The Traditional Banner Ad Business May Be In Even More Trouble Than You Think
from the ad-blindness-everywhere dept
It's no secret that we're not big fans of the banner ad business -- and, in fact, part of what we're doing with Floor64 and the Insight Community is helping to offer companies alternatives to wasteful spending on straight banner ads. Just a couple months ago, I moderated a panel at a marketing conference, where we talked about "the death of the banner ad." And, while every person on the panel admitted that banner ads aren't particularly effective, they said they still bought them, just because it's part of what you do. However, that may soon be changing. The first hint may have come earlier this year, when people started realizing that banner ads on hot social networking properties were worthless. And, now, with the financial crisis freaking people out left and right, some are considering pulling back on their ad spending.And, if they needed any more ammunition for that, a new study from Jakob Nielsen shows that ad blindness is more widespread and more comprehensive than almost anyone realized. Almost no one looks at banner ads. The only "advertisements" that people look at are search ads, because in those cases, people are actively looking for something, and the ads often provide it. In other words, in those cases, the ads are good content.
This doesn't mean that it doesn't make sense to reach out to the people who make up your market. It just means to stop thinking about just bombarding them with meaningless "push" messaging that they'll ignore completely -- and start actually engaging them and providing good content.
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Filed Under: ad blindness, advertising, advertising is content, banner ads
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It's worse than that...
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two sides
I run several free web services that average about 25-50,000 unique visitors per day, and I couldn't afford to keep those sites online without banner ads.
Granted, I don't do the annoying popups, expanding, make noise ones.
As companies start pulling out of banner ads though, many popular websites (including major sites like Digg, MySpace, Fark, etc) will have to find other ways to pay their bandwith bills.
All of you who are quick to bash ads - you still read this site... would you pay to read it without ads? I doubt any of you would.
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Re: two sides
Uh, no. That's wrong. We don't rely on banner ad revenue. In fact, that was the point of the opening of the post. Our business model is designed to work even if banner ads disappear completely.
So, what's "the other side"? That some sites choose a bad business model?
I run several free web services that average about 25-50,000 unique visitors per day, and I couldn't afford to keep those sites online without banner ads.
So you chose a bad business model. You could choose a better one.
As companies start pulling out of banner ads though, many popular websites (including major sites like Digg, MySpace, Fark, etc) will have to find other ways to pay their bandwith bills.
And those business models may be much, much better for everyone.
All of you who are quick to bash ads - you still read this site... would you pay to read it without ads? I doubt any of you would.
Nor would we expect them to. That's why we built a different business model that does not rely on banner ads.
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Re: Re: two sides
Isn't it difficult to tell people to change their position on business strategy when Techdirt doesn't even follow its own advice?
Tell you what: Drop the right sidebar, the intrusive ads upon posting, then talk about "content=ad" instead of telling businesses they have the wrong model.
"We're giving away our content as advertising for our business", Mike will reply. So what's the excuse for the intrusive ads if you already have ads on the site?
While you may tell us "it represents a small amount" of revenue for running the site, don't you think this may be the reason other sites do it?
Practice what you preach, please.
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I agree with Ryan
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Re: I agree with Ryan
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Re: Re: I agree with Ryan
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Re: Re: Re: I agree with Ryan
Same here, with NoScript.
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Re: I agree with Ryan
As we discussed, quite clearly, on this site over and over again, our business model is not banner ads, and they represent a very small portion of our revenue.
So, no, the site is not being paid for by banner ads. There are some, and they do bring some revenue, but it's a small amount.
Besides, shouldn't that make it even more credible? If our revenue was all banner ad based and we talked up how wonderful banner ads are, *that* would be suspect. But criticizing banner ads, even while we do make some money from them should be pretty clear that we're speaking from actual experience, rather than what drives our wallet.
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Re: Re: I agree with Ryan
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Re: Re: Re: I agree with Ryan
Actually, I've addressed that in great detail. They still make money for us, so what's wrong with *us* using them? The problem is for *advertisers* who will eventually recognize it's a bad buy, and stop buying them. And if they do that, good for them. We're ready for it.
But, can you please explain how it's hypocritical? We don't *buy* advertising -- which is the part that I think is a bad model. Please understand the difference between a publisher and an advertiser before you accuse someone falsely of hypocrisy.
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Re: Re: Re: I agree with Ryan
If they are smart, they'll continue using banner ads as long as they provide revenue. That's kind of the point, don't you think?
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also
I've never seen them on a news site or comapny website or online web application that I use daily.
