Thursday, November 06, 2008

MyAds: Banner ads reborn?

MySpace, the oft-maligned, drab older cousin to Facebook's freaky fashionability is taking the growing up seriously. Ever since their acquisition by Fox Interactive Media, they've pursued a revenue generation strategy around advertising innovation. 

And now, one month from it's launch, MySpace is generating estimated revenue of $140,000-$180,000 per day using a pay-per-click display advertising model (according to TechCrunch).

So what?

Display advertising (also referred to as banner ads) has known issues (banner blindness and CPM deflation being two among many). But the MySpace model is intriguing for what it enables:

1. Do it yourself ad creation
2. Pay per click pricing

Combined with MySpace's long tail, tribal approach to community (i.e., you associate with those whose interests are relevant to your own--like music, pet ownership or tatoos!), one might expect many community-generated banner ads to actually reflect the community's values rather than an ad agency or marketer's interpretation of those values. 

Combined with pay-per-click pricing, one might expect that these potentially more authentic ads might outperform their less relevant, intrusive messaging foils--and therefore attract more spending. In fact, IAB reports for the 3rd quarter of 2008 show that CPM-based approaches to online advertising are already showing flattening spend levels, while performance-based models continue to rise (see prior post here). MySpace would appear to be on the right road there.

But what about the 'quality' of the ads? That argument, like many subjective arguments over quality, will have to have performance data to back it up or it will be an argument of interest only to those making it. An ad created by someone within the community has alot of intrinsic advantages over an outsider with an art degree.

Online, good design is design that works. If a person with inexpensive, off-the-shelf tools  (e.g., Flash, Photoshop) can create display ads that get measurable results, those who have made a living on self-evident value judgements may have to rethink their approach...or focus on the communities that they are part of. 

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