July 15th, 2007
New Online Advertising Models: The Scalability Problem
Search advertising is probably the most scalable advertising platform in the history of advertising and marketing. But ten years into the promise of the web and new media to transform advertising into an ROI-driven marketing engine, the success of keyword-driven pay-per-click text ads is the exception, not the rule.
The problem is scalability.
Just as audiences and media have fragmented, so too must advertising. The problem is that traditional advertising paradigms — the 30-second TV spot or the glossy print — are one-size-fits-all, i.e. you make the ad once and then show that same ad to everyone in every medium. Data-driven digital media, with platforms like behavioral targeting, make it possible, in theory, to show a different ad to each person in each medium, each time they interact with that advertising.
But, yikes, that’s a lot of work — and it couldn’t be farther away from the traditional ad agency business model.
Search advertising doesn’t quite reach that extreme, but it has made it logistically possible to create different variations of ads for different keywords. Search advertising has also come the closest to achieving the great promise of online advertising ROI — optimization, i.e. trying different variations from the endless range of possibilities to see which performs best.
That is not to say that most search advertising campaigns achieve this level of sophistication. But by creating a self-serve platform, Google, Yahoo, MSN, and others made it possible to distribute all of the work involved in leveraging the myriad ad possibilities — that’s why search advertising has scaled so beautifully.
But search advertising is also at the extreme end of simplicity — just a few lines of text. When you get to visual display ads, and then video ads, the complexity increases geometrically.
Yahoo is trying to tackle this complexity with its SmartAds platform, which is a great first step. Google has tried to bring the same scalability of text ads to every other traditional form of advertising, including TV, radio, and print, but scaling in those formats is a much tougher slog.
Facebook and other social networking sites have a huge opportunity to leverage social connections for commercial purposes, but again, there’s a huge scalability challenge. I suggested that Facebook should look to Google for lessons on how to monetize — the key to any successful social networking platform is going to be scalability. All the debate about Facebook’s revenue and the potential for an IPO really hinges on a scalable monetization platform.
Perhaps the best lesson from search advertising is this — get your customers to do all the work for you. But as with successful search advertising campaigns, there has to be a huge payoff for doing so.
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The Scalability Problem in online advertising models. He joins others in pointing out, “Data-driven digital media, with platforms like behavioral targeting, make it possible, in theory, to show a different ad to each person in each medium, each time they interact with that
and marketing. But ten years into the promise of the web and new media to transform advertising into an ROI-driven marketing engine, the success of keyword-driven pay-per-click text ads is the exception, not the rule. The problem is scalability.” Click here to find out how to overcome the issues
New Online Advertising Models: The Scalability Problem
New Online Advertising Models: The Scalability Problem
[…] New Online Advertising Models: The Scalability Problem » Publishing 2.0 “But search advertising is at the extreme end of simplicity — just a few lines of text. When you get to visual display ads, and then video ads, the complexity increases geometrically.” (tags: internet advertising display search trends) […]
There is also the issue of intelligently limiting ads to relevant content - and making sure that an ad doesn’t show up in front of something you don’t want your product associated with. Like this:
http://www.onlinevideowatch.com/who-doesnt-love-contextual-ad-blunders/
Scott,
Good point on scalability which correct me if I am wrong you are suggesting scalability of use, not infrastructure and resources, yes?
When I think of Web 2.0 technology, I think of systems that put the utility in the hands of its users, systems where users can go from points A to Z completely on their own without being required to call someone or wait for someone to perform a task, something we lack in automotive online retail. Google has certainly accomplished this with its AdWords and AdSense programs.
However, I also think that the PPC model is overrated and will soon be outdated if it does not evolve, primarily because it permits advertisers to bypass the nature of Internet search…organic listings. Anytime you escape the roots of a culture shift like Internet marketing you risk having a short lifespan bubble, which I think PPC as we know it could have.
Unlike conventional advertising where advertisers pay to produce and display ads with messages to connect consumers emotionally to their products, the Internet is different. It’s about those things, but it is also about relevancy and utility and measured results as you have stated.
You were disappointed to see advertising to you of a singles site because you are happily married. You might expect such ads in the physical world, but in ether land you expect more. This is clearly lazy advertising that ad publishers will probably get away with for some time too.
Similarly, PPC enables advertisers to purchase and display ads not exactly relevant to their real products, simply to drive traffic to their sites. Additionally, PPC has distracted companies from the more important organic search listings. So again while PPC is the “exception not the rule” to search advertising, I think it has fundamental flaws that are yet to be fully realized by advertisers. PPC is more about Google than the businesses themselves and search advertising that can find a way to counter this will blaze new trails.
-Ryan