Why advertising is failing on the Internet

I've turned down countless requests from companies to advertise on my own costume design site, which got a lot of traffic when only a few such sites existed. Some of the companies were related to costuming, but some were only barely related, or not at all (furniture imports, for instance).

I've noticed sites that DO accept ads get ugly real fast, with clashing styles and color schemes clamoring for attention, some even animated. As a designer, I am repelled by the visual discord, if I can't manage to ignore it.

On the other hand, I know the ads are a valuable source of revenue that supports sites I like and allows them to continue.

I think spam fatigue got to most of us a long time ago. I have a great aversion to becoming a quasi-spammer myself, that's why I resist the ubiquitous urging to use networking sites to promote relentlessly. It's bordering on a mental block, in my case.

I don't have any answers.

I have use push advertising for years in all kinds of media and it has worked because usually you post ad's in the medias that are drawing a certain type of customer. Keeping away from just throwing ad's up anywhere to see if we catch anything.

Example: Travel ads in the Travel section of the newspaper or in Travel magazines.

The internet is different in that if people want to book travel they search for it, check prices and book it themselves. If they are reading about a particular place or type of vacation they are not interested in being sold too. They would consider it an intrusion of their time and place. Push advertising does not work.

Suggested Answer: I heard is said that in Social Media you need to become famous in what you do. Make your product or service interesting by giving away content and knowledge to the consumer. Pictures and video are becoming more important. Not selling but educating. People will find you. Travel agent needs to make a certain vacation infamous so people will get curious and ask. Regular participation in the social media become essential. This requires a whole new change in mind set and marketing talents. Those that master it will succeed.

I have seen in the early days sites that provide a service for free tried to use "banner" ads rolling across the top or bottom of the screen. And being a window user I just moved the window to where I could no longer see the ads.

Now Cnn and NCAA's March madness both show Commercials before the "player" pops up with your video or stream. And it is now thought the average american will see over 1 million commercials before they are 20 years old. That is a lot of attempts to lure us into what we don't need. And somewhere out there I want to reach the target market of those who do need what we have to offer... not to "talk them into" what they never needed.

I also do not have any great answers. I am sometimes pleased with our internet efforts to get noticed without spending a lot on advertising.

This could (has) generate some good discussion and probably will appear in a quite a few blogs in the near future.

Networking; biznik events; blogs; social websites; testimonies and featured people or tenants on websites... these are some of the immediate advertising alternatives that come to mind. Also donating to auctions for great causes can be another way to get your name out there.

I really do think that advertising on the internet can go either way. There are plenty of situations where it fails miserably, and some where it actually works out pretty well.

For example, I feel like advertising on social networking sites doesn't work well at all - if I'm on Facebook, Biznik, or another site like that, I tend not to even notice the ads - I'm there to network, chat with my friends, see what's going on.

However, I think that on sites that sell things, ads can work quite well. If somebody wants to buy some soccer gear and they find my site, their goal is still to find soccer gear. To many users, the difference between a post reviewing something and an ad yelling "SOCCER CLEATS 50% OFF" is negligible. They both get the user to their end goal - getting those soccer cleats they need.

In the social networking example, the ads don't support their goal at all - it often detracts from it by distracting them from their main goal - to network.

Or that's how I see it, anyway ;)

Dan, since close to 100% of my business comes via the Internet (I do very little networking and no advertising or mailings) I think of marketing, rather than advertising.

And my definition of marketing is different than most. I call it "providing value to your prospects so that they can discover if they want to start a relationship with you."

So if someone comes to my web site, they can decide if they want to get my Contribution Factor report and join my ezine list or not. Then when they're a subscriber, they can choose to follow links that tell them more about a particular service or program I'm offering.

So I'm always marketing, even when most of the time I'm giving away valuable information. This builds my network of business relationships who in turn tell other people about me who visit my web site, etc.

What people miss out on is marketing intentionally through very carefully focused campaigns designed to convert prospects into clients. This week I completed a campaign that filled my marketing coaching business for the whole year.

