The potential of banner ads
I love reading about the discussion of the viability
of online advertising, among other topics, but there
are three important factors that I seldom hear that
are central to this discussion:
1. Econ 101 - What happens when oil producers produce
too much oil? The supply goes up, while demand remains
constant. The result is lower oil prices. The falling
CPM rate is not a factor of ROI (see more on this
below), but of supply and demand - very basic. There
is a wealth of inventory out there that is
significantly more than the current demand. Soloman
Smith Barney just released a great report along these
lines. I strongly recommend reading this.
2. ROI - I have a challenge for anyone here to point
to a serious ROI study that has been conducted to
evaluate the effectiveness of online advertising. I
won't accept any study based on click-through rates -
they are but one of many factors that determine the
effectiveness of an advertising medium. How can one
compare the true effectiveness of online advertising
with offline advertising when there is no click-through
(other than a call to action or phone number to call)?
In regards to online advertising, ROI is simply a fancy
term for "I don't understand online advertising and am
afraid to commit dollars." The online advertising
community must be able to get past this fear, as opposed
to "failed ROI."
3. A Herd of Cattle - Just like VCs, members of the
advertising community seldom makes intelligent decisions
on their own. Rather, they rely on the movement of the
pack. So, when the pack points in one direction, don't
think that you can change their mind with some new banner
sizes or self-fulfilling prophecies.
Everyone loves to look at this downturn in the .com
economy with gloom and sadness. I look to it with a
positive outlook. No longer will companies with whacko
ideas and business models be able to overwhelm consumers
with muddled messages. No longer will companies that
sell below cost but "make it up in volume" be able to
operate without some basic business reasoning. Virtually
everyone I know from the Internet world looked to this
as a revolution that would turn everything we knew upside
down. Let's use this time to bring reality back into the
picture.
Andrew Del
Received on Thu Apr 26 2001 - 10:44:07 CDT
