Online advertising's elixir of life

31 Jan 2009 13:00 | by: Remmert Braat

Imagine if we could transplant the brain forever, somehow preserving or capturing its essence. Would this then be the key to eternal life or would it need to adapt dramatically over time, thereby changing its essence and forfeiting the promise of eternal life? I believe it must and it will adapt. Transplants only prolong the inevitable since all must change in the end - even advertising.

A lot of old thinking has been transplanted into the new digital world. Sometimes this works andmostly itdoesn't. When was the last time you clicked on a Facebook ad?

Everyone jumps on the bandwagon and announces the imminent death of the illustrious banner, but does anyone wonder why? Perhaps we should ask the consumer and put him (or her - ouch!) in the driver's seat.

Flip that coin
All this attention about online advertising has focused mostly on the publisher or business perspectives. Let's turn this around and ask ourselves a very fundamental question:

What value does online advertising provide the consumer anyway?

And when I pose this question, I'm talking about affiliate/banner marketing in particular. I'll discuss two areas where online (affiliate) marketing could provide real value to the consumer namely when:

  1. it points the consumer to a relevant offering (by the vendor)
  2. it provides added consumer value on the site that is being visited

Almost all online advertising effort has traditionally gone into the former while the latter could potentially prove to be a lot more valuable to the consumer. I'll start off by discussing the first.

Transplant or Adapt?
Of course advertising has always been around, in some form or another, but has really come about since the advent of the industrial revolution. The sudden surplus of goods, supermarkets and other large retail chains resulted in an extended undifferentiated offering. Brands became a good way to stand out from the crowd. However, brands need to be build up over time and this was mostly done through advertising in the massmedia; the so-called industrial media complex.

Now, this whole deal works quite well offline but not online. Although I do think that strong brands can be supported or even be build up through the internet, I do not believe that broadcasting your message on large affiliate sites does quite the trick. Amazingly, this is just what a lot of vendors are doing. Really, the best you can hope for with this scenario, is to lure a couple of lost souls to your landing page while it provides absolutely no value to the rest of us. Online marketing reduces to a rather technical affair of conversion ratios and all sorts of efforts in pimping the banner to squeeze out the final couple of lost souls.

So perhaps this strategy should be revisited.

You see, the internet is an active medium as opposed to the traditional massmedia. When we watch our TVs and listen to the radio, we expect to be provided for. We expect to be entertained. This is massmedia's great virtue. That's why it will never completely go away. Communication is one way and we have learned to accept advertising as part of the package.

from passive to active media

On the internet, this is not the case. Even in its most basic form, the internet requires a more active role from its users. So generally, when we are on the internet, we are actually doing something. This means that interruptive marketing is less effective since we have to be distracted from what we are doing.

Unfortunately, the passive offline advertising model has been more or less transplanted to the online world without the necessary adaptations. Remember transplants, in essence, treat the dying. In my view this doesn't work and I think advertising on the internet needs to adapt and be a lot more relevant to the consumer in order to be truly effective.

Relevancy is all about context
To be frank, relevancy can be a bit of a moving target. In an ideal marketing world you would know everything about your consumer and engage in a conversation at the right time and in the right context. You simply need to know who your consumer is and what he is doing. Technologically, this has been possible for some time but we still have a long way to go before this materializes. At the moment, paid search comes closest to this ideal since:

  • the search engine user is more open to suggestions because he is actually looking for something
  • some user context can be derived from the search terms that are entered

That's why paid search is the premier online advertising platform right now. However, this article is not about paid search but about the problems facing affiliate marketing. So what can we do? Perhaps we should tackle the big challenge of relevancy by starting to think small.

Smaller is really bigger and better
Paraphrasing Seth Godin here, I believe that niche sites are more focused and thus better positioned to engage with the consumer in a noninvasive way. Their focus gets them closer to the consumer context. For example, it wouldn't be strange to have an ad for a pair of binoculars on a birdwatching site.

Google was one of the first businesses to realize this and harness the power of the long tail through their adSense program. In this way advertising revenues where opened up to small website owners. The next thing would be to take this one step further towards true disintermediation and cut out the middle man. I think that small publishers (siteowners) know a lot more about their customers/readers than would any Google algorithm. It'd be a waste, really, to not tap into this knowledge.

Therefore, I just love the idea of affiliate marketing because it really buys into this. Just let the publisher browse through an online repository of ads and allow him to cut and paste ads into his own site as he sees fit. The ads then communicate back to the advertising party and stay online until their budget runs out.

