Oct
20
Henry Blodget things we’re fucked in his recent article: Let’s Be Serious: Online Display Ads Will Fall Sharply In 2009
I don’t think we’re so screwed. I do think he’s right that display advertising will drop, but only for a while.
We’re lucky this isn’t rocket science. Otherwise we would be screwed.
Online display advertising is equally as ghetto as it is in the real world (maybe more); you get CPM which means “you pay for every 1000 eyeballs.” Advertisers do not like this, and will pull back these dollars. It’s long overdue. This is not what the Internet is for. Punch someone else’s monkey please.
Text ads, on the other hand, are easily quantified. CPC means “you pay only when people click.” Advertisers like that. There is also CPA which mean “you pay only when the person buys your shit.” Advertisers love that. These are the things that make advertisers spend their dollars.
People will create new metrics for display advertising, like engagement or click-through and charge advertisers in a more transparent way. This is inevitable. The bullshit publishers and ad networks will disappear because not only will they be unable to convert, they can’t even define “conversion.” Advertisers will get fine-grained targeting (eg, “I want to target cute single girls who date fun geeky jewish guys.”)
The future will come. MySpace’s new advertising system is the closest thing yet. MySpace needs to blow it out to publishers across the Internet and not just use it on MySpace properties.
So let’s make it rain, bitches. And before we make it rain, let’s have a drought to kill off the weak.
Comments
4 Responses to “Memo #15 — Blodget says: Online Display Ads Will Fall Sharply In 2009. I say “Good””
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Of course advertising is better with accountability. Online advertising sold by CPM is a stopgap; selling by CPC or CPA creates much-needed accountability that is simply impossible in other media. The notable problem with accountability alone is that it drastically reduces the amount of money changing hands, making the whole thing seem altogether less worthwhile. Enter targeting, where you rightfully cite MySpace as being among the cutting edge. Scarily detailed targeting improves CTR and raises the financial stakes, bringing the crowd of big-ticket advertisers back to the table.
This is about where we are today and two major problems remain. One I think is in a sense solvable and the other I fear approaches impossibility. We can work through the privacy concerns by focusing on correlation and not identification. It isn’t necessary to show an ad to Richard Crowley specifically but to someone who recently visited Flickr, ESPN and The Big Picture (3 random tabs). Nearly impossible is the selling of ads against material that is perused rather than navigated (Facebook rather than a SERP).
True… This is also why SERP CPC ads pay a lot more (10x or more) than joe-blogger’s publisher CPCs.
Either way, the question remains… how do you add accountability to display advertising? Improved targeting is only one half of the puzzle.
No more talk about Joe The Blogger.
The advertiser needs to pay the publisher based on the number of conversions that publisher’s clicks generated. It’s easy if everyone is honest but the advertiser has the incentive and opportunity to report fewer conversions. The advertiser’s opaque conversion reporting is like the secret rubric Google and Yahoo! use to count only a fraction of your clicks.
Could the cooperation of the credit card companies solve this problem? The credit card processor seems like the right place to match clicks to transactions but I can’t think of a piece of data that could unify the two without also being ignorable by the advertiser.
In a perfect world, it’d be safe for the advertiser to include some JS on the landing page or conversion page supplied by the publisher. But that’s insecure and will never happen.
But also, not all failed conversions are the fault of the publisher, sometimes the advertiser has such a shitty site that the consumer can’t even check out.
Life isn’t great yet.