Advertising – trend to online will continue

By September 25, 2006 No Comments

An article in the FT this morning “Ads send wrong message, says survey” (most of it hidden behind a DRM wall) cites a survey which found that “nearly one quarter” of baby boomers were insulted/put off buying certain brands by their advertising.

The article makes more of this than is warranted – advertisers don’t expect high hit rates, think direct mail as the extreme targeting low single digit conversions – but my point here is you can solve these problems by advertising on the internet.

You can target ads MUCH MUCH more effectively.  And that is today when (in my opinion overblown) privacy concerns prevent the effective use of profiling.  Plus, as an advertiser you can choose to pay on results only (CPA or cost per acquisition in common parlance) which means that your goals aligned with your media partner.  He will be honest with you as there is no benefit to him carrying your ads if they don’t work.

I posted last week about Yahoo!’s share price decline following their warning on the online ad market and said I hoped that demand from adverisers wouldn’t dry up just as more inventory (supply) from social networks was coming online.  I now think that the worst that could happen would be a short term blip in the continued strong growth of the online ad sector.  Since I wrote that post I have heard:

  • chat in the market that suggests Yahoo! has internal problems that may explain as much of the miss as a softening of market conditions (plus they were priced for perfection and only just missed the bottom of the range of expectations)
  • iTV in the UK repoted ad revenues down 8% in H1 on its main channel – that money has got to be going somewhere, the overall ad market will hold up as long as the overall economy does.  Thank you to the Times for making that article available online for us all to see, link to, and help them grow their business.

UPDATE – check out EarlyStageVC for a more downbeat view.  It is a good and considered post, and I hope I’m right in thinking he is overly pessimistic.