The end of web advertising as we know it?

If you're interested in the future of online advertising, John Hagel had an excellent, thoughtful post on the subject about 10 days ago (I know, I'm running a bit behind the blogroll these days).

In his post, John cuts through the confusion created by the contradictory market trends that are being picked up by the media, typically one at a time:

• the cyclical downturn in the general advertising market;
• the continuing explosion of new web advertising platforms like social networks and video;
• the development of great new targeting technologies; and,
• the increasing fragmentation of our attention across media, which reduces the effectiveness of online ads.

The markets are reacting.  Google shares are down 37% since the start of the year, on fears of a slow-down in online advertising and waning effectiveness.

John points out:

Here’s the danger: we may become so focused on the recent growth in online advertising that we dismiss any short-term slowdown in spending growth as a purely cyclical phenomenon. In the process, we may miss the longer-term, and ultimately far more profound, impact of the diminishing returns that online advertising is already beginning to experience.

Think about the impact on traditional advertisers.  Just as they are about to embrace the Internet; just as the large brands are starting to shift more bucks into banner ads and online video campaigns; just as the P&Gs and Unilevers and BMWs are coming round to the view that the Web is the future of advertising; just then.... the yield drops and Web ad effectiveness is thrown into doubt.  Microsoft (oddly) captured the problem nicely in this funny video (thanks Nic, good find):

There will be a lot of click-through soul-searching and efforts to tweak ads to recapture our attention, but the truth will be inescapable: static, image-based advertising (eg banners, etc) will be on the wane just as these advertisers get it together online.  Some will be scared off, a few will charge ahead into the next marketing frontier: interactive marketing games, clever video ads, and vague concepts like influencer marketing, social marketing, collaboration marketing, and so on.  These innovations represent huge future advertising opportunities, but they are still nascent.

Future advertisign effectiveness will be about influencing influential people, and exploiting social networks to spread messages.  It will be about the confluence of marketing, public relations, and corporate social responsibility, and about mastering some guerilla tactics to get the word out.  And that's not likely to be your current ad agency's core competence.  As a result, you can expect some serious churn of people and companies in the advertising industry before the new paradigm is established.

Comments

[Nic Brisbourne]

Nice post Max. The other part of the answer lies in VRM.

That is the only concept which gets over the problem that people don't like and don't see ads.

[Rajiv]

Nice ad by MS.

[Roger Warner]

great post max... i'd agree the future lies in more direct methods of engagement and influence, rather than the 'build it and hope they come' (or click) model.

the key to this is the fact that whilst ad outlets proliferate, our attention span is reducing and our capacity to get excited about blatant ads is waning fast.

we'd call the new way of doing things 'pico-branding'. i've linked to a post on the idea here.

as you say - it's all about getting out there and engaging directly with your audiences in other parts of the web - social netowrking hubs, blogs, etc. we'd envisage an army of copywriters and 'ambassadors' doing the job, rather than a bunch of creatives dreaming up a TV ad or a banner.

i do think though that the mainstream advertisers are getting there quick and that there won't be such a delay between the innovators and the laggards. we see a bunch of big brands doing great things in terms of web engagement right now - dell, lego, etc. its good to see!

[REG CROWDER]

THESE DUDES AT ENDEMOL ARE REALLY "IN THE ZONE." Modest scale testing of new channels. Leveraging across platforms (web video + retail CD distribution = [maybe] more than the sum of the two). Avoiding the temptation to substitute big spending for big thinking. Test test test, all along the way. Awesome! What an intellectual & managerial powerhouse! Dear Endemol: GO GET 'EM, TIGER!

REG CROWDER
Freelance Business Journalist
London, UK & Brittany, France
http://www.RegCrowder.com