Economist talk v2

A quick history lesson!

Prognostications were made of great fortunes being made with these little babies. They were touted as “trackable,” since marketers could measure how many people clicked on them. At the time, we thought this was a good thing.

It would be 15 years before we realized that was more or less bunk. Ironically, even the headline of this banner, in hindsight, proved to be wrong.

1994: The first banner ad appears on HotWired.

Now, not only could we click on a banner, and measure that, we could measure how long people played with the banner. This would prove to be a blessing and a curse.

1996: Flash is introduced.

Advertising wasn’t really a part of that. People were going public and getting bought by other firms. Advertising on the web was still a rare and bold proposition. Most money stayed firmly in “traditional media.”

1997 - 2001: That whole “tech bubble” happened.

First, Advertisers surprisingly didn’t retrench after the bust. They kept experimenting and trying different things online. Occasionally things would work, but often they were just that - experiments.

2002 - 2008: Two things happened to online advertising.

Web 2.0 was all about failing fast and failing cheap. It was about being nimble, and starting small companies that reached profitability quickly.

Not coincidentally, many of these companies had the same basic business plan: make money through advertising.

And, secondly, there was that whole Web 2.0 thing.

Meanwhile, over on the publisher side...

I am not one of those “old media is dumb media” people. I’ve watched ten years of attempts at figuring out how to take a profitable publishing concern and move it to the web.

Publishers have spent the last decade trying different things to migrate their businesses online.

2000 2001

So, of course advertising was part of the solution for publishers online...

We became over-obsessed with the click as our only metric. We ignored hundreds of years of advertising knowledge and only focused on ads that made people click.

But Clicks ≠ Marketing Success

Advertisers were moving their budgets over from “traditional” to “digital,” in amounts large enough to let the ad industry feel like it had growth sectors, but not so quickly as to decimate print’s revenue stream prematurely.

Part of the reason money was moving slowly was because of the whole “click trap.” They called it “banner blindness,” but really it was “tactics blindness.”

But life was good, and the economy was good.

Marketers knew online advertising was still nascent and the click wasn’t enough to throw out 50 years of Nielsen.

Publishers knew the clock was ticking, but thought they had time.

Advertisers knew change was coming, but played a defensive game.

Everyone knew this.

And then one day...

In one fell swoop, everyone stopped believing that publishers were going to solve their problems before time ran out.

It all came to a head.

Subtitle Text

To make matters worse...

To Make Matters Worse...

Other factors were making things rougher for the publishers

The web zeitgeist demanded “free” content - the small amount of money publishers got from subscriptions offline wasn’t replicated online in a widespread manner, negating an obvious supplementary income.

Advertisers were still in “experimental” mode and paid only a fraction online for the same number of eyeballs offline.

Many advertisers outsourced their display ad sales to one of a gazillion ad networks, thus lowering standards and profitability.

That whole web 2.0 thing caused a glut of display ad inventory online, thus lowering prices even more.

Blogs stole a lot of their glory.

Mainwhile... in AdLand

Everyone suddenly remembered that clicks ≠ marketing success, and started complaining about banner blindness.

The social media revolution compounded this. Who would click on a banner when they could get a recommendation from a friend?

The only things that generated buzz online have proven to be custom, unique engagements.

Suddenly, engagement was all the rage.

...and advertisers finally admitted that clicks weren’t nearly as important as “engagement” - the logic being the longer that you’re exposed to the brand, the more prone you are to consider it. Just like TV saturation.

Custom engagements are the holy grail - publishers and marketers partnering to offer something unique to the visitor that no other publisher can offer. And brands are willing to pay.

Which brings us to today.

Takeovers are big

And publishers are looking for other ways to offer a unique, substantial connection.

So everybody wins, right?

Sadly, it’s not worked out that way.

So what’s gone wrong?

Successful, effective, custom engagements are still rare.

Advertisers are still having trouble measuring success.

Publishers are still ill-equipped to provide unique selling propositions.

“Engagement” is a dodgy proposition (remember the billboard and TV spot - do they “engage?”), though we all seem to be ignoring that for now.

But, like so many things, really it comes down to the economics.

Have we stopped and asked ourselves: who’s thinking these things up?

- Not really known for their creative prowess. - Don’t fully understand the client’s needs. - Custom delivery is often hard to pull of logistically (production). - Sales staffs may be in need of retraining after “the banner years.” - Tend to try to offer repeat solutions with nominal “engagement.” - Creative (“editorial”) staff views sponsor-driven work with disdain.

Publishers?

- Don’t control the purse strings. - Have brilliant executions, but are one-offs. - Limited relationships with publishers. - Limited technical prowess for custom production. - Traditionally view the brands as their client, not the publisher.

Creative Agencies?

Well, they got rid of all their creatives years ago in the great agency split.

Every single one of these is a unique, delicate flower. Thought up as a custom idea just for this brand and this publisher. To really work with the consumer, it has to be compelling, useful, groundbreaking and moving.

Why would any of the people who can do all that be working at a media agency?

Media Agencies?

So what’s needed?

Publishers may elect to develop more robust in-house concepting capabilities, but will find challenges in recruiting, retention, and editorial/sponsorship.

Also, as more and more advertisers submit RFPs requesting “custom opportunities for engagement,” the staffing needs will be felt acutely.

The Future

The Future

I believe shops will rise to fill the niche - shops dedicated to creating unique interactive experiences for publishers and clients.

New revenue streams can arise:

Working on deals with publishers to develop a stable of unique digital offerings, collecting payment when they’re sold.

Creative concepting services sold to media agencies.

Indeed, TBG is already seeing a notable portion of our revenue - perhaps 10% - coming from these types of engagements.

Banner economics are changing dramatically as prices fall. Solid offline print alternatives are diminishing. New analytics packages are drawing the line from multiple views of banners to impact, whether the user clicks or not.

Don’t count out the banner just yet.

Finally, I believe the banner may make a comeback yet.

Thank you.

Books – Adland, by James Othmer - out this week – Pattern Recognition & Spook Country, by William Gibson

Blogs – Barbariangroup.com – Paigcontent.org – BBH Labs

Five References

Questions?