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

[D-Cypell]

if you think it's some other way around, tell me what was the 5th banner back that you saw on slashdot.

I am not sure what you point is. What is the 5th advertisement back you saw on television? Which of your relatives was the 7th birthday back? What was the 12th meal back you ate? (Yes, all of these questions sound grammatically wrong to me too, I cant quite put my finger on the correct format).

All you have done is prove that people have a poor memory for detailed facts, but if I asked you what dabs.com sell or which industry you associate nestle with, I am sure you could give me an answer. It is this kind of 'vague association' that advertising folks want to build, so that next time you need a new PC or you need to search the web you know where to go intuitively.

I happen to believe that online adverts DO serve this purpose, but I would also say that there are companies that I associate negative feelings with because their advert popped onto my screen while I was reading something important (or amusing).

If I click on an ad, order a product, get a great service, need the same kind of product again, I will probably return to that same site. Advertising may only be the first step, but it is probably the most important as without that ad I would have never have made the order or even found the site.

So details like "What was the 5th banner you saw" are completely irrlevant if the 5th banner you saw now means you associate a specific product or service with a specific company. Who cares how many adverts back it was???

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.

Investing Full On

[faqmaster]

"Investing full-on" == the return of pop ups. I've noticed more and more pop ups, not in independet windows, but as CSS overlays. Annoying as hell. Plus, it seems every page now has full-motion 30 fps quarter-page Flash movies. The return of the bad-old-days.

Too bad for the Ad agencies,

[BattleRat]

that a good bit of the Firefox users (about 10% of the online browsing community, if I remember correctly) use the Adblock, Flashblock and NoScript extentions. We were largely ignoring them before, now we are even seeing them. I wonder if investors are taking this into consideration or are they fishing for the IE masses? It's only a matter of time before non-tech savvy grandmas and the like are going to start using Firefox in order to cut through the craptastic ad-laden world that is viewed through IE. (Not to mention the IE vulnerabilities)...ugh.

Old problem in advertising

[Anonymous Coward]

"I know that 50% of my advertising is wasted. I just don't know which half" - John Wanamaker 1886

Filters

[marol]

Thankfully, Adblock works rather well, filtering out visually disturbing ads from actually useful and/or entertaining information on the web.

Comment removed

[account_deleted]

Comment removed based on user account deletion

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.

Temporary?

[hagrin]

I've started a tech site/blog just like a million other people around the world in the hopes that I too could cash in on the online advertising scheme.

However, running a tech blog, I have noticed one definite fact - that Ad Munching occurs on almost 70% of the users that visit my site. That means that my "revenue stream" (I've made less than it would take to fill up my car's gas tank) is one Greasemonkey script, one AdMuncher default installation, one MSFT OneCare configuration away from being completely obliterated.

Technical users are already speeding up their web browsing experience and once default OEM computer installations come with ad blocking (MSFT could potential block AdWords ads with Vista out of the box), you could see a filtering of advertisements off the web. Especially since Google is relying on contextual ads, their JavaScript code is one security setting away from never even reaching the user - no less having them click on the ad and then actually buying something.

The Secret to Advertising is one word:

[dada21]

Don't. Not unless you can afford establishment advertising.

Honestly. Advertising can work for the very select top tier products that become the establishment product, but in the long haul, there is only one way to make a product successful and profitable: quality.

It doesn't have to be the best, it has to work in the customer's situation. If you sell service, do it happily and as close to perfection as possible.

In all my years of being in business, I have never seen a good return on advertising that turned into a long run of regular customers. Sure, I may have seen some profits, but I also so many losses. I will never advertise again, I can't compete with Target or the like. What brings customers to my various businesses? Word of mouth. It spreads like wildfire when you perform a really good service or sell a great product.

The web is in trouble as programs like AdBlock and the like gain use. I know many of you use AdBlock, but if you use it on a website you like, turn it off. Click the damn ads. How do you think that site is being provided for? I pay as a subscriber to slashdot, and this Christmas I'm planning on giving a dozen or so subscription gifts to people on here that I admire. Sure, Taco and the boys have some nice money now, but I love the site, and I will continue to support it.

Advertising online doesn't work as well as many think it does. I've been watching the companies that have started to use AdSense within their catalogs (offering paid links to their competition). Only the top companies are making it big. I've spoken to some large bloggers (off the record) and their numbers in advertising don't make their blogging a real income. Yeah, there are a few who are making it big.

Google is taking in the most, but they have to find ways to combat against AdBlock and other ways to avoid the advertising. I don't know how they'll do it, but as I find AdBlock being used on more and more systems, I know that Google won't remain the king.

I do believe that sponsorship advertising of the web might work. Basically a monthly payment in order to say "Slashdot, brought to you by Microsoft" or something of the sort. Some podcasts I've listened to are receiving sponsorships, and they are't tacky ads but well thought out slogans or quick product placements.

Online advertisement have suffered badly

[GauteL]

.. due to an extreme focus on clicks.

Regular magazine advertisements have no direct link between the advertisement and the shops selling the products, while online advertisement do.

The problem is that for a long while, web adverts were considered useful only if they gave DIRECT hits to the target website. That is highly unfair imo. Having people SEE the banner is useful enough on it's own. It helps generate brand recognition.

I think the web sites oversold the idea of clicks so much it made companies undervalue viewings of the ads. In my opinion web ads should be more expensive per square cm per viewing than regular ads, because of the added statistical information the client gets. In addition, clicks should be rewarded.