So no, I'm not a big fan of advertising on the Internet, but a very big fan of marketing.

Cheers, Robert

Dan, I have websites that encourage local businesses to advertise on our site for small "ad" fees. Our websites are designed to meet the needs of newcomers and new homeowners, both groups that have huge needs for information, products and services. We offer a Gift Packet that is mailed to each applicant that fills out our survey form. I tend to agree with you that the "Sponsor Ads" are not real money makers. My real income still seems to be in the direct marketing approach of taking our packets out to our targeted groups and introducing our business sponors materials in a personal, (scripted) format. Word of mouth, is still the best form of advertising. I think that our "coupon" offers online do have value, but our websites are geared to work in conjunction with our Gift Packet Presentations. Cheryl

In a world where we are assaulted by unwelcome advertising everywhere we turn - Billboards, TV commercials,loads of flyers in our mailboxes each day, radio commercials with the most irritating sounds and voices they can find , pop ups and offers on the internet etc.etc. etc

We as a nation are becoming immune to ads- we have shut down due to the information overload.

The only way to get people to listen to what you have to offer is to Target -Target -Target

Niche marketing is extremely successful these days because you are talking only to those who are looking for what you have to offer

When you find your niche- advertise there in all forms- print- online-social networking-build relationships with your niche- get out there and network personally When you approach marketing in this way you will find a specialized group and not just throwing your message and advertising dollars into the wind-- Cathy

In my experience internet advertising can be very effective. The key is to be target specific. Unless you have a limitless budget, saturation marketing is not the way to go. The more focused your advertising is the better ROI you will recieve. Yes, you will reach less potential customers; however, the ones you do reach will be more likely to turn that add in to a sale.

What has worked most effectively for us is niche marketing. For example, although we sell promotional items and screenprinted shirts to every industry out there, we will specifically advertise that we print custom screenprinted shirts for Homeschoolers and only advertise on Homeschool specific sites. This does take a little more time than the generic saturation type add designed to appeal to everyone but it is far more effective. -- Chris

Great post, I was wondering what happened to the Intuit ads. I think you are absolutely right. On Real estate web sites you see all kinds of ads for books, and DVDs. In talking with other people who have those sites the money may, I said may, pay for the hosting but not much else.

How would a subscription work for other informational sites?

If internet advertising didn't work, affiliate marketers would be out of jobs ;)

There's a few things on my mind...

• Biznikers are more tech savvy than a lot of people, and tech savvy people are more banner blind than most. Just because the community feels one way doesn't represent how the rest of the internet feels.

I do over 30 million ad impressions a month and have seen a CTR anywhere from 0.75% to 1.25%. That a healthy middle of around 300,000 interested visitors!

• The internet is different, take design for example..you can't have print designer come in and whip up a web page for you. Internet ads need to be different as well.
• Internet advertising is so inexpensive, advertisers can spend less than they ever did, and reach more people than they ever thought was possible. More importantly, they can use geographic and demographic information to better target their ads.

On the link to the New York Times there are ads. There is also a subscription I would guess. There is a level of trust there.

Now looking at other sites I can see there is a subtle difference in styles of ads.

Real Estate may not be a good indication of popularity for advertisers. There is a level of distrust.

Other sites seem to have more direct targeted ads from a more trusted site setting.

I just wanted to add that Intuit, in my opinion, is not a trusted product.

I used Quicken for years before it out grew me. I had Quick Books before and it was incomprehensible. I just bought Quick Books again but I need a class, and adviser to make sense of it.

Intuit may not have been the best test.

The Intuit example was a failed idea as they attempted to push a product in the pull economy of Biznik. They could have done some basic foundation changes and seen much more impact. They simply didn't pitch the idea right.

+Ad spots plastered all around Biznik would have little effect in my opinion. Most social networking sites have incredibly low ROI on generalized advertising placement.

