2005 The Turning Point For Online Ads

An anonymous reader writes "Google's advertising sales vice president, Tim Armstrong, said this week in an interview that 2005 was the turning point for online ads. Older businesses went from trying out the internet as an advertising venue to investing full-on." From the article: "'The experimenting and testing phase begun in the 1990s has ended. Corporate ad buyers are investing now,' he said. Jupiter Research estimates the U.S. online advertising market will grow 28 percent over last year, to $11.9 billion in 2005, moving to $13.6 billion in 2006 and $15.1 billion in 2007."

Comments

Non sequitor

[voice_of_all_reason]

They always go to great lengths to point out that ad spending is increasing, yet never make any statements about how effective all this money being spent is. They're throwing cash into this black pit because everyone says to, but how many companies are actually experiences increased sales from onling ads?

Turning point indeed. In financial terms, this is called an "imminent crash."

Re:Non sequitor

[Wellspring]

They're throwing cash into this black pit because everyone says to, but how many companies are actually experiences increased sales from onling ads?

Honestly, I have no idea.

Advertising does have strategic benefits. When I was working at a mobile software platform company, we skipped ads altogether. Result: companies thought that we were either not viable or not a major player. When we started running ads, the concerns evaporated. So people weren't exactly persuaded to buy by the ads, but they did help give us some credibility. Having a winning image helps differentiate you from your competitors in established markets. In new markets, it helps educate your consumer-- so prospects that your salesmen pick up can be more quickly qualified (ie you don't have to do 4 flights worth of meetings to discover that your prospect has no need for your product, and to help customers realize opportunities to use your product that a cold-calling salesman might not realize).

What I like about Google's model is that they're gradually working towards a model where you pay not for views (like most ads) or for clicks (as things w/ google work today) but eventually for sales. Every step is getting us from the current "black hole money pit" model where marketing is overhead, to marketing as a cost of sale. In accounting terms it's great, but also it helps you finally get a sense of what really works out there.

For all the statistics and numbers, marketing is still pretty much voodoo. I'm just happy that we're finally getting closer to a point where you can really start seeing what works and what doesn't.

online vs offline advertising

[rd4tech]

Can anyone give any real-life examples of offline vs online advertising profits? What costs more? What pay's off more? Which one is better targeted?

No Better Place for Advertising Dollars

[xoip]

Targeting of customers by major brands is obvious. The main challenge is accessing the local market. Finding a central portal/site where consumers from a certain neighbourhood visit is the main challenge for the local business who lives off walkin traffic.

Fueled by small business

[gasmonso]

The online advertising is so successful because it allows any company big or small to get recognized for as little or as much money they want to spend. If you look at how adwords functions, it allows you to bid on keywords to get your ads placed on sites with Adsense. Sure, some keywords get very expensive, but in general the prices are reasonable. Now with other companies like Yahoo getting in on the action, this will drive prices down. What's key here is how effective these ads are or are not. Everywhere you go, my site included, has Adsense. I bet many people click on the ads not even realizing they were ads, thus diluting them a little. But the fact that they are content based, does make them effective. This is the future for now and the kinks will be worked out. Let's just hope tv shows start using adwords so we can get rid of commercials :)

gasmonso http://religiousfreaks.com/

Yeah right

[Ender Ryan]

I work for a company that has made money selling online ad space since 1995. We are indeed one of the first companies to actually make a profit at it, AFAIK. In 2001, after a brief period of net advertising being absolutely out of control, it all came crashing down, because there was just too goddamn many ads, and people tuned out. Just like what is happening with TV ad spots today, they become less effective when there's just too much of it.

So while ads are reasonably effective again right now, it'll crash again, because website owners are just cluttering their sites with too damn many of 'em.

The company I work for has learned, and is maintaining a reasonable number of ad spots on our site. Others would do well to do the same. But I guess that goes against the current trend of dangerously short sighted business practices.