Why Online Advertising Will (Largely) Fail

On TechCrunch, Eric Clemons explains in articulate detail what most of us have been feeling in our bones for some time:  that the web and advertising as we know it are inimical to one another.  First, he proposes an operational definition of advertising:

Advertising is using sponsored commercial messages to build a brand and paying to locate these messages where they will be observed by potential customers performing other activities; these messages describe a product or service, its price or fundamental attributes, where it can be found, its explicit advantages, or the implicit benefits from its use.

He goes on to explain what I’ve always assumed that the authors of The Cluetrain Manifesto meant when they offered their Thesis 74:  “We are immune to advertising.  Just forget it.”  Even though the authors have recently disavowed the sweep of their claim, it’s consonant with Clemons’ view:

It is frequently argued that the advertising industry will provide sufficient innovation to replace the loss of traditional ads on traditional mass media.  Again, my basic premise rejects this, suggesting that simple commercial messages, pushed through whatever medium, in order to reach a potential customer who is in the middle of doing something else, will fail.  It’s not that we no longer need information to initiate or to complete a transaction; rather, we will no longer need advertising to obtain that information.  We will see the information we want, when we want it, from sources that we trust more than paid advertising.  We will find out what we need to know, when we want to make a commercial transaction of any kind.

Think of the new world Clemons describes as being bound by 2 axes:  proximity of the user to the transaction on one, and value added by the information in the message on the other.  This is why lead gen businesses have worked and branding hasn’t.  It’s also why paid search currently rules the world, although Clemons argues (less persuasively, I think) that it’s fundamentally a form of “misdirection” which will become less valuable. 

In any case, it’s clear why online newspapers are so screwed in this scenario:  they are mired in the southwest corner of the matrix described above, whereas “transactional businesses” such as classified were their cash cows in print.  And even as branding goes, the good stuff–national advertisers–will be touched by so many intermediaries by the time they land in a local daily online that the cpm will be measured in pennies.  So local dailies are left with branding for local businesses.    Good luck funding a serious newsroom with that.


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