4 ms·

Internet advertising will be relatively unscathed in the economic downturn

25 points by makimaki 18y ago

netcan 18y ago
This is quite interesting. On one hand, this article really gets it: 'above the line spending vs below the line spending; objective cost-of-sale vs speculative cost of branding.' From an investors' perspective, this will give you the picture. I agree with the conclusions. I think that online advertising largely because of google/adwords/google analytics, their competitors & the complex of supporting technologies & services, mean that the base chunk of online ad spending is much more robust then the average. But on the other hand, the article seems to be written in the context & jargon of the advertising world that doesn't get it "awareness, consideration, preference and loyalty" is part of the consumer behaviour concepts behind traditional advertising selling 'ordinary products for ordinary people'- washing powder, toilet paper & cars. It's really squeezed in here. Then they mention hulu. That's dumb (IMO). Hulu is part of analog tv advertising. It replicates the analogue environment enough to be able to take their customers with them. I have no beef with this, but there is nothing the about.com, facebook or even (i think) youtube can really learn from them. The second thing is that the undertone seems to assume that big traditional advertisers are the driving force behind everything. They were in tv-land where there is only room for a few dozen advertisers that needed to reach everyone & above all wanted to become 'your brand.' That has nothing to do with online advertising. The revolution is that advertising is now in chunks of whatever size you want. You can advertise a local auto repair shop on a $1000 a year budget with approximately the same ROI as a as a big name nationwide chain. That's the revolution. I'm sure coca-colas & Fords will eventually take a big piece of this, their big companies. But it's not their pie.
- ig1 18y ago
  I disagree - I think the Economist is right about Hulu, Hulu generated advertising money not becuase it's like analog tv, but rather because advertisers want to associate their product with high-quality and appropriate content. There's lot of brands which only advertise on large reputable sites (newspapers, etc.) rather than on banner networks for precisely that reason. For a lot of companies their brands are one of their most valuble assets and they don't want to risk them appearing alongside illegal/questionable/poor-quality content. No sane brand manager would touch something like youtube or justin.tv, the suicide on justin.tv was horrific enough, imagine the reaction if it had been overlayed with "Nike: Just do it". A few seconds of bad footage could wipe billions off the value of a brand.
  - cfabbro 18y ago
    Do people really associate a brands reputation with the content of the site on which they may be advertising? Internet cynicism aside, I honestly don't think most people do because they understand how banner networks and keyword advertising work. Example: On reddit there was an article about a boy who ordered McDonald's and ate it at the scene of the fatal accident he had caused. Later it was reported he had fled police custody and on the news site that reported this, a McDonald's commercial was featured prominently. http://i34.tinypic.com/20ifms7.jpg http://i34.tinypic.com/20ifms7.jpg While seemingly inappropriate (and funny), it in no way reflects on the McDonald's brand. Even if the case was Justin.tv and Nike:Just do it, I think that most people are sensible enough to see that it's just a case of coincidence. Anyone who gets seriously offended or angry in these cases is most likely trolling for attention or is completely clueless as to how advertising works on the internet. "wipe billions off the value of a brand"... really? come on!
    - ig1 18y ago
      "Do people really associate a brands reputation with the content of the site on which they may be advertising?" Probably. There's overwhelming evidence (in general; not web specific - but I'm not aware of any research which shows it doesn't apply online) which shows advertising context is critical in market positioning. Have a look at the Tesco-Levi lawsuit from a few years ago, Levi a premium jeans company sued Tesco a supermarket to prevent it selling Levi jeans, because putting premium jeans alongside vegtables damaged the exclusivity of the Levi brand. While I appreciate the example is from a different context, I believe there's no reason that the same principle don't apply online. Another way of looking at it - think about the following scenario: Say a consumer was looking at a porn site and it contained an advert for a dating service (called A), and later on the consumer looked at their church's website and it also had an advert for a dating service (called B). If you questioned the consumer about which dating service was more "wholesome" I'm willing to bet the consumer would pick B over A the vast majority of the time.
      - cfabbro 18y ago
        That's a pretty extreme case and wonderfully framed to back up your assertion, but even it is kinda wrong IMHO. Dating sites in particular tend to promote the values their clients hold. If it's a dating site where "wholesome" is the clients primary value then advertising on a porn website would be detrimental, however a company like adultfriendfinder benefits greatly from advertising on porn websites. What I assumed we were talking about was actual big brands like McDonald's or Nike. They, unlike dating sites, tend not to be as dependent on their customers moral values and so context isn't as important.

25 points by makimaki 18y ago

This is quite interesting. On one hand, this article really gets it: 'above the line spending vs below the line spending; objective cost-of-sale vs speculative cost of branding.' From an investors' perspective, this will give you the picture. I agree with the conclusions. I think that online advertising largely because of google/adwords/google analytics, their competitors & the complex of supporting technologies & services, mean that the base chunk of online ad spending is much more robust then the average. But on the other hand, the article seems to be written in the context & jargon of the advertising world that doesn't get it "awareness, consideration, preference and loyalty" is part of the consumer behaviour concepts behind traditional advertising selling 'ordinary products for ordinary people'- washing powder, toilet paper & cars. It's really squeezed in here. Then they mention hulu. That's dumb (IMO). Hulu is part of analog tv advertising. It replicates the analogue environment enough to be able to take their customers with them. I have no beef with this, but there is nothing the about.com, facebook or even (i think) youtube can really learn from them. The second thing is that the undertone seems to assume that big traditional advertisers are the driving force behind everything. They were in tv-land where there is only room for a few dozen advertisers that needed to reach everyone & above all wanted to become 'your brand.' That has nothing to do with online advertising. The revolution is that advertising is now in chunks of whatever size you want. You can advertise a local auto repair shop on a $1000 a year budget with approximately the same ROI as a as a big name nationwide chain. That's the revolution. I'm sure coca-colas & Fords will eventually take a big piece of this, their big companies. But it's not their pie.

ig1 18y ago
I disagree - I think the Economist is right about Hulu, Hulu generated advertising money not becuase it's like analog tv, but rather because advertisers want to associate their product with high-quality and appropriate content. There's lot of brands which only advertise on large reputable sites (newspapers, etc.) rather than on banner networks for precisely that reason. For a lot of companies their brands are one of their most valuble assets and they don't want to risk them appearing alongside illegal/questionable/poor-quality content. No sane brand manager would touch something like youtube or justin.tv, the suicide on justin.tv was horrific enough, imagine the reaction if it had been overlayed with "Nike: Just do it". A few seconds of bad footage could wipe billions off the value of a brand.
- cfabbro 18y ago
  Do people really associate a brands reputation with the content of the site on which they may be advertising? Internet cynicism aside, I honestly don't think most people do because they understand how banner networks and keyword advertising work. Example: On reddit there was an article about a boy who ordered McDonald's and ate it at the scene of the fatal accident he had caused. Later it was reported he had fled police custody and on the news site that reported this, a McDonald's commercial was featured prominently. http://i34.tinypic.com/20ifms7.jpg http://i34.tinypic.com/20ifms7.jpg While seemingly inappropriate (and funