October 25th, 2006
Does All Advertising Want to Be Free?
Isn’t there an odd contradiction in all the thinking about new media? Individuals are now empowered to create content, to publish and have a voice without going through the old corporate hierarchy. You can blog and be heard, all for free, without asking permission. But what about brands? The assumption that online advertising will finance the next generation of media and software implies that individual companies still need to pay to play. They may be paying empowered individuals like Rafat Ali and Om Malik, but they still need to pay.
If individuals can bypass traditional media and connect directly with a community of common interest, why can’t brands do the same with their customers? Well, they are (via Search Engine Journal):
A growing number of Louisville businesses are turning to the social-networking Web site MySpace.com to connect with customers, promote events and, ultimately, make money.
Taverns, clothing stores and gift shops — many of them independently owned — are creating virtual profiles of themselves on the site as an informal approach to free online advertising. For Peter Berkowitz, owner of Old Louisville Coffee House, the effort was so successful that he abandoned his traditional Web site in favor of MySpace.
I’ve written before about the challenge MySpace faces in getting companies to pay for what individuals can get for free, i.e. a MySpace page. But really all of media — including the newly adopted software industry — faces the same problem. In fact, small businesses connecting with customers directly sounds like a challenge to Google as well.
Despite massive innovation on the content side (what used to be called “editorial”) — blogs, MySpace, YouTube, Flickr, Digg, search — there’s only been one real innovation on the old “business” side — pay-per-click text ads. But even search advertising is based on companies paying to ride along with a content provider (search results) to deliver a commercial message — sure it’s more relevant, but it’s still paying a big media company to deliver the message. Search ads can lead people to useful information or “meaningful brand experiences,” but when you push the new media revolution to its logical conclusion, you get companies setting up their own identities on the network (in this case MySpace) for free, empowered just like everyone else.
Sure, companies paying to advertise isn’t going to go away anytime soon — old habits die hard, and the network isn’t nearly efficient enough yet. But if brands drink enough of the Kool-Aid new media is serving, they may start to realize that self-empowerment is indeed liberating — and much more cost effective.
Or to put it another way, if it’s all about “conversation,” then why play a game of telephone by putting a media company between you and your customers?
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Scott, this is a logical line of thinking. Once distribution and message fidelity are both cheap, the last great role of the intermediary is to ensure that a brand marketer can use the new, cheap methods effectively. Yep, that means process consulting and “creative services” — traditional agency roles, not distributor (read: periodicals, broadcasters) roles.
That Louisville coffee house owner apparently doesn’t need either. So that lards a little bad news for agencies on top of already bad news for distributors. We really have cut out the middle man and passed the savings on to you!
Scott,
You’re right. But there’s a key element you should’ve injected into your analysis. This may sound trivial and tactical, but brand Web sites are among the most trusted forms of advertising and commercial messaging. The fact is that any company that has a Web site is in the publishing and content business and mustn’t lose site of this. But, then again, being a publisher doesn’t entail automatic access to the right people you’re seeking to make members out of. The new media distribution channel is now word of mouth.
Max Kalehoff
Jay, yeah, the media as marketing services model breaks down if companies learn how to do it themselves as part of a core competency (like customer service).
Max, yes, and the great thing about word of mouth, leveraging social networks through MySpace, etc. is that it’s FREE. It would seem that a great “agency” business in that case is helping companies understand how to leverage the consumer network directly
Scott,
I have to disagree with you on one point: “free”. Sure, the costs are lower in terms of physically (or electronically) publishing. However, when you talk directly with your customers, there’s a management cost for that is well. That’s one of the key questions as companies seek to harness word of mouth, where this is an expectation of listening to customers as individuals, not as mass eyeballs juxtaposed with media: how the heck can you scale this? On that point, I argue that social media cost-of-entry is much less expensive, but the cost actually has the potential to be FAR from free, if not more expensive. Social media also entails greater customer service, and we’ll probably see more dollars shift from media to direct relationship. Again, another sign of the customer service department becoming a media department, or overtaking its prior role.
Max
Max, indeed, it’s free as to media/connection costs. Customer service departments could talk to consumers live over Skype for free, but they still need to know what to say.
I think you are missing one other aspect about advertising: the new viral nature of much online advertising. If a company engages me on a clever level, I will talk about it with my friends and may even help get its message out. What the internet does, for companies that are willing to be creative enough, is allow the message to be broadcast for free.
Certainly, pay-per-click is an innovation. But what I’m seeing on YouTube is the willingness of users to search out an ad if it is creative enough. Some will even upload the ad for free. I certainly have done it. That’s a huge cost savings for ad agencies.
In the past, many brands operated their own internal ad agencies, and most local businesses still do that. For example, Bloomingdale’s department store for years did all their own marketing, and came up with slogans such as “All Cars Stop at Bloomingdale’s” (reference to the new subway stops near the store) and funded the Buster Brown comic strip. Now, of course, with the rise of Television, super ad agencies control the dollars. As long as millions of people watch TV, and there is a need to create high-end commercials, this won’t change. But there is definitely going to be a shift to internalize certain areas of marketing, especially with regards to online stuff, as who knows the customers better?
[…] The always incisive Scott Karp on advertising: Despite massive innovation on the content side (what used to be called “editorialâ€) — blogs, MySpace, YouTube, Flickr, Digg, search — there’s only been one real innovation on the old “business†side — pay-per-click text ads. But even search advertising is based on companies paying to ride along with a content provider (search results) to deliver a commercial message — sure it’s more relevant, but it’s still paying a big media company to deliver the message. Search ads can lead people to useful information or “meaningful brand experiences,†but when you push the new media revolution to its logical conclusion, you get companies setting up their own identities on the network (in this case MySpace) for free, empowered just like everyone else. […]
I love how you wrestle with these issues Scott, and I think you are an invaluable resource to those that really need to hear you loud and clear — which is any established company with over 100 employees.
On the other hand, the more you say, the more I really love being small.
Either I’m stupid, and too quickly jumping to what I think is the obvious response to your post, Scott, or you’re missing something really obvious.
Conversations are slow, by and large, because they require the formation of some level of relationship. Sure, there’s the occasional viral shooting star that jumps to huge numbers very quickly, but for most companies, building audience is long, hard, slow work.
Good work, and rewarding work, but long and slow.
Advertising is a way to short-cut that process … a way to speed up awareness levels that then buy you the opportunity to have a conversation with a potential client, which in turn buys you the opportunity to potentially make a sale.
Let’s face it: not everyone who needs office cleaning done in Anytown is going to jump on MySpace to find a janitor. And not every janitorial firm will rank in the first few Google results, particularly if they’re new to the new media game.
So advertising is a way to pay to get on that first page. Maybe it’s temporary. Maybe you abandon it when you get big and smart and popular enough.
But it’s a good kick-start.
Shared by: don l on 10/25/2006 at 2:28 PM - Details Does All Advertising Want to Be Free? » Publis…
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John, you’re right that advertising is still a necessary “accelerant” for most companies — the network is not efficient enough yet. But give it time. The network effects are growing and accelerating everyday — at some point, the network will be more efficient than media for enabling companies to widely and rapidly connect with people.
Christopher, that’s exactly my point — the online network enables advertising to be propogated for free.
[…] Publishing 2.0: Does All Advertising Want to Be Free? "If individuals can bypass traditional media and connect directly with a community of common interest, why can’t brands do the same with their customers?" (tags: advertising) […]
So this whole argument breaks down if MySpace decides to charge some sort of hosting/agency fee to small businesses?
Sam, would you want the job of policing MySpace for non-paying small businesses with active communities and telling them that they need to pay up or shut down? That would be a great way to foster community on MySpace.
I think the horse is already out of the barn.
the internet as a new form of distribution is taking over. big brands should stop thinking about old methods and look around for the really picture. Free advertising is so popular on the internet because for nothing the internet will give you global coverage. everyone wants to be heard,but with the internet with never ending space, is the clutter confusing the customers more? or it is it leading to better segmentation. but when you advertise for free does it send out the right message about your company?
Publishing 2.0: Does All Advertising Want to Be Free?
[…] Scott Karp raises a good point:Â That just like content creators, advertisers don’t need to pay to play, either. […]
[IMG RSS] del.ico.us tag=newmedia … and I feel finewww.myspace.com/deptofnetworkperformanceArtnodes, espai d’art, ciшncia i tecnologiaASTP 2005 NexusDoes All Advertising Want to Be Free?
The Louisville coffee shop owner just doesn’t get it. Abandoning his own Web site for MySpace? He should be leveraging MySpace to bring people to his own domain. Otherwise his only hope is that News Corp. is going to give him free advertising forever.
From the shamelessly-reposted-from-elsewhere department: Scott Karp on Publishing 2.0 seems to have a hard time understanding why, in a social media new media web 2.0 conversational marketing world, companies would still want to advertise: I’ve written before about the challenge MySpace faces in getting companies to pay for what individuals can get for free, i.e. a MySpace page. But really all of media — including the newly adopted software industry — faces the same problem. In
about paying for advertising