NONE: Re: ONLINE-ADS>> Controversy between Burst and IAB
Re: ONLINE-ADS>> Controversy between Burst and IAB
Mark J. Welch (markwelch_at_ca-probate.com)
Wed, 06 May 1998 10:32:43 -0700
I'll take Richard's bait on this one. First, let me admit that I have
no idea how much money was spent on web advertising, and I don't
think anyone else can, either. Cross-sponsorship, barter, and of
course huge volumes of undisclosed business make it impossible
to accurately report anything other than the order of magnitude
of sales. Fortunately, the predictions do fall into the same order
of magnitude.
> Burst claims their research puts it at about $336 million,
> versus the IAB's $906 million.
> One anonymous ad sales director is quoted in the article as saying
> "Whenever a study is funded by a bunch of of publishers, you get skewed
> results."
The various print "audit" organizations were created because the
temptation to defraud is great. If I am selling advertising and I
know that buyers are willing to pay X dollars per 1,000 readers,
I will be tempted to exaggerate my readership. The traditional
audit function looks at two issues: actual deliveries (by checking
postal records) and paid-vs-free circulation (by checking the
publisher's records). On the internet, there is no post office and
usually no paid subscription base, thereby eliminating these
techniques.
>The principal criticism Burst has with the IAB fails to differentiate
>between real dollars and barter/trade dollars.
This is a serious issue, which I believe goes right to the heart of
the business. Huge amounts of business have been "traded" via
reciprocal purchase orders. If I work for a publicly-traded company
seeking to enhance booked revenue, I go find another similar
company, and I agree to buy $4.2 million worth of advertising
banners, and "coincidentally" they agree to buy $3.8 million worth
of advertising banners from me. Suddenly, we've each booked a
lot more revenue, in a business where valuations are often based
on (absurd) multiples of revenues. And we've just created $8
million worth of transaction to be tracked by industry analysts.
Of course, it's very important that the purchase orders not be
visibly exchanged, and we will actually write checks to each
other, since we don't want the SEC or our shareholders claiming
fraud. Instead, we wink and we nudge.
One of the problems in measuring a market like "internet
advertising" is the issue of what to include in that term. Do
we include development costs for microsites created in
connection with an ad campaign? Do we include site
sponsorships? Do we include commission revenues from
Amazon and others? Do we include ClickTrade and deals
that pay for links? Do we include LinkExchange and other
banner exchanges that "buy wholesale and sell retail" with
member sites? What exactly is internet advertising, or
perhaps more important, what is not? If I hire someone to
design a new "Grateful Dead" web site for me because I
have a deal with a music publisher, for whom I hope to sell
a lot of CD's, is the design of that site an advertising expense?
-- Mark J. Welch, Web Site Banner Advertising
-- http://www.markwelch.com/bannerad/
-- Mark Welch's Web Ad Forum http://www.markwelch.com/welchmtg.htm
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