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. 

Flash banners: online Badvertising

Banner blindness, intrusiveness, non-existent click thru rates, impression-based pricing models...as if online display (banner) advertising didn't have enough going against it, now comes...hacking!

The nerds at /. carry news of an apparent use of booby-trapped Flash-based banner ads to gain control of the systems of the unsuspecting who click. Thank goodness hardly anyone clicks on banners. As this story gets round the bout, I suspect click thru rates will dive into negative numbers ;-)

It does point out an obvious issue: in an imperfect world, all communication vehicles have pros and cons. But when the balance of pros and cons--to the end user--grows sufficiently lopsided to the con, then the vehicle that suffers such indignity will find itself circumvented. TiVO and popup blockers being but two examples of ad-circumvention tools.

If online display advertising--using the ubiquitous Flash format--is now to carry with it the stigma of being a doorway for malevolance, and not merely something to ignore, I suspect ad blocking technology will become less about annoyance and more an issue of security.

When that happens, falling banner ad CPM rates can continue to zero and still be priced too high.

Spending or Earning?

The web is not an advertising medium. Come again? Well that's a shocker since so many advertisers seem to be taking their traditional ad dollars online. Can they all be wrong?

Of course not. But let's make a distinction...two really:

1. Advertising does not equal marketing
2. Buying something is not the same as earning it

First, marketing is more than advertising. Marketing encompasses all the activities that go into selling something...advertising is one small part of that. Here's a sample point of view on what marketing is, and is not, at thestreet.com (it seems a bit more practical to me than the American Marketing Association's definition).

Second, traditional brand advertising models have generally been based on the idea of buying attention (in the form of impressions, reach or frequency). Online (and in direct response), you can't buy attention. You have to earn it.

Problem is that many of the online advertising models are struggling with this notion...that a user who controls his or her own online experience can't be bought. In fact, attempts to buy attention--via banner ads, intrusive popups, unsolicited email--might even create a cost...in goodwill...in positive perception. The very old saying that any publicity is good publicity is, well, very old and very outdated.

But there are methods for earning attention. One is to be relevant. That requires listening. Another is to be responsive. That too requires listening.

Maybe that's why pay-per-click works. An individual provides a marketer with something worth listening to--the search query--when the marketer responds with a relevant response to the query (as in a sponsored link), the conditions are right for being invited into the consumer's world...one click at a time.

The smartest marketers know that display advertising and pay-per-impression models online fall short in a medium that demands--and offers--more to those willing to market.

For an research-based take on the effectiveness of banner display advertising, see Jakob Neilsen's Banner Blindness article on useit.com

When less is still more

A couple of sources have reported updates to advertising spend trends.

AdAge reported that the top 100 advertisers (representing 41% of all measured ad spending) shifted almost $1billion from TV and Newspapers to the web. From the article:

Put another way, these top-tier marketers increased measured internet spending by $1 billion; slashed newspaper spending by $674 million; and cut TV budgets by $406 million.


TNS Media Intelligence reports a slowdown in the growth of online display advertising: from 16.7% growth in 2007 to 8.5% growth in 1Q08.

Two thoughts on what's at work here:

1. It's the economy: Of course, that's not really thinking, it's just stating the obvious. What's interesting is that even in the face of overall spending that is flat, advertisers continue to see the web as a place to invest. And with CPM rates continuing to fall online, there would seem to be little downside to advertisers taking their ad dollars there.

2. Display advertising reflects the advertisers using it: the top 100 advertisers, who control 41% of all advertising only control 37% of the display advertising online. Many of these companies are particularly sensitive to economic conditions.

So, maybe for those top 100 advertisers, it is about the economy. When times get tight, sometimes less is more. In this case, continued superior growth online suggests that, well, more is more.

Friday fun music link: One Les that's more (in the right hands)