June 4th, 2008
Dear Advertiser: Your Ad Sucks!
Why is Google transcendent and Yahoo a takeover target? Compare the following:
Sue Decker, president of Yahoo! Inc. (Nasdaq:YHOO), addressed the advertising industry during a keynote this morning at the 2008 Advertising 2.0 New York conference.
“Yahoo! is helping to accelerate the transformation of how display advertising is both bought and sold,” Decker told the audience earlier this morning. “First, we are developing the technology, products and platforms that are designed to help advertisers find the right audiences and publishers find the right advertisers. Second, we are partnering with publishers to secure and monetize inventory that advertisers and agencies find desirable. And third, we are partnering with advertisers and agencies to channel demand to the right consumer.”
Over time, the company also looked beyond click-through rates to rank ads. Google now takes into account the “landing page” that the ad links to, and, for example, gives low grades to pages whose sole purpose is to show more ads. Soon, the loading speed of a landing page will also be considered, Mr. Fox said.
These factors contribute to an ad’s “quality score.” The higher that score, the less the advertiser has to bid to secure top billing. For example, an advertiser who offers to pay $1 per click to attract those searching for “vacation rentals in Colorado” may receive more prominent placement than another who bids $1.50 for the same query but has a lower quality score. An advertiser with a very low quality score may have to bid so much for placement as to make it uneconomical.
Quality scores work as an incentive to advertisers to improve their ads, which benefits users and, in turn, benefits Google, Mr. Fox said.
“An incentive to advertisers to improve their ads.”
Think about that for a second.
Compared to: “help advertisers find the right audiences and publishers find the right advertisers”
While Yahoo is developing systems to enable advertising online to work the same as it does offline, Google is completely reinventing how advertising works.
I gave a keynote at the MagsUniversity conference in Toronto yesterday, and I put this on slide:
Dear Advertiser,
Based on our evaluation, including feedback from our audience, we regret to inform you that your ads suck.
To improve the performance of your campaign, and to stop annoying our audience, please take immediate steps to improve the quality of your campaign creative.
Sincerely,
Your faithful publisherP.S. Fed up with your agency? We’d be happy to help.
In the room full of publishers there was stunned laughter, and a lot of nodding heads. Publishers understand the problem of bad advertising at a deep level, and yet what do they do about it? They are stuck in the system. The advertiser gives you a crappy ad, you run it, it creates no value for your audience, and the advertiser blames you.
Google, on the other hand, has the numbers to call bullshit on bad advertising.
Social networks are running crappy traditional ads and vaporizing ad value.
When I wrote last week about why traditional advertising fails on the web, some responded that this is why an ad-supported Web 2.0 will fail.
But the problem isn’t advertising as a means of monetizing media — it’s a complete lack of new ideas.
So let’s sum up the new ideas for digital media advertising:
- Social network user data
- Video
- Mobile
Am I missing anything? I’m sure I am, but you get the point — these aren’t even ideas, they are contexts. Lot’s of social networks. Lot’s of video. Lot’s of mobile use. So we should be able to make money with advertising, right? Just slap on some banners, some pre-roll, and some text ads.
Google got to bcome Google because nobody thought search was monetizable — even Google wasn’t sure, until lightning struck.
Just think about the term “monetize” — it’ generic. It assumes that innovation is not required. Just get an audience and then “monetize.” Then flush.
But even Google, outside of pay-per-click search and contextual ads, is as stuck as everyone else. They put someone in charge of YouTube “monetization” and the result (according to Om):
My sources say that YouTube made around $80 million in 2007, a number that could grow by more than 50 percent this year to around $125 million. A Bear Stearns report estimated YouTube revenues at around $90 million for 2008.
Advertising 2.0 = FAIL (so far)
Powered by 
Design by 
Some excellent points Scott. Advertisers just keep choosing to shout at viewers with retarded dumbed-down message. All push, nothing to pull. If anyone can reposition this medium it’s the G-gang.
Hi Scott,
Great post! Would you authorize me to translate it in french and publishing it on my blog, a translation lab aiming to share great resources with french spoken people, obviously quoting and sourcing you?
Kind regards,
Jean-Marie
Hmmm. In principle I agree. Most online display ads suck. In the most horrible and soul wrenching way imaginable. So now that is out of the way, let me tell you why Google can “punish bad ads”, and Yahoo! can’t.
With Paid Search the publisher and marketer have essentially the same objective — get people to click to my site. (There are exceptions, as Google punishes advertisers, their customer, for prequalifing your click on more broadly applicable term, but I digress) Publisher (the search engines) and advertisers both want the same thing, and the monetization method supports that shared objective.
With display, that is not the case, in fact, publisher and advertiser are in basic conflict. The publisher DOESN’T want ads that draw clicks. Why? Because they can’t sell the next impression to the next schmuck. The Publisher’s natural desire to increase deep engagement on their site (unlike the quick touch of Google) so they can sell more is DIAMETRICALLY opposed to most marketers goals.
The other major difference is that advertiser in display have widely desperate goals. Some still care about clicks (really? but I digress) Most today care about some kind of conversion (sale, lead, etc). Some care about “brand engagement” with their rich media banners. Some just want their logo there, and if at all possible, bigger. Some have no idea why they are there at all other than the fact that they read in the WSJ this week that Facebook is popular with the kids. If your advertisers can’t agree about what they want, how can you structure a system to pick what is and is not a “bad ad”?
The difference is symmetrical monetization, vs. asymmetrical monetization. Are the publisher and advertisers goals aligned? Can you monetize where those interest intersect? With Google, they intersect beautifully. With Yahoo!, not so much. The truth is, there is only so much you can do to help align these interest — it is basically an outgrowth of the usage pattern of your site. I can think of three areas where advertising has symmetrical monetization — Paid Search, Yellow Pages, and Newspaper Classifieds. (Notice that there are two DYING media in that list? Technology is taking the user base away from the utility that Yellow Pages and Classified used to have a monopoly on… but again I digress)
Keep up the great thought provoking posts!
[…] Tell the advertisers when they’re ad sucks This is one issue I’ve been beating for ages, but have never had the power to push through: There should be no ads on any page that aren’t immediately and obviously relevant to the person reading or the content being read. If advertising is actually reliably useful, then it’s content, not an irritation. […]
No one knows how this ad crap actually works. Put the awards spiel on repeat whenever anyone mentions ROI or any of those MBA favorites. They can’t tell the difference between the know-nothing award-happy associations, so they all give cover. You should check at http://www.adagencysecretformula.com