Celebrating the Online Advertising Industry Shakeout

Currently, the industry is experiencing a severe hit. The huge loss of revenues associated with the failure of many dot-com start-up companies, pathetic click-through rates, and a possible looming recession make working in online advertising a scary proposition.

Great! The industry has needed a kick in the pants for some time. The human consequences are tragic, and we can all sympathize with the thousands of people who have lost their livelihoods. But let’s try to be positive: When times are tough, people get hungry and less complacent. Many have struggled against the same complacency and incompetence that sowed the seeds for the sad situation we’re in now.

For example, think of the irrational way in which many online marketers attributed their success to click-through rates and site traffic rather than making a profit or maintaining a sustainable business model. Think of the slow pace at which rich media has been accepted across the web, lagging far behind the available technology. The fake user interfaces, click-to-win promotions, brochure-ware sites, etc., all contributed to the general complacency associated with the explosive growth of the Internet industry as a whole. And this has given people little reason to push the industry forward. Time to grow up, kids.

Look at the bright side: There’s no excuse for advertisers to keep buying ad units that can’t produce tangible results. The decline of dot-coms has allowed click-and-mortar advertisers to use the web more strategically as an integral component of their overall marketing plan. The demand for more synergy between online advertising and traditional advertising efforts can create new opportunities for creative ideas that enhance the consumer’s relationship with the brand.

Banner campaigns by themselves have proven to be less effective than a more holistic approach encompassing site integration and relationship-marketing tactics to fulfill the needs of online advertisers. The agencies that survive must understand more than how to create a usable user interface and how to get clicks. We need to understand how the client’s business model works and how people react to all facets of online marketing — we need to go beyond “X type of button is 30 percent more clickable than Y type of button.” We need to weed out the “me-tooers” who decided to get into the web in order to ride the wave.

Active participation and commitment is necessary to survive now — which is refreshing. Five years ago, the Internet was full of innovators and ambitious people with vision; lately, it’s become dominated by seat-fillers and parasites. Sorry if I don’t cry for those people — but working for a VC-funded buffoon who wouldn’t know what a marketing plan was if it bit him or her on the ass is never fun.

These days, there’s not much reason for someone to get into the Internet business if he or she doesn’t have a genuine interest and expertise. The hype’s gone. Sure, we’re taking it on the chin now, but trends like these tend to swing back and forth. A year ago, the Internet was the Wall Street darling, and people were projecting, in some cases, 600 percent growth and hiding behind the technology and hype of the industry. But the backlash to the dot-com explosion won’t last forever.

The economy and, in particular, the Internet advertising industry will recover, and the people left standing can justifiably feel proud of their accomplishments. When broadband goes mainstream and wireless devices catch up with Europe and Japan, advertising creatives who have weathered the storm should be able to take advantage of the increased potency of the web. The current climate of Internet advertising forces the industry to shape up or ship out. I, for one, am glad to see it.

Related reading

Overhead view of a row of four business people interviewing a young male applicant.