We’ve gone through about 2 1/2 online advertising revolutions to date. The first rolled around during the dot com bubble. Suddenly there was a way for publishers to make money. No longer was it something you had to do for free. But it all came crashing down.
As the dust settled, publishers found that CPM had dropped to near nothing. If you had a large website, you could still make money, but the revenues for small to medium sized publishers were negligible. Then came the second revolution, it’s name was Adsense.
With the dust of the dot com burst settled, there was a void waiting to be filled. The second revolution began when Google released Adsense and its counterpart Adwords. The major difference this time around was not only the PPC model delivered through a trusted third party. The big win for Google was using its search expertise to become the premier broker of contextual ads. Advertisers could trust that their ads would be shown on relevant pages and publishers could trust that the ads being displayed on their website would be equally relevant. Suddenly, being a publisher was profitable again and in the best way possible. The advertisers were getting great ROI. We were all blessed with a relatively sustainable model.
The 1/2 that I refer to is an advertising strategy that’s still up in the air. We don’t quite know whether it will really catch on or whether it’s a flash in the pan. That strategy is sponsored blogging. There are lots of companies battling it out in this space as we speak. It’s far too early to tell if any one of them will end up owning the market segment or not. That’s if the market continues to exist. It might also reach the middle ground where some use it and some don’t. That means the jury’s still out as to whether or not we can call sponsored blogging a real revolution.
So what’s next? What’s looming over the horizon as the next big thing in online advertising? Branding. Branding is going to be the next revolution in online advertising. Right now the PPC and affiliate models are completely driven by ROI. If there’s no immediate ROI, most current advertisers will back off and try something else. If you look at most television ads, most of them are all about branding. There’s absolutely no intention of driving customers immediately to a purchase, but rather to build the positive image of the brand amongst consumers. Think Pepsi and Coke. Think beer companies. Think national auto ad campaigns. None of these advertisements are designed to get you up off the couch, run out and buy one of these items. They’re designed to stick in your brain and make you have positive reactions to those brands when you’re out and about.
At the moment there is very little of this type of advertising online. It’s only a matter of time though. One of the problems with online branding at the moment is that there are no reliable metrics for measuring traffic from a 3rd party. That means that they just don’t know how much exposure they’re getting per dollar. Another contributing factor might be the overall noisiness of web pages that run ads. Whereas television runs ads in sequence, giving the advertiser the viewers complete attention, on websites ads are run simultaneously, dividing attention. If you’re working to build or maintain a brand, you don’t want to be seen as noise.
Without a doubt these challenges will be overcome because there is so much money at stake. I’m sure there are a number of online advertising companies soliciting just this kind of advertising from the major brands. The next revolution will come and once one or two companies demonstrate that branding online can be done effectively, the floodgates open. It will be interesting to see how this will affect advertising as we know it since there will be massive advertising budgets aggressively looking to consume the biggest and best advertising spaces. Big publishers will win big. These companies pay multiple tens of millions to all star athletes to plug their product, would they bat an eye at tossing $500 000 to an all star blogger to plug the fact that when they’re trying to get their work done and it’s late, they drink x brand energy drink.
Only time will tell. Unfortunately the rich will get disproportionately richer, but fortunately there will be a trickle down to to the increased market pressure on advertisers who will need to turn to smaller sites to do what they used to do with bigger sites. That means that the small to medium sized bloggers will still stand to gain. But it will mean perhaps doubling their income while the bigger bloggers might be dealing with increases up to a factor of 10. Only time will tell. I wouldn’t be the first person to predict something perfectly reasonable and have reality take a swift left turn on me. But from where I stand at the moment, this is what I see on the horizon.
advertising, marketing, monetization
(2 votes, average: 3 out of 5)
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2 responses so far ↓
1 Court // May 7, 2007 at 3:52 pm
This is a super interesting topic. Since I’m a blogger, of course I hope that it works forever. It does make it a lot easier for us to monetize our traffic, and I wonder at times if it’s a little too easy. Some bloggers are making a hundred dollars a day with very little traffic; they’re only doing sponsored posting.
It seems to me like the prices paid for sponsored posting will have to go down since the advertisers couldn’t be getting a lot of bang for their bucks; at least the requirements will become more and more strict.
2 Marc // May 9, 2007 at 1:59 pm
Sponsored blogging is interesting in such that it hasn’t matured yet. That’s why we see low traffic blogs earning lots. That will all settle down with bigger blogs asking more and smaller blogs accepting less. For most advertisers, even at the relatively high prices, it’s still pretty cheap.