The Sad State of Online Advertising

While reading an article in today’s New York Times, I saw the following sleazy ad:

Paris Hilton Ad in NYTimes

You’ve probably seen this genre of ad before, which offers free merchandise for a trivial task – of course, the ads always state that “Details Apply” in tiny text (I wonder how the FTC feels about these “details”).

As stupid as these ads are, they’re not much worse than the advertisements for escort services that you see in back pages of a free weeky – but you’d never see one of those next to a top story in the print edition of the New York Times!

Why not? Money, of course. A prominent ad in the print edition of the NYT is far too expensive to be purchased by the low-class advertisers – and even if it were cheap enough, the Times’ higher-end advertisers (luxury companies such as Tiffany’s, who spend a lot of money to consistently advertise in the paper) would never allow their brand to be anywhere near an ad like that.

But it turns out that Tiffany’s and other high-end advertisers don’t advertise on the web today – because there’s no appropriate online advertising surface out there for them. This missing business causes two side-effects:

  1. The scummy advertisers aren’t priced out of the market
  2. The Times, faced with low-revenues in their online edition, can’t be as choosy when it comes to advertisers

Broader Markets are Good

One could mis-interpret my previous statements and say that I’m an advertiser snob, looking to price out the little guy. This, of course, is false. Even with way less than ten percent of the advertising market, the Internet has brought more advertisers into the market – this is undoubtedly a good thing.

Large publishers, like the Times, can (and should) still cater to the little guy. Unlike the print version, an online edition need not display the same advertisement for all readers in perpetuity. A digital publication can sell limited run, or niche-targeted advertisements at a lower total cost and higher visibility than they could in the one-size-fits-all print edition. In fact, I’m certain they already do so.

Publishers like the Times have to start being picky and demanding a certain level of quality from their advertisers. In the print world, it’s clear that advertisements are part of the content (look at any fashion magazine if you’re in doubt) – this attitude needs to extend to the digital realm.

Moving toward a better future

At Mix, I showed some sketches of what online Magazines can become. Roger Black and I are working to create higher-end content experiences that won’t dilute the brand of luxury advertisers. Rest assured, you won’t be asked to punch a monkey.

It’s still early, so all I have to show are sketches – but there’s a lot of room for improvement in this space! I’m a bit surprised by the state we’re in today, because so many of today’s mistakes come from ignoring the lessons learned during decades of print publishing. Of course, digital is a different medium than print, which means that we need new plenty of new paradigms in order to succeed – but that just makes it all the more exciting!

Update: Other Voices

After writing this post, I found P.J. Onori’s excellent (and similarly-titled) article The Sorry State of Online Advertising – which I recommend. He makes similar points (and posted them first, so he wins):

I would argue that the sheer number of advertisements some of these sites have on their site is evidence that the current ad model is not working. Instead of thinking of more original, symbiotic and user-friendly forms of advertising, most site creators have subscribed to the “more ads means more revenue” philosophy. This current relationship between the site creator and advertisers is much like a building landlord and a renter. Space is offered to the advertiser and other than the exchange of money, there is little to no relationship between the two. Under this model, the landlord attempts to rent out all the space to whoever offers money. The problem with this model is that if the landlord just rents out rooms to anyone without any discernment, the landlord’s property could be quickly destroyed by the renters. Meanwhile, the apartment building is in shambles and no one is interested to look at the space, much less rent it. Similarly, if a website does not carefully choose its advertisers, the web site could shortly be a ghost town. An interest in short-term gains can ultimately disenfranchise a site’s users to the point that they do not come back. Guess what, advertisers are going to drop you like a bad habit once you are not giving them what they want - click-throughs and revenue.

Another article worth reading is The Devil & Online Advertising by Darius A Monsef IV. Here’s an excerpt:

Do you know why you only see those terrible, low-budget ads on your local television stations? Because it costs too much for those guys to hock their “Super-Mega-One-Day-Only-Sales-Extravaganza!” on national television. When the price point to advertise online is in the pennies per CPM, then you’re going to end up with low-quality advertisers.