Is advertising failing on the internet? By Even Aas-Eng

My good friend Aleksander Rosinski at www.finn.no sent me this article by Eric Clemons: http://www.techcrunch.com/2009/03/22/why-advertising-is-failing-on-the-internet/
Clemons is a Professor at Wharton and he is not a big fan of advertising… I thought the article was interesting but I disagree with him, a lot!

Clemons don’t believe that advertising dollars will not migrate online or to other digital channels, instead he believes that the internet will unveil the failing history of advertising and shatter all attempts at influencing consumers. Clemons says “It is not trusted, not wanted and not needed”
The advertising doesn’t work discussion seems to never end. Normally when this arise it’s a online marketing wizz behind it saying that SEM, affiliate marketing and a good old list of email addresses will solve all your problems but Clemons takes it one further and even dismisses search as a “Monetization of misdirection”!

His article is a long one so I will focus on his three reason on why advertising will fail

Consumers do not trust advertising. Clemons graduated from university in 1971 so he might think that advertising still looks, acts and feels like a Mad Men episode. We might not trust advertising to make important decisions in our life but we are not enemies of advertising. When Nike launches a new trainer, consumers that are exposed to Nike advertising may have thoughts on the design, colors or the price of the product but they don’t accuse Nike of trying to sell them a crap pair of trainers. Consumers don’t trust companies that promises something they don’t deliver and they don’t trust bad advertising. The internet is a transparency tool and the rise of social media means that companies no longer can risk being untruthful in their advertising without the consumers picking them apart, but the idea of truth in advertising is not something new. McCann’s mantra “Truth well told” is almost 100 years old…

Consumers do not want to view advertising. This is definitely true for a lot of “push” campaigns out there, but it doesn’t mean that we are not influenced. Let’s take a horrendous example. inkclub.com has annoying display ads everywhere you go online and I don’t know how many times I have been exposed to their ads. I don’t have a printer but if I did I would surely by both ink and toner from inkclub.com. Why? I don’t care about ink, I don’t want to spend time looking for ink and I certainly don’t care what other people mean about ink, so if I remembered the name of someone who sells ink I would buy it there. If inkclub has a positive return on their investment is a different story but it does work even though it’s annoying.
Then there is all the types of advertising that people like to view. Who doesn’t like the text ad from the wonderful little beach bungalow that was smart enough to be there when I searched for a beach hotel at Boracay or what a about the 240.000 consumers (campaign was shut down after two weeks) that participated in Burger Kings last campaign where you could dump your Facebook friends for a free burger.

Consumers do not need advertising. They don’t, but that’s hardly the questions here. Companies need advertising and the economy needs advertising to stimulate demand. Increase in demand leads to profits and innovation and that again leads to increased material welfare. I don’t know about Mr Clemons but I certainly don’t mind. Clemons own research shows that people use UGC sites like Tripadvisor when they make decisions and therefore they don’t need advertising. People do use Tripadvisor and similar sites and we are experiencing a influence revolution but this influence is not enough to drive the same amount of demand as you can with a successful advertising campaign. It is definitely possible to influence consumer behavior, advertising is one of the tools companies have at their disposal. Let’s take an example from the travel industry. With the arrival of low cost airlines consumers travel behavior in Europe has changed drastically. In a small market like Norway there are three direct flights to Vilnius from Oslo weekly, that means that 450 people fly there every week. I don’t know what the number was before Norwegian Airlines started their direct flight but I am pretty sure it was less. So by convenience, affordable prices and marketing Norwegian airlines has been able to increase demand for airtravel to Vilnius. How would they fill their flights without advertising and how would I know that they fly to Vilnius without any kind of advertising? And please don’t say word of mouth…

Internet will not kill advertising. On the contrary it will provide us with more relevant models for push marketing so that inkclub doesn’t have to waste money on me and it has already given us the opportunity to create even more relevant, valuable and successful pull campaigns. And the best thing, it will only get better.

“Interest-based advertising”, the rebirth of behavioral targeting. By Even Aas-Eng

Two days ago Google launched their new display product with new targeting options. You will now be able to target user based on their browser history, the site they visit and the pages they view.
The service is still in beta but will soon be launched across Google’s massive adsense network and give it a long overdue facelift.

I assume that the “interest-based advertising” service is based on Doubleclick technology. If that is correct this is the first significant outcome of Google’s takeover of the company in 2007. It has taken two years to take the new display product to market, it must have been frustrating!

I think it’s funny that the term “behavioral targeting” seems to have disappeared after the US congressional hearings last fall about online targeting and privacy issues. In order to stay away from the heat Google has also implemented a lot of user friendly features to their new service. You can choose categories of advertising and you can off course choose not to be targeted at all. No one will probably ever discover these opportunities but Google’s has its back free.

So make no mistake behavioral targeting is back but it has a new name, “interest-based advertising”

More info can be found here: http://googleblog.blogspot.com/2009/03/making-ads-more-interesting.html

God, I was wrong! By Even Aas-Eng

This blog has been dead for a bit over a year now and this is an attempt to bring some life back to it.

One of my last articles was titled “Recession is here” and was posted on January 22 th in 2008. The post was a rant on how a recession will speed up the transition from “old” to “new” media and how the online advertising industry would benefit from this. I was also offensive enough to recommend a few tech companies as potential winners in the stock market during a economic downturn, I wish I didn’t… The concerned companies was Google and Tradedoubler and the stock price at the time was about 500USD for Google and 123 SEK for the Swedish affiliate marketing player. Today Google is trading at 318 USD and I just sold my Tradedoubler stocks at 26 SEK a share…

Well I was right about one thing, the recession was really creeping up on us and we are now experiencing the most severe global economic downturn since the big depression. This has obviously impacted the digital business as well and my rosy prediction from a year ago looks ridiculous today. But I am not going to use this blog to post doomsday prophecies. We live in interesting times of change and transition, new ventures arise and old business models dies, fortunes are made and lost. It’s the age of opportunity.

So the blog is back and the first real post will be ready soon (hopefully) I already know the title, “Black Swans and Creative Destruction”

And I got rid of the sleazy picture!