This makes everyone very happy since:

  • it is a great way for the vendor to get the message to the right audience (effectively and efficiently)
  • the publisher can capitalize on his own knowledge of the consumer by increasing advertising income
  • the consumer is less likely to be harassed by irrelevant advertising

Think even smaller still
What would be even more focused than a niche site? Yes, you guessed right....it's the consumer or groups of consumers themselves. Generally speaking they know what they like. They know what's good for them. So, why not give them the online tools to manage their own conversations and relationships with vendors? Doc Searls calls this Vendor Relationship Management or VRM which is the reciprocal of CRM. This approach offers value to both the consumer and the vendor, thereby creating a sustainable market model.

This shift in control from institutions/organizations to us humble individuals is already underway. The large social networks try to profit from this by hoarding together as many consumers as they can. Unfortunately, they've transplanted old thinking into this new online environment using a business model that will not be sustainable. Their efforts are geared towards maximizing advertising revenues by locking the users in, instead of creating value for the end user. Again, this will change and we'll eventually move to a more user centric web.

So, power to the people then - right? What will all this mean to the publishers out there? People become publishers and publishers (amazingly) become people.

Will we be stuck with millions of amateur journalists to keep us informed? The answer is NO. Journalism, for one, has always relied on free-lance professionals to come up with proper work. So we've always been unknowingly served by individuals rather than huge corporations. The publishing platforms may change but we will still retain the need for high quality journalism and other services that add value to our lives.

Hopefully, I have offered some insight into how consumers can be pointed to a more relevant offering. Now how can advertising deliver added value to the affiliate site that the user is visiting?

Give something to the people and thou shall get something in return
So consumers have learned to ignore all sorts of marketing messages. The solution is really quite simple: just give them something useful and they may just listen. One of the most effective things to start with is content driven marketing where you provide content that adds value to the consumer. Content driven marketing is already upon us. In a way, a major part of the blogging community is really disguised content driven marketing.

Advertorials are also a great example of content driven marketing at work and can be applicable in almost any scenario. For example, suppose a company like Lonely Planet would disclose travel report highlights on affiliate travel sites. So right there - on that page that you thought was interesting, about let's say Kenya - you would get great additional travel stories courtesy of Lonely Planet. Not only would this greatly enhance Lonely Planet's webpresence, it would also give it credibility and real value to the consumer. It would liven up that Kenya page wouldn't it?

A couple of interesting things are worth mentioning here:

This setup is really win-win as the affiliate site is able to provide added value to the consumer without having to pay for it. Lonely Planet on its part doesn't have to waste expensive marketing dollars to connect with its target audience. In essence, a free advertising platform is created that has a bigger exposure and resonates a lot more with the consumer.

The ties between the affiliate sites and Lonely Planet are going to be different than with the traditional publisher vendor setup. The relationship is going to be a lot closer. For sure that's the way the consumer will perceive it. This will mean new opportunities as well as threats. On the one hand, a strong brand like Lonely Planet could act as an endorsement (seal of approval) to the affiliate sites. They could even ask for some form of compensation. At the same time, the closer ties will mean that the Lonely Planet brand is left quite vulnerable to undesirable actions by partners in the network.

This raises all sorts of new questions like:

  • What new ways are there to create value and make money?
  • How are we going to manage these partner relationships?
  • How do we easily exchange data with our partners?
  • In the case of LP: What will this do to one of our greatest assets namely our independent and neutral reputation? (perhaps use a separate sub-brand)

One way to shield the brand to the quirks of partners and still create added value to the consumer could be to use smart widgets. These widgets would replace the traditional banners and interact with the content on the site, sort of like an adSense on steroids. In this way, it should be clear to the consumer that the widget is not actually part of the main site. The key is to figure out what value the widget can provide to the consumer. Suppose you are an online bookstore that has great book reviews. You could then create a widget that is placed on the sites of relevant affiliate partners. The widget would then show book reviews related to the site content. To make this happen, the widget uses content tags or preferences set by the publisher. This is just a quick example, the possibilities are endless.

In all these examples, one thing is clear: online advertising needn't die. The vendor justneeds to engage more with its partners. Some partners will becompanies,others will be groups of people or even individuals. The vendor will need to be more open, listen carefully and be authentic.

That's quite a challenge, I know. It's a lot more than just another transplant but will leave plenty of new opportunities to follow up on.So engagement is onlineadvertising'selixir of life.


Related blogs about:

affiliate marketing

John Battelle

content driven marketing

NOISE

data portability

Alexander van Elsas
Doc Searls

marketing

Seth Godin

VRM

Adriana Lukas
Project VRM

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