Creating more valuable online ads in 3 steps

Posted: December 9th, 2009 | Author: | Filed under: journalism | Tags: , , , , | View Comments

Local moms love Uncle Rupert

The world of media can be largely divided into two different kinds of individuals: ad people and journalism people.

As both firsthand experience and the creators of Mad Men have taught me, ad people are suave, snazzy dressers with a silver tongue and a taste for quality scotch. I, on the other hand, drink PBR, sport a hole in my shabby work pants and get excited when the AP announces changes to its style book.

But regardless of my classification, both my income and my industry depend on advertising, and I think it’s important to keep an eye on where it’s headed.

That’s why I find it particularly troubling when Rupert Murdoch decides to chime in on the bleak future of ad-supported journalism.

Like him or not, Murdoch is a media sage and a shrewd businessman. When he speaks, people follow.

He and his minions decried  Google and its “parasitic” practices, then floated the threat of removing his content from Google altogether. Sure, Murdoch’s onslaught against Google was probably a bargaining ploy. But his column in the WSJ seems a bit more sincere:

The old business model based mainly on advertising is dead. Let’s face it: A business model that relies primarily on online advertising cannot sustain newspapers over the long term. The reason is simple arithmetic. Though online advertising is increasing, that increase is only a fraction of what is being lost with print advertising.

That’s classic Murdoch for you — big, bold and scary as hell.

In a way, he’s right. He goes on to point out that advertising was successful because of “quasimonopolies” like classifieds, now rendered as obsolete as the Walkman by sites like Craigslist.

Sure, newspapers had the market cornered on classifieds. But the key there is that they had something of value to consumers.

I agree that value has absolutely been lost.

But why is it so impossible to believe that news organizations won’t ever be able to find that value again?

In a field as open and flexible as the Web, it’s not surprising that online advertising is in its infancy — it’s proven extraordinarily hard to figure out. But we’re getting closer, and there’s reason to believe that we can create value in online advertising — at least enough to support lean news operations.

Step 1: Cut the crap

This is crap.

This is crap.

Someone should let Obama’s economic advisers in on a little secret: judging by a hefty bulk of online advertising, “local moms” are the nation’s most valuable resource. They’ve found the secrets to everything! Weight loss. Teeth whitening. Muscle building.

In reality, they’re scams, propagated through ad networks even on reputable sites like where I work.

This kind of garbage makes most people’s eyes glaze over, and in the long term it hurts Internet advertising. If consumers grow accustomed to seeing ads for the “truth about acai berry” across the sites they visit, they’ll stop paying attention altogether.

But Google, with the largest online ad network, is taking steps to combat these scammy ads. It may not help on the other ad networks that are even worse about this sort of thing, but it’s a start.

Eyetrack studies by the Poynter Institute prove that quality ad content matters to viewers. In our quest to build value, why not start there?

Step 2: Innovate

The Web presents online advertisers with endless possibilities — and that’s part of the problem.

But if you want to create value, innovating doesn’t mean “Let’s find a new way to make this ad as obtrusive as possible.” You can’t take eyeballs by force.

Instead, the Web can offer relevancy. That can mean personalized ad results, which some ad networks are implementing now. It can even mean ads that appeal directly to your type of personality.

That’s what a group at MIT is working on.

Now websites can be primed to “read” potential customers from the way they interact with web pages. It uses a program called the Bayesian Inference Engine running unobtrusively on a user’s computer to monitor the person’s click patterns and so to determine how they respond to different textual and visual cues. This is then used to categorise the user’s cognitive style.

More than print ads, more than television ads and more than radio ads, online advertising has the potential to target users directly and offer them something individually. Focusing on that property will yield results.

Step 3: Build on growth

Sure it’s been around for a while, but online advertising is absolutely still in its infancy.

A 2008 Pew Center study found that 37 percent of Americans list the Internet as one of their major sources of news. That’s almost triple the figure from a decade ago.

That growth has translated into a shift in ad spending. Some analysts predict online ads will claim about one-sixth of ad spending by 2012 and overtake newspaper ad spending by 2015.

With the trend heading in the right direction for online, and stagnant and falling for TV and print, it seems logical to shift resources toward making online ads work.

These steps are a start. If news organizations rebuild value in online advertising, they’ll be able to charge a higher price and bring in a larger revenue stream.

We will never get back to the heyday when news organizations were pulling in 20 to 25 percent profit margins, but I won’t stop believing it’s possible for them to eke out enough cash to support lean operations.

Subscription fees are and always have been essentially delivery costs. After all, couldn’t a non-subscriber stroll down to the library to get the news for free in “the good ole days?”

Delivery costs are hard to defend in the Internet Age.

After all, bits travel faster and cheaper than atoms.

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