In fact, I don't think I've noticed an annoying ad in months.
of course, i don't visit porn and warez sites either.
In my daily internet usage, I haven't come across any - and I don't use adblock.
Something tells me that the problem is either way over-stated, or some of you people visit some very shady websites.
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RE: Ryan
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Have cake, eat too
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Banner Ads, A bad idea since Trintext
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New?!
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Re: New?!
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Re: Re: New?!
I'm not seeing anything there that isn't text.
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why don't you buy your banner activity on a pure cpa basis?
in reply to your article on banner advertising, why do you still buy them on a cpm / cpc basis - are you mad?
and please note, people have been talking about the death of the banner ads since 2000 and they are still going strong!
thank you
paul
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The new banner ads are...
These are so annoying. I also have seen a lot of sites lately that make a popup appear the first time you click anywhere on the page. Very annoying as well.
They made ads so invasive and so annoying that nobody reads any of them any more. I don't think I've clicked on an advertisement on the internet and completed a purchase EVER, not even ONCE. And I have been an active internet user for fifteen years.
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Re: The new banner ads are...
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Check this out for better ad types
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I think you will find smart companies increase their ad spending during a recession. That's how they fight for a bigger share of people's reduced discretionary spending.
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Re:
Actually, no. The vast majority of Google's revenue is from SEARCH ads, which we discussed in the post itself.
And, even though banner ads are making *some* money for the companies that host them, like Google, that doesn't mean they're a GOOD BET for the advertisers. And that's the potential problem.
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Re: Re:
I know I spend much more time on Gmail and Youtube than I do searching for stuff.
I agree that context-sensitive ads are much more useful and probably generate better clicks as well, but they show up in more places than search.
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Re:
Who said otherwise?
if it's not sold on a subscription basis
There are more options beyond just subs and ads.
While I agree there is a lot of advertising overload, brand advertising requires a more dynamic canvass to convey their messaging and you simply don't find that in a text link.
Again, that doesn't mean banner ads are your only option.
Pop ups are a ridiculous creation, but quality banner advertising (not a "punch the monkey" ad) provides a strong user experience, without being intrusive.
The research suggests otherwise, but ok.
Plus, as users media consumption begins to transfer moreso to digital platforms, those outlets will have to find a way to monetize their content. Pre-roll videos can't do it alone.
The fallacy here being that the only options are banner ads or prerolls.
Expand your concept and you'll see there's much much more.
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Re: mike
It works because people still click on them and companies still see value in putting them there.
If they ever stop working, I'll have to adopt to a new business model. That model will still "work" - as in it makes more money than it costs, but I'm sure it will involve some paid walls and some pissed off users.
While I love reading techdirt, You're very quick to bash every business model out there without offering any suggestions.
let's suppose MySpace and Facebook ditch banner ads all together. How do they make money without pissing off their user base. Go with it.. That'd be a post I'd like to read.
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Re: Re: mike
There's nothing wrong with banner ads right now -- but the research + common sense makes it clear that it's unlikely to be sustainable. That's my point. And, as I note, they may be ok for you *now* but they're increasingly not okay for advertisers, which means you may be in trouble once they realize that.
If they ever stop working, I'll have to adopt to a new business model. That model will still "work" - as in it makes more money than it costs, but I'm sure it will involve some paid walls and some pissed off users.
If the business model involves pissing off users, then it's unlikely to work very long either. There are business models that work without pissing off users. That's what we talk about all the time, with examples. I know you're a regular reader, so are you really going to believe that those examples don't exist?
While I love reading techdirt, You're very quick to bash every business model out there without offering any suggestions.
No offense, but we offer suggestions ALL THE TIME. Not only that, we point to examples of how it's working. Hell, in this very post we explained how WE'RE building a business model that doesn't rely on banner ads.
let's suppose MySpace and Facebook ditch banner ads all together. How do they make money without pissing off their user base. Go with it.. That'd be a post I'd like to read.
We actually have discussed that in the past as well. Banner ads aren't particularly effective on either of those sites, with tiny CPMs and ridiculous low CTRs.
But what those sites do have is a great platform for actually *engaging* with people and fans of brands, and offering up a platform on which other great ideas can grow. From *that* you can build a model that involves not inundating people with ads they don't want, but providing them with services that they need. Think about what we're doing with the Insight Community, which is much smaller than either Facebook or MySpace.
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Nice Banner Ads!
Oh...wait...according to your article I wasn't supposed to notice those.
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Re: Nice Banner Ads!
