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Posts Tagged ‘performance’

Update 3/29/09: Danny Sullivan correctly pointed out to me that he is a publisher and an advertiser.  I’ll disagree on the idea that he is a “real user”, by which I meant “regular user”, because he is not nor I am.  We study websites, traffic and human behavior – we notice and ignore and react to things very differently than a user just flying by to get the latest news and views.  I do agree with Danny that my argument mostly matches his… thus, I’m only calling out Clemons argument.

Update 3/28/09: Techcrunch keeps stirring this up.  Now Danny Sullivan replies…

The most damaging part of both of their arguments is that neither one is arguing Clemons original argument and rebuttal mostly fail to convince his claims about the death of Internet Advertising.  He’s conclusions don’t match actual data and experience from the perspectives of an advertiser, a publisher nor really a regular user.

These points are not defensible without real data:

Users don’t trust ads
Users don’t want to view ads
Users don’t need ads
Ads cannot be the sole source of funding for the internet
Ad revenue will diminish because of brutal competition brought on by an oversupply of inventory, and it will be replaced in many instances by micropayments and subscription payments for content.
There are numerous other business models that will work on the net, that will be tried, and that will succeed.

In fact, let’s consider some counter examples:

Someone sold 4 million Snuggies based on ads.  Did the people who responded to those ads not trust the ads?  Their behavior shows they did enough to fork over $15 bucks for a blanket with holes in it.  The better statement is some users don’t trust some ads.

Users do want to view ads.  Millions of people love superbowl ads and actually seek them out online and on their TIVOs.  Online only ads that people do want to view include the millions of mini games they play, youtube videos they watch, contests they enter.  A better statement is that some users to want to view some ads, especially when the ads are not engaging, useful or catchy.

Users do need ads.  Search engines and social graphs can only show you information about things that are already popular/reached tipping point.  They cannot show you stuff just coming out of the labs.  Users need ads to learn about new and different products and services.  And the only way to introduce people to new things is put new things alongside already known things.

Ads are not the sole source of funding for the internet. Anyone who is claiming this is what web companies think clearly has not really studied the industry or worked at a web company and/or companies that extensively use the web in their business models.

Ad revenue will continue to grow in the long run.  As long as businesses need to sell more product, more ad revenue will go into the market.  The difference is that the ad spend is spread among more and more entities, so individual businesses will get less ad revenue.

Many other business models already work. and more will be created.  Selling apps, selling computer time, renting server space, selling subscriptions, donor models, barters, licensing, premium access…. I mean, gosh.  I don’t think we lack for business models that work.  The media is simply pointing to the high profile failures of big media companies that haven’t figured out to how to shoehorn it’s model into the internet way of doing things.

Once again we see that pundits rarely represent the real story.  They don’t know the price of milk. Just talking to people in the industry and summarizing the conversation is not enough to predict the end of online advertising.

See below for rest of my original response.

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Despite the impressive length,  a recent TechCrunch guest feature on the failure of internet advertising fails to reveal what’s really destroying the ad model online.  Clemons neither states what he claims is actually failing and doesn’t really prove it is. Alas, I will still attempt to refute the possible implications of his claim.

It is not a particularly insightful observation that “The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed”. Of course people don’t like being distracted with ad messages.  That’s always been the case, that’s why marketers have to pay for ad placement.  Nothing new here.

Advertising itself is not broken nor will ever go away.  As long as companies have products they need to push into market, they have to advertise, regardless of nature of the medium.  Play with the language and state definitions all you want – advertising will always be a part of our lives and media experiences.

What’s wrong with the business models of sites that rely on advertising is the pricing, not the actual idea of advertising.  Spending in terms of dollars is down in all mediums, certainly.  However, the amount of advertising we’re exposed to is likely still growing.   I have a long post on all sorts of data points on this topic here.  The short of it:  marketers have a growing number  advertising impressions out there, everyone know’s how well they perform and thus the pricing is coming way down from the relatively overpriced “older” advertising models in print, radio and tv.  This shrinking pricing model puts pressure on the business from a margin standpoint and so the less efficient businesses fail.

Yes, I generally hate banner, text, billboard ads and neon signs like everyone else. Except when I don’t.  And when I don’t that’s valuable to the company that paid for that placement and it’s valuable to me to be notified of something I might have missed.  We’re just arguing price.

