The Lessons of the X10

If you have spent any considerable amount of time on the Web lately, you are probably familiar with the X10 camera. Perhaps too much so. Recently, advertisements for the product have popping up everywhere.

The X10 camera is a small, wireless video camera that works with your television or computer and is designed to be hidden. While the ads often tout the X10′ s usefulness in security and childcare, the images of attractive women who usually adorn the ads suggest an entirely different (and illegal) value proposition.

The X10 has been advertised on the Internet for years. A while back, pop-up ads first started appearing on low-grade content sites, such as porn sites (or so I’m told). Then banner versions of the ads started appearing where there are huge amounts of cheap inventory, such as the inside pages of second-tier search engines.

Now, however, X10 ads show up on the most premium of sites, including the New York Times. The ads have been slightly modified to “pop under” instead of pop up over content, but they create a new browser window and demand attention nonetheless.

The proliferation of X10 ads is a bad sign for the industry — a sign of troubled times for ad sellers. There’s something disturbing about seeing the X10 on top-tier sites with valuable content, registered audiences, and good demographics. It’s like seeing Susanne Sommers pitching the Thighmaster during “Meet the Press.”

Online properties have been so commoditized by click-through rate and the bulk measurement of impressions that good sites aren’t able to make a case for quality audiences. And since Internet advertising is sold by impressions, with multiple placements on each one of those impressions, ad space on the Net is almost limitless, with the laws of supply and demand inexorably driving down value.

Obviously, that’s not good for ad sellers. But the situation is not good for advertisers, either. Advertisers are used to buying audiences, and association with content, not hits on a server. When they make a buy on the Net, even millions of impressions feel like a drop in the bucket. Many feel they have no way to reach Web audiences in a meaningful way.

That’s why Web advertising seems most attractive to advertisers such as X10 instead of GM and Coke. The latter understand advertising by calculating reach and frequency against specific audiences. That’s the way they have been buying advertising for years — impressions and page views doesn’t mean much to them.

If the X10 ads do represent some good news, it’s that the industry’s increasing willingness to accept new technologies and ad formats. Up until recently, most high-profile sites sharply limited the amount and types of rich media (non-GIF) ad executions running on their sites.

Rich, flexible, and interactive advertising units offer tremendous promise for advertisers. But it goes without saying that in a healthy industry, rich media should serve mainstream advertisers, not distributors of peep cameras.

Now is a crucial time for the industry. As the Upstream Group‘s Doug Weaver, publisher of the indispensable newsletter Drift, eloquently puts it:

Whether you’re a publisher, an ad agency or a marketer, it’s time to make the tough choices. Are we living in the world of “Friends” and “Monday Night Football” or rooting around among the “Three’s Company” reruns? Are we part of the medium that will allow advertising to be great, or are we hawking Chia Pets? The choices we make today — about pricing models we’ll accept, about creative execution, about use of richer media forms and new ad units — will have a big impact on how we’re seen tomorrow.

There are no easy answers. But the need for a radical re-evaluation of the way online advertising is quantified and understood is painfully obvious.