Is it really that difficult for otherwise intelligent people to understand this? I have addressed the point in the past as well as multiple times in the comments:
The point is that banner ads are bad for *advertisers*. For now, they work (somewhat) for publishers like us, so we'll keep them (within reason). But we hardly rely on them as our main business model, and have built a business model where we'll be perfectly fine if they go away completely.
Our assertion is that more and more companies are recognizing that banner ads are a bad buy (as advertisers) and eventually that will trickle down to publishers.
The fact that we still have banner ads doesn't refute that point in the slightest.
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Re: Re: Nice Banner Ads!
Read below for your answer.
The point is that banner ads are bad for *advertisers*.
Actually, they're bad for everyone. If advertisers are getting the clue (finally) these damn things don't work, then this means they don't work for sites like Techdirt, either.
Yet, look around. They're everywhere, so somewhere, somebody doesn't get it and yet you claim we're having difficulty understanding this?
How is it these banner ads "generate a small portion of the revenue" Techdirt (and others) make if they don't work?
We intelligent people would like to know this, please.
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Re: Re: Re: Nice Banner Ads!
*sigh* We *do* follow our own advice. We tell our advertisers there's a much better way to accomplish what they want to do. Some are willing to try it, some stick with what they know, even though it doesn't work very well. But our advice is quite clear to ADVERTISERS: look for more effective ways to spend your budgets, and to PUBLISHERS: Don't rely on just banner ads, because that market may dry up.
We follow both of those pieces of advice. We do not rely just on banner ads and expect that market to dry up, and we do not buy any banner ads.
While you may tell us "it represents a small amount" of revenue for running the site, don't you think this may be the reason other sites do it?
For most other sites it represents *all* of their revenue. That's what we're warning about.
Actually, they're bad for everyone. If advertisers are getting the clue (finally) these damn things don't work, then this means they don't work for sites like Techdirt, either.
Yes. I agree. But, as I thought I said clearly above (oh, look, I DID say it above), they are working somewhat FOR PUBLISHERS, but not for THE ADVERTISERS.
So, as long as that's the case, we'll still use them. But the point is that eventually THE ADVERTISERS will recognize they don't work well, and when that happens, banner ads will not support publishers.
How is it these banner ads "generate a small portion of the revenue" Techdirt (and others) make if they don't work?
Again, as I explained clearly above, you need to understand the difference between an ADVERTISERS' perspective and a PUBLISHERS perspective.
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No Hypocrisy... But Why Do We Have To Kill Off Everything Old To Promote The New?
As an unrelated example, electronic books arguably have many advantages over printed books. But that doesn't mean printed books must die in order for electronic books to succeed. Eventually, as the cost of e-books falls and the advantages of e-books become more obvious to more consumers, the industry of e-books may at some point equal, and then exceed, the printed book market. It may take quite some time for this particular example to actually cross that line, but someday we may all be reading books on e-book screens. But that doesn't mean printed books will ever completely go away. Nor does it mean that printed books must somehow fail or cease to be a profitable business/industry before e-books can expand its market share.
By analogy, banner advertising has its usefulness (just like printed books obviously do). And it's not hypocrisy for Techdirt to display banner ads (while Techdirt and the Insight Community builds up its "digital content" business). Techdirt is anticipating a future when banner ads may not be as ubiquitous as they are now. The shift away from banner ads may take some time, but we're looking forward to the change. And it's an easy trap to think that banner ads must *completely* die before the ad=content models can rise up, but banner ads might never go away. Techdirt is simply preparing for the growing adoption of the ad=content business (and letting everyone else in on the plan).
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Banner ads do work and so does email ads
In addition to website ads we also employ what is called an Advertorial ad. This is emailed and is extremely effective. The reader opens the email and is provided with real information that they can benefit from and yet still be "sold" from the company who is doing the instructing. This ad concept allows both parties to experience value and thus provides a better return for their investment.
I enjoyed the article, but I will continue to promote both online advertising as well as, email marketing.
Thank you.
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carpenterz@tamu.edu
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They work alright
Good advertising works, though. If done well, it can provide a great user experience. There are many, many examples of solid, relevant display ads, television ads, etc. prompting people to go to search engines to search for more info. A good display ad can boost your awareness, it may even peak someone's interest to sign up for permission marketing, which will allow you to continue to provide relevant content marketing to them. Sure, you can't just throw up a banner and expect cash to flow. But it can be part of an effective overall strategy, when combined with search, good social PR, and a good permission asset focused on content.
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kmb281989@tamu.edu
kmb281989@tamu.edu
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Banner is not dead!
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