Why ad rates on the web suck (and what you can and can’t do about it)

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pointing hand1. Ad buyers are stupid and lazy.

This isn’t my opinion — I’m quoting an ad sales guy who used to also (quite inappropriately, and sometimes to hilarious effect) run the web division of a certain media startup I used to work for (that had no clue about the wall that’s supposed to be put up between editorial and ad sales).

Maybe I’m being a little harsh — ad buyers are human, and while the landscape of ads they can buy has changed, embracing that change would require superhuman amounts of effort.

To wit: If you were an ad buyer for Acme, a medium-size company, and they gave you a million bucks to spend would you:

a. Diligently research the dozens or hundreds of tiny websites you’d have to buy ads on in order to best target your audience while getting impressions at fire sale prices

or

b. Throw the whole lump at a television ad network and call it a day so you can go home to your family in Westchester.

OK, so it’s an exaggeration, but the point is: until ad networks become more powerful and, frankly, monopolistic, the only people who are going to get high CPM’s on the web (that’s dollars-per-thousand-ad-impressions) are the biggest sites, like Yahoo, that can absorb huge ad budgets.

In other words, the bottleneck is the folks buying the ads — they’re stuck in the 20th century. (Except for the ones using Google Adwords, but those kind of ads aren’t going to command enough money to keep a business afloat unless it has ridiculously low overhead, like Plenty of Fish.)

One possible solution, as I just noted, would be for someone to do a better job of consolidating ads into potentially huge pools of buyable impressions.

Why do you think the Glam ad network is such a runaway success?

pointing hand2. The ability to perfectly measure your traffic is a curse.

Think of how traditional newspapers sell advertising — they tell advertisers how many subscribers they have. But how many of their subscribers didn’t even read the paper that day? Or never saw the specific ad that was paid for? I’m sure if there were a print-world equivalent of Google Analytics, that had the same level of fidelity, advertisers wouldn’t stand for their low ad impression rates and print advertising rates would fall off a cliff — frankly, the whole thing is built on an illusion. But that’s the sort of thing you can get away with when you’re an institution with 100’s of years of history, I guess.

Thanks to Scott Karp over at my new obsession, Publishing 2.0, for getting this whole brainstorm started: Why Online Advertising Economics Are So Messed Up | Publishing 2.0

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