Advertising is an important revenue channel -- but it's not the only one. Content sites must seek alternative sources of income.
I'm occasionally asked my thoughts on Web advertising. I'm no online ad professional, but as a consumer and online business strategist I have a few opinions.
In principle, online advertising is necessary. Someone has to pay for the wonderful online content. Advertising and subscriptions are necessary, because venture capitalists are going to stop funding online content one of these days.
Banner ads seemed so natural early in the Web era. There are banner-like ads in newspapers and magazines, why not simply put them online?
The effort failed, because banners do not engage consumers. "Banner blindness" is the ability to completely ignore anything that looks like a banner. Pop-ups are hardly an improvement. According to The Wall Street Journal, people reflexively close intrusive ads by "force of habit," completely ignoring pop-up ads. People are similarly blind to ads in print and broadcast media. The difference on the Web is that advertisers can measure online blindness.
Though advertising won't disappear from the Web, Internet companies shouldn't count on ad revenue alone when they create business plans. For a long time, everyone thought he would get a piece of a very large pie. A Gartner report found a variation of the 80/20 rule: The top 20 sites (out of 2,800 studied -- 0.7 percent) reaped 80 percent of all online ad revenue. If everyone doesn't get a real shot at the brass ring, sites must do more to attract ad dollars than simply building traffic. As NUA reports, online publishers must be more honest about their traffic, user base, and targeting capabilities.
The same Gartner report suggests online media attempt to "get better demographic and targeting data from user registrations" to increase ad revenue. With growing mistrust of any information-gathering efforts (see the flap about Comcast storing data to improve customer experience), how can sites get better data without providing a better experience for customers? If all consumers get in return for their data is more advertising, they're likely to opt out and leave no one to advertise to.
Online content sites must continue to offer quality content but find creative ways to collect revenue. Some site sections will always have to be free to attract large numbers of visitors. For these visitors, quality targeted advertising presented in a creative manner will help subsidize their free viewing. For those who want better, more, deeper, or older (archived) content, inexpensive subscriptions may be the rule, along with advertising, of course. It's been a nice party, but it's over. Virtually all other media -- radio, TV, newspapers, magazines -- are ad-supported. Online will have to follow suit.
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Blake Rohrbacher is a consultant with Keally Consulting. Keally develops marketing and business strategy for clients who want to do better business online. Keally does site evaluation and optimization to help clients connect with their customers and provides market analysis, data modeling, and business planning expertise to help complement clients' in-house expertise.
Hong Kong, May 5-6, 2015
Gartner Magic Quadrant for Digital Commerce
This Magic Quadrant examines leading digital commerce platforms that enable organizations to build digital commerce sites. These commerce platforms facilitate purchasing transactions over the Web, and support the creation and continuing development of an online relationship with a consumer.
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