Will Internet Advertising Fail?

Dr. Eric Clemons from the Wharton School of Business has written a provocative post over at TechCrunch called ” Why Advertising is Failing on the Internet“.      It’s a very interesting perspective even though – very surprising to me – Dr. Lemons has really missed the boat in a major way on this issue.

Clemons argues that both offline and online advertising are failing because people are rejecting  deceptive, unwanted intrusiveness of ads pushed at them during their experiences ….

Continued over at Technology Report

Matt Cutts from Google

Matt Cutts at the Google Dance
Originally uploaded by JoeDuck

It’s always great to get a chance to talk to Matt Cutts at search conferences though I didn’t have any good complicated search questions to bug him about this year. Matt is one of the early Google folks and arguably the most knowledgeable search expert in the world since he’s one of the few people who knows the Google algorithm inside out. Matt’s actually listed on the key Google search patent.

Today I noticed that Matt’s post about Google Chrome is near the top at Techmeme after some early reports suggested Google was going to nab all the info people created via use of the Chrome browser. Although I do not worry about Google stealing the content I create using their tools I was surprised in the discussion at Matt’s blog to see how people probably do not understand how much of your data from searches, emails, and other online tools is analyzed by search engines, ISPs, and probably at least a few government agencies. I wrote over there:

Well, I’m sure folks like Marshall knew that Google was not out to steal content. What people should be as concerned about is how the Chrome datastream will be processed now and over time, and how open will it be to examination by companies for advertising purposes ? Personally I’m OK with that but I think many people are not, and the lack of transparency in this area bothers me.

Somebody even suggested I was foolish to think they’d use Chrome data to target advertising, to which I replied:

Josh – you are naive to assume Google does so little with the search term data they explicitly say they have the right to collect. In Gmail, for example, some portion of your header is read by Google (probably just the title and not the content) so that ads can be targeted to you on those topics. Google Toolbar collects a lot of information and my understanding this helps target PPC advertisements though I’m not sure about that. As i noted I’m personally OK with this level of snooping, but I believe Google should make it much clearer what they do with the data they collect and probably also have options so users can delete any information they created – including their search streams – as they see fit.

Paid Content has a great article about online advertising and how the concentration of online advertising in the hands of so few websites is becoming a problem. 

They note this remarkable stat from Zenith regarding distribution of online ad revenue:

So the big problem is not that ad spending is drying up, it’s that the bulk is concentrated in a few sites. Citing the IAB, Reuters points out that the top 50 websites in the U.S. took in more than 90 percent of the revenue from online ads in H107, while the top 10 sites sucked up 70 percent of internet revs for the same period. 

They also quote Zenith as suggesting that even as late as 2009 online advertising will remain a fraction –  under 10% – of the total global ad spend of some 495 billion.     I’m skeptical of that estimate – very skeptical – because online ROIs remain vastly superior to offline, though this advantage is not as obvious as it should be because so much of the spend is done in foolish “old media” ways with large, expensive, poorly targeted campaigns.  As PPC campaign sophistication improves, people continue to move online, video continues to move online, and advertisers increasingly continue to insist on positive ROI we should see online buys approach offline – I’d wildly guess there will be online / offline ad parity by 2015, though interactive TV and video clip advertising may blur the distinction between a TV ad and an online ad.