September 12th, 2006

Will Content Quality Still Be a Driver of Advertising Online?

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Numerous “analysts” (including me) have been predicting that user-generated content sites like MySpace and YouTube, despite their runaway popularity, will not receive all (or even much) of the big brand ad dollars that will be poured into online advertising across the next few years. The reason — advertisers still care about the quality of the content and context where their ads appear, and MySpace and YouTube have too much “crappy” content that can’t be guaranteed to meet given standards. Conversely, these sites are appropriately wary of alienating their users with “traditional” advertising (i.e. display ads, pre-roll video ads), something that most users of traditional media sites have already come to accept.

The analysts at Veronis Suhler Stevenson have put some numbers behind this school of thought:

Traditional US media companies are increasing their share of the fast-growing online advertising sector relative to internet rivals such as Google and Yahoo, according to a new study.

In one of the first detailed reports of the relative positions of traditional media companies and their online competitors, Veronis Suhler Stevenson, the private equity group, has shown that, contrary to many people’s expectations, media companies are holding their own in the digital space.

VSS will report on Tuesday in its annual comprehensive study of the media business that this year, of the $22bn expected to be spent on online and mobile advertising in the US, traditional media groups’ share is forecast to be 37 per cent, up from 23 per cent in 2000.

By 2010, when internet and mobile advertising is due to reach $44bn, traditional media companies are expected to capture $17bn, or nearly 39 per cent, of the total.

If they are smart, the MySpaces and YouTubes of the web can capture a whole new bucket of “social” marketing dollars, the same way that Google did with search marketing. Some traditional media companies will grow or hold onto their share of online ad dollars by acquiring these social media/user-generated content sites — News Corp is of course the de facto poster child with its acquisition of MySpace.

But another key to traditional media companies’ success may be the “quality” of their content (and I put the best blogs and other independent, high quality content producers in this category). The theory here is that the old symbiotic relationship between content and advertising will survive online (even as advertising increasingly becomes content), and that companies will continue to see a direct relationship between perceptions of their brands and perceptions of the content and context where their brand messages appear.

Of course “quality” of content is in the eye of the beholder — but like judging pornography, we all make instinctive judgments about content quality — how many brands do you really think will want to ride along with a video of someone lighting a fart (amusing as some may find such videos)?

Google is many ways proof that content quality still matters online — on Google’s search results page, the measure of quality happens to be relevancy, but it’s a measure of quality all the same.

  • Google didn't have a revenue model until it launched AdSense/AdWords. While big advertisers sometimes use Google text ads, for the most part a whole new industry of advertisers has sprung up around that innovation (or copy of a innovation). In other words, Google grabbed market share by expanding the market, not taking advertising dollars so much from the existing market.

    Big Brand advertisers may not advertise on YouTube or MySpace, but if those companies are smart, they will develop advertising platforms that will expand the market, creating new opportunities for new businesses or underserved segments of the market because what and how those segments want to advertise are not currently served well by existing advertising channels.

  • I think you are on the money.
    There is another consideration; assuming that these advertisers would have to spread across a broad range of these micro-channels, what about the practicalities of time and effort involved in selecting and monitoring this large number of channels for their quality?

    I can't imagine too many companies or their agencies having an apetite for that; too much hard work interfering with lunch.

  • Ali

    It's not just that brand advertisers are concerned about quality for branding's sake--we ran a Fortune 500 financial services client's ads on an AOL content program and because there were not enough quality controls, our client was exposed to $2.5M in compliance liability. Without a controlled environment companies also expose themselve to legal risks, which can have a much more tangible and immediate negative impact than brand erosion.

  • Scott,
    Absolutely, content quality will be a question for reason -- and arguably moreso because as advertisers continue along the path of the Tradgedy of the Commons, bastardizing every little ounce of attention and eyeball they can salvage. Content quality and context is required to achieve advertising effectiveness; it's always been true but will become more. I would argue that porn and obscenity are only the first of what should be many filters in niche advertising, particularly on consumer-generated media. And those two, of course, should be filtered for suppression, in most cases. Then there are cases of filtering for desirability.

    But relevancy and context -- in the sense of Google and search -- is only the beginning; it is a very blunt instrument, and often sloppy matching engine of ads and media (relative to what it could be). Other key frames of context must be addressed, like depth of emotion, sentiment, credibility and trustworthiness. Of course, these latter characteristics border on the ether and are beyond the scale and short-term pragmatic interests of most media planners today, and contextual advertising algorithms don't address them either. (But such technologies are being developed for other, related purposes, more toward consumer insights research, at least in our labs.)

  • Max,

    The title of the post is a question for a reason -- I honestly don't know the answer. Certainly there are deeply entrenched interests that want the answer to be Yes. I've argued many times that the answer is no -- the solution to these riddles is typically somewhere in the middle.

    I do think there's some there there to looking at search result relevancy as a measure of content quality.

    Interesting to noodle over, isn't it?

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