Business of online media and blogosphere

At the Digital Citizen’s Indaba, I presented on the business issues of online media and the blogosphere, from my own experiences as a blogger and working as a media professional at the M&G Online.

Banner ads in online media are still relatively unsophisticated. The problem is that most online advertising models on media still resemble traditional media advertising models. For example, the advertising model in newspapers has merely been transplanted to the web, without really adapting the model to suit the web environment.

So it’s no wonder that a “successful” clickthrough rate on a campaign is around 0.3%. In fact, most banner ads are terribly “web 1.0”. There is still so much wastage and hit and miss (much like advertising on traditional media). The question I have is what about the other 99.7% of your users that the ad had no effect on, or at worst irritated them. The web allows us to target advertising to make it relevant and useful to readers, so why aren’t we doing this? The banner of the future will be profile based (on registration data) and have a more sophisticated understanding of who it is serving too.

In many respects Google — the world leader in just about everything online (except social networking 🙂 ) — has shown us what a web 2.0 advertising model looks like in their Contextual Search Advertising models such as Adsense. So clearly online media has a way to go.

Comments (3)

  1. Grant wrote::

    I think the reason we aren’t making ads more relevant for 99.7% of users is because of the psychology of the decision maker at budget level.
    Large advertisers will more often than not have an ‘experienced’ (read- old) marketing manager who has built a career on the back of spending money on antiquated print/tv media. It’s what they know.
    To approach someone like this and suggest things like- ‘behavioral targeting’, ‘re-connect’, ‘rich-media’ all of which carry a hefty price tag compared to the tried and tested ‘smash out a million ads and hope’- is not an easy task. And to educate them on the capabilities of adserving technology is a bit like trying to teach someone mandarin in an afternoon. (I don’t speak/teach mandarin but I’m guessing it’s not easy)
    Just my 5c worth.

    Thursday, September 13, 2007 at 9:54 am #
  2. matt wrote::

    Hey grant — I agree with you — part of the problem is the personnel, but its a lack of innovation in the industry generally — but it will eventually get there… the other point i should have made is that the hit and miss approach is still attracting online advertising, but only for products that have high value (cars, insurance contracts etc..), which only need 0.3% clicks for ROI. The point I make is that it could be so much more efficient.

    Thursday, September 13, 2007 at 10:22 am #
  3. Grant wrote::

    Definitely- and efficiency can only achieved by using the available technology and improving on it.
    The likes of Wunderloop are already making big strides in providing this sort of granular segmentation and targeting.
    But the trend has definitely started- (Hence why Google bought ad technology (DoubleClick) and ad network (Blue Lithium)) So we can expect them to make a big impact in the way things are done.

    Thursday, September 13, 2007 at 10:37 am #

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