Trends for 2003

From: Cliff Kurtzman <moderator_at_o-a.com>
Date: Thu 09 Jan 2003 12:22:30 -0600

Hi Gang,

Submissions to this list have been pretty quiet, so I thought
I'd provide some personal observations for 2003 based on my
perspective as someone that thrives on finding great online
advertising strategies and buys for organizations large and small.

A common complaint I'm hearing from folks that want to advertise
online is that they had been engaging in some kind of online
marketing (be it search engine optimization, pay per click buys,
ad banners, whatever...) and that it used to pay for itself, but the
same strategy is no longer producing. There can be a
number of reasons for this:

* Diminishing returns after saturation of an audience
with a message.

* Increased online competition is causing limited demand to be
shared amongst more and more suppliers.

* Risings costs of ad placement at "sites that work."
Ad venues that work attract more customers, which
drives rates up to the point where the buy is no longer
profitable for many of the original advertisers...

* Changes in the way that various search engines and
directories work.

* Drowning out of real or desired messages by the spammers...
people are getting so much junk now that they tune everything
out.

Online publishers are frequently taking the (surely reasonable)
attitude that it is better for their inventory to go unsold
than to sell it at a price point at which they cannot cover
their costs of operation. Online publishers are gaining a
better understanding of how much it really costs to operate, and
and they want to be compensated for the expense of creating
the exposure for the advertiser... only problem is, the cost
of providing the exposure per sale is coming out higher than the
profit on the sale for many advertisers. The days of ad sales
subsidized by venture capital or IPOs are long gone.

The advertiser feels that they are faced with either buying
advertising that works but is too expensive for them to make money
on, or they can buy "zillions of emails for $14.95" which is
cheap but has a low conversion rate, often with too large
a number of responses that eat up time but do not lead to sales.

As the industry matures, it requires even greater experience along
with continual innovation to create a good campaign. And creativity
is not inexpensive. While a larger client (i.e., someone
spending $10K+ per month...) can usually afford fees for developing
unique creative approaches (or the costs may be supported
by the agency commissions on the buy), the little guy, who used to
be able to make a strong impact online, is now left with few options.
They don't have the budget to interest an agency in creating
strategy for them, they don't have the buying clout to negotiate
good deals, and they don't have the experience and contact base
to get them where they need to be... it is rather depressing.

Other thoughts and opinions?

--Cliff

Clifford R. Kurtzman, Ph.D.
Moderator
Online Advertising Discussion List
http://www.o-a.com/
281-480-6300




Received on Thu Jan 09 2003 - 12:22:30 CST