Will Online Advertising Fail?

Interesting piece by Eric Clemmons, Professor of Operations and Information Management and Management at the University of Pennsylvania’s Wharton School, on TechCrunch a couple of weeks ago on how online advertising is failing.

Worth reading, especially his “update” after getting hundreds of comments:

OK, guys.  It’s time to calm down.  I did not insult you, your families, your religions, or your rottweilers.

I may have presented a message you did not want to hear.  Let me summarize it again, for those of you who appear to have commented on it without reading it:

Online advertising cannot deliver all that is asked of it.  It is going to be smaller, not larger, than it is today.  It cannot support all the applications and all the content we want on the internet.

And don’t worry. There are other things that can be done that will work well.

If you disagree with me, it would be helpful to think about the basic premises of the article and to refute them:

• People don’t trust ads.  There is a vast literature to support this. Is it all wrong?
• People don’t want ads.  Again, there is a vast literature to support this.  Think about your own behavior, you own channel surfing and fast forwarding and the timing of when you leave the TV to get a snack. Is it during the content or the commercials?
• People don’t need ads.  There is a vast amount of trusted content on the net.  Again, there is literature on this.  But think about how you form your opinion of a product, from online ads or online reviews?
• There is no shortage of places to put ads.  Competition among them will be brutal.  Prices will be driven lower and lower, for everyone but Google.

Or you can continue to laugh, or to attack.  That does not constitute a response, and it does not help you plan for the future.  But a few parting thoughts may help you construct stronger attacks.

• People whose experience is different from yours may still have experience.  People whose industry contacts are different from yours may still have industry contacts.
• I’ve been attacked and ridiculed before.  I warned the floor traders in New York about the coming of online trading back in 1989 and was fired for it. I warned traditional people-based travel agents about dropping commissions and their eventual bypass through online booking systems and was ridiculed. I warned early investors in online grocery that it would not truly succeed as a mass-market offering for at least a decade and was ridiculed again. I warned investors in specific early online business-to-business exchanges, like Covisint, that sellers would not participate.  All of these ridiculed me more politely.  But most of them still cannot afford to buy me dinner now.
• And even if you continue ridicule my piece, there are too many other professionals noticing the same thing.  Consider the recent article in the Economist on essentially the same thing: advertising cannot fully support the net.  You cannot ridicule everything you do not like off the net.

So … those of you with commercial interests in online advertising … you can laugh at me.  You can attack me.  Or you can think about how you can protect yourselves and your companies against the changes that are going to come.

Well done. His examples of previous “warnings” are valid and I love his barbecue blog.