison: A print publication reader may see an ad as he
or she reads through the publication. Moments, hours, or days later, if
the reader wishes to return to that ad, it is a relatively easy task.
And when the reader does, it is very valuable repeat exposure. For the
advertiser, it is a repeat shot at a reader whose interest in the ad is
active. Repeat exposure to consumers who lack that motivation and
interest is certainly worth far less. Even worse, it can annoy and
irritate the reader. What about the online ad that a reader wants to
return to? Have you ever tried to return to an ad that was dynamically
served? It can be an impossible quest. An ad without a specific spatial
location in the publication has a serious disadvantage when it comes to
a reader seeking a repeat exposure.
The Story Gets Worse
These
are some of the reasons why online advertising isn't working out of deficiencies
in the ads themselves -- and why publishers are failing to see the kind
of ad revenue they're looking for. In addition, though, there are other
qualities that are present in online advertising that are
actually off-putting to consumers. In Part II, we'll describe them,
along with the dark shadow that they cast across the whole online ad
industry and its development. And, finally, we'll offer recommendations
for concrete steps you can take to improve your online ad revenues.
William
Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com/consultant.
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