January 27, 2010
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Here's a general curious question... Do you still click on internet advertising? You know those ad banners on the top or sides of a web page, or those pop ups? Me personally, I hardly ever click on those things. In fact in these day and age where web browsers (I use Firefox) have functions to completely minimize the amount of online advertising that you see (to practically none), it's almost a lucky accident whenever one gets my attention. It makes me wonder how internet ads could possibly be an affective marketing tool. Is it because it's so cheap to make them, that all they need is the attention of at least 1% of web page visitors. Oddly enough, I think that less than 1% of web page visitors actually click on online ads.
So I'm trying to think about what type of online advertising are actually effective, and it's got to be the ones forced on you when you watch videos on Hulu.com or youtube.com. Those short 5-15 seconds ads in front or in-between videos are definitely ones I couldn't avoid, so that's something for the marketing theme to cheer about. Other than that, what else do online ads have going for them?
The new form of online advertising is actually an old one... word of mouth. I'm ofcourse referring to social networks like twitter or facebook, where people post up an impression or an uploaded photo to their status update or blog, regarding some product. Music, movies, restaurants, games, to home goods, are all freely talked about in these social networks, which gets the attention of their friends and families on their contact lists, that might result in an additional sale by somebody there. THAT is really the current model of internet advertising, status updates and blogs. It's a company's dream to have people who are willing to do the marketing for them, for free (hello "street teams"). Just look at me as an example, as I'm admittedly a participant to this form of free marketing by the things I've posted on my blog and status updates.
Comments (6)
Actually you'd be surprised. There's a reason why spam and web advertisements are still being used. It's because they work. Billions of dollars are currently being spent on web advertising and you can bet that products are being purchased through those ads are paying for it all.
There's more granular measurement of the idea of internet advertising. One metric is the number of "impressions". These are the passive ads that you see on the webpage while you're visiting it. Next is a clickthrough. This is when the visitor actually clicks the ad. The main metric used to measure effectiveness at this rate is the CTR (Click through rate) which is #Clickthroughs/#Impressions. Usually this is somewhere around 1% but 1% of 10 million impressions is 100,000 clickthroughs. Of course you actually want to make money so what really counts to the company that's paying for the ad is how many "conversions" you get from an impression. The conversion rate is the metric in this case #conversions/#impressions.
There are several ways advertisers monetize the content the produce on the web. A few of these are:
CPA (cost per action), CPI (cost per impression), PPC (pay per click).
Of course there's always the risk of click fraud. The higher the rate of click fraud from an advertiser, the less likely a company will want to pay to have ads.
This gets a lot more complicated very fast with artificial intelligence and data analysis thrown in, as well as frequent meetings of a marketing department whenever the metrics go down.
Now just remember the following. Sure you yourself don't check internet ads or purchase anything from them. But if internet advertising ever becomes ineffective, the internet will go back to what it was in 1998 when all you had were crap websites of your grandma's pets and HTML blink on all the text.
@darren_macintyre - I definitely live in a bubble then, because I almost never notice internet ads anymore. In my tabbed webpages right now on Firefox (twitter, youtube, gizmodo, techcrunch, xanga, facebook, collegehumor) only one of them has a visible ad for me to click on (collegehumor). The majority of them are ads to their own sites, but ads to external sites seem rare to me. Maybe it really is all thanks to ad-blockers integrated on Firefox, or ads becoming a lot more subtle than before, or just the use of data tracking ads embedded on the website. It's also silly of me to assume that most everybody has ad-block turned on.
I think most of the ad revenues are coming from porn sites anyway. LOL
Nah not really. Pr0n ads are noticeable because they're fairly obnoxious. But legitimate companies a lot of times are very subtle. For instance upsell or co-selling ads during purchases (I'm sure you've seen that on amazon). There's lots of affiliate links posing as articles. Most product reviews that don't disclose that they don't have a relationship with a manufacturer. As for ad blockers, that's an arms race. The moment an ad blocker matches an ad, advertisers modify something so it isn't detected as an ad.
As for your list:
twitter - They share revenue with their content generators (you)
youtube - no clue... everyone's still debating on their revenue stream although google definately is one of the biggest advertisers.
gizmodo - Are you kidding? Ads galore, your adblocker may be blocking but you are technically STEALING content just as surely as torrenters, kazaa, etc... (not that I don't do it
but that is how the industry views you)
techcrunch - read gizmodo comments
xanga - read twitter comment
facebook - read twitter comment
collegehumor - read gizmodo comment
Yes this is an idealogical issue but remember, the people employed to create the content you enjoy are making a living off ads. Unless you want to go to the model of micropayments and subscriptions, you might want to rethink your stance on internet ads.
@darren_macintyre - My stance on internet ads? I don't have a stand for or against them. I'm just stating the fact that I almost hardly ever notice them anymore, which made me wonder how effective they were; hence this blog post. As you are saying, they clearly are still effective, and if they are able to have a successful business model (like your Twitter comment) then more power to them. At this point it doesn't really matter to me, as I don't notice them at all. But if they are essential to keep the internet alive, then I'm all for them then... I guess (with ad blocks on LOL )
@patrick005 - Sorry I wasn't saying your stance specifically. I was just saying there a lot of debate on the internet about obnoxious ads and adblocking. Some websites (smaller ones usually) have actually taken to not displaying any content if you have ad blocking software. Larger ones don't bother as much as long as they get enough revenue from their ads (they just up the technology curve to get around ad-blockers). However there is a movement to go to subscription or micropayment models (I think the New York times recently decided to go this route). Wired, instructables and makezine have moved to a value added micropayment system (you get some stuff for free but you have to pay for premium content) as well.
We'll see what wins out. Personally I think micropayments/subscriptions are the way to go since you're directly paying the people for the content they enjoy (thats why I pay for ebooks, DVDs and CDs even though I get laughed at). But most of the world's still looking for a free lunch so at this moment that won't work.
@darren_macintyre - I can agree with what you said about micropayments and subscriptions. We'll definitely be seeing more of that in the future, the sooner print media dies. The future of the internet will definitely be balanced in some way between paid and free content.
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