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Well, are we all amused…? You know, things going your way, life better than it was a decade ago or at least a couple of birthdays ago…?

 

Today it’s…

  • The Pope
  • The Supremes (Court that is…)
  • Playoffs – pick your sport…
  • Market(s)
  • War(s)
  • Civil law changes
  • Constitutional law changes
  • Pollution outlook
  • Gangstatainment
  • Food shortages in developed countries
  • Creation of diseases to use pharma’s research results
  • Barrel of pain @ $115
  • Oh, and that political thing going on…makes a person bitter just watching

 

Nothing’s perfect of course so there are some things going well and others in or headed toward the big porcelain bowl.

 

Check out a February, 2008, U.S. government statistic that estimates that 77 million workers will leave the workforce in the next few years.   Most are members of the baby-boom generation.  I guess that makes them “Gen B” in modern marketing parlance.

 

Look to the left, look to the right, we’ll lose 6 to 10 % of the workforce by the time you all notice changes in your environment…as opposed to a written prediction that you find here.

 

The up-“and thinking about it” generations of workers will not be nearly large or skilled enough to replace those Gen B workers, figuratively or literally.  Technologies promise is being fulfilled but the billion days of experience encased in those that leave the workforce can’t fulfill the needs to use the technology that exists.  It’s impossible. 

 

So what we have here is a great potential for those that have a work ethic that they are able to promote to the highest bidder.  We also have a bunch of Peanut-like cartoon characters who want what they want which is not inline with what the workforce needs, the world needs or the mall needs.

 

Already we have a shortage of talented workers.  That means that there are skills gaps all over every industry, every sector of commerce and every level of employment.  Again, it is contextual.  If you have the juice to do the stuff that is needed, it is a VERY good thing for you as an individual contributor.  If you have a skateboard in the living room next to your direct connect Facebook profile or your iPod tree of accessories, you may find the coming years a challenge…assuming of course that you recognize challenges when you trip over them.

 

Amidst the impending shortage of workers and looming skills ‘black holes’, there is an increasing demand for results and continued pressure to improve the ‘bottom line’.  Now, there is not a big difference between the shareholder’s bottom line, the employer’s bottom line and your bottom line. As we are all finding out, we are all interconnected.  Not by some fuzzy, energy-laced icon, or a pillar of metaphorical musings or soft and romantic notions of nationality or piety but by relatedness in the absolute sense.  Screw up the aspirin formula in a lab in Malaysia and those in Germany and Mozambique get sicker, not better.

 

We are all related in numerous ways that we don’t attend to.  We do things and others do things and together we interact and do other things.  We are related by the context of what is around us.  What is around us is that which is going on in Bosnia and Boston, Denver and Dubai.  THAT context is the context that will never grow smaller, never become diluted and never disappear.

 

Today is always different than yesterday or tomorrow…[I know, heavy!]   But now, in this time period, we are more aware of things going on all around the world. With our greater access to everything we have greater potential for confusion when competing values must be confronted.

 

With workforce changes exerting their effects and economic complexities exerting theirs, it all leads to increased pressures on whatever we are doing.  The rapid pace of business, the demands of families and the need to have some ‘stakes’ in the ground in different areas of our life… all make for a world more competitively primitive like that from which we evolved millions of years ago than a world provided by a John Grisham or some contemporary historical romance author.    

 

So, here is the warning bell.  Take note… to overcome the losses from Gen B leaving and increase the probability of a single employee will be able to perform the work several employees have done in the past, there is going to be a wholesale changes in business performance software. Everything gets measured.  People are the ‘Business.’  Commerce uses what commerce needs.  Skill gaps identify contribution to cost.  Skills equate to value. 

 

All this will be confounded by little attention for “casual Fridays” or a need for a window office.  Gen-NEXT will be hired based on performance at every measureable level, get evaluated seamlessly, will perform where needed, get tracked to available tasks and get paid only for results rather than ‘work’. 

 

It’s already started.  There is less need to build robotics if you can get maximum production out of employees that need to feed their kin or code content.  There is a mushrooming interest in empirical learning and training that will come to dwarf philosophical and quasi-political niceties.  Get ready. 

 

Oh, and then we’ll need to figure out the other parts…those family relationship changes, social community interactions and the individual identity agony that is sure to follow. 

 

Hang on.

 

 

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