Endorsement on a social networking site are different. If you can find a well-supported, trusted, and viable advertiser that a dozen+ people on Biznik recommend... you can sell something with a little extra spotlight advertising.

Eric is somewhat flawed in the argument that advertising will fail online, as his definition of advertising actually categorizes almost EVERY site online:

"Advertising is using sponsored commercial messages to build a brand and paying to locate these messages where they will be observed by potential customers performing other activities; these messages describe a product or service, its price or fundamental attributes, where it can be found, its explicit advantages, or the implicit benefits from its use."

Ultimately at the core 99% of the adult population: we are sponsored by a company, product, or service. Even as entrepreneurs and indies, most Bizniks are sponsored commercial messages.

The payment however, has gone far outside of the standard dollar. We now use social bartering and referral partnerships as a form of payment.

I know of several authors who target precise testimonial based partnerships and have incredible return on it (into the 30-50% range of the audience.)

If you can put on a thinking cap and integrate a testimonial based social barter system, everyone learns to maximize different portions of an audience.

Dan,

I think there is a fundamental difference between a business model and advertising. DHH is talking about a business model, and I was talking about the effectiveness of advertising on the internet :)

Well, since you all begged me to weigh in with my opinion...

I think this will all be moot in 3 years anyway. We are putting so much of our behavior online in publicly viewable ways, that I expect - if I ever even SEE an ad - it will be hyper-targeted at me, because some smart geek has crawled my Facebook, Tumblr, Twitter, blog, and Biznik profiles, and has built an incredibly accurate picture of who I am.

They will be able to serve me ads that are timely and EXACTLY what I am looking for.

Seem far fetched?

Over 10 years ago I worked for JavaSoft and had a friend who went to the Fraud Protection department at Visa. Using nothing other than the information on a credit card receipt, they could almost do a police sketch of you. Not to mention they could tell you how much milk was in your fridge, and when it was going to expire, too.

Now imagine if that same team found my Facebook profile and Twitter feed, and correlated that data with my Visa card history.

With that level of data, everyone becomes as transparent as air.

And the ultimate result is that they know my wants and needs better, so they can serve me data that better aligns with what I actually need.

And maybe this means advertising will become less annoying, since those banner ads won't be for Depends or pink Motorola cell phones or for MySpace.

It's a possibility...

I warn my kids about target ads all the time.

IMO it's already here.

@ Dan

I think in your example of "The authenticity is for real." is the hardest part of the whole experience. Keeping a clean testimonial reputation with a spotless character is the key there. If you give someone reason to question the endorsement and are not straight-up about it, enter the doomsday scenario.

@Christian

I think the hyper-targeting issue will probably be some interesting secret sauce. The real catch is targeting people without making it obvious, or else folk become suspicious like Dan mentions.

Unfortunately the less technically savvy people don't know how and when they are being targeted. Having come from the Verizon world it was truly scary to see the information we had on anyone with a mobile phone that was cross-compared to some basic databases.

Having looked at hundreds of online business models: advertising is probably one of the most painful and unlikely to succeed money making methods. When it does work however, it is like gambling and winning the jackpot (which is why the Googles and Facebooks of the world get soooo much press)

For every Facebook, look how many advertising businesses went under (Seattle PI anyone?)

Used appropriately, it's fine.

Ads need to be relevant and non-intrusive.

'Have stuff that's likely to be of interest to your audience, and don't have too many on a page.'

Ahh -- a topic that is very close to my heart. In fact it's so close to my heart that I have some slogans that I use to express my opinion on the subject:

"Ad-supported media is corrupt and corrupting" -- plus when I'm feeling real ornery -- "and deserves to die"

You cannot serve two masters and he who pays the piper calls the tune.

Also, you get what you pay for -- if you paid nothing for something, that's usually what it's worth to you.

I respect a site that values itself enough to ask me to pay for it and if it is worth it, I am ready willing and eager to pay.

Finally, here is my 10-Point declaration on the subject:

mind-share n.

the amount of attention required by something, the time spent thinking about something

1. My mindshare is mine.

2. My mindshare is valuable.

3. I have a right sell, trade, or share my mindshare as I choose.

4. Nobody is entitled to take my mindshare without my permission.

5. Unsolicited and intrusive advertising amounts to mindshare theft.

6. Mindshare theft is wrong.

7. I have a right to resist mindshare theft.

8. I demand media that does not deal in stolen mindshare.

9. I support media that respects my mindshare.

10. The world is better when individuals control their mindshare and their media.

Hey Dan,

Late to this conversation but let me refer back to the source. Techcrunch also recently published this article by the IAB: http://www.techcrunch.com/2009/06/05/iab-reports-5-percent-decline-in-us-online-ad-revenues-for-first-quarter-2009/

It notes a 5% decline to 5.5 Billion dollars estimated industry ad revenue. Even at a decline, that is a lot of ads being served.

The decline is in part due to the economy but mostly it is representative of a shift in power from traditionally modeled CPM advertising to other forms: CPA, CPC, CPV, etc. The shift in power is happening for three reasons: 1) advertisers are becoming more ROAS focused as budgets slim down; 2) these other forms are better equipped to mesh with social platforms; 3) advertisers are starting to realize that the real money is in the data that tracks, quantifies, and segments consumer habits.

The shift does not indicate a change in business strategy. Businesses still feel they need to inform you about their product and entice you to use their product. And although smart consumers like yourself would prefer to not be a target...you still are. A good indication of that is Google turning on behavioral targeting recently: http://googleblog.blogspot.com/2009/03/making-ads-more-interesting.html

For those who are not completely banner-blind yet you will start to notice more ads "remessaged" in an attempt to capture you as a customer. Heck I had an ad for the Venetian follow me around for a month before I cleared my browser cookies.

Of course Google's spin on the matter is that in order to avoid ads I dislike and only be solicited by advertisers I am interested in I divulge my interests. And in fact with every "social" tag I place on a photo and with every "social" gift I pass within FB I am divulging what I am interested in. By participating a profile is being created. Google is just asking for this information up front.

In terms of alternative ideas to the model it is difficult to come up with things sustainable. I think Barry's comments in regards to bartering are very smart. Bartering systems in the right context work well. Just look at ever vibrant "free" section Craigslist.

Interestingly growing up in Arizona when I think of bartering I think of Arcosanti: http://www.washingtonpost.com/wp-dyn/content/story/2008/04/18/ST2008041802218.html A rebellion against "hyper-consumerist society" started by architect Paolo Soleri. They attempted to do focus on a barter and volunteer system. Decades later their vision is still not complete and has shifted to try "create buzz" outside of their community. That buzz when you look at their official website is a lot like advertising.

Ultimately I think it is how you use the advertising. Smart advertisers will attempt to engage and invite discourse instead of being invasive and assaulting the consumer.

@Dan/Barry: I think you are thinking of "targeting" too much from the tech side, and not enough from the user experience side. If ads actually were to become valuable content for the viewer, it would change your relationship to the ads.

For example, every year I go to Burning Man, which happens on the exact same day every single year. So about this time every single year I perform another fruitless search for the Perfect Burning Man Tent.

Anyone who trolled my online profiles would know that, and could serve ads (on FB, and elsewhere) that were for the latest tents.

Back up for a moment and think about this: We ignore the ads in EVERY medium (TV, print, online, etc) because there is no useful information in the ads. The signal-to-noise ratio is just too low.

If, on the other hand, every ad I saw was targeted at my specific needs and interests, that makes the ads (and therefore the web site) higher value for me. I might actually look at the ads to see what is getting pitched, rather than knowing to ignore that 30% of screen real estate.

Highly targeted ads are of value to me because they provide me with content I might be interested in.

If Facebook actually did the data mining they could do with my profile, and used that info to serve me meaningful ads, then 100% of their screen real estate becomes of interest to me, rather than just the 25% wide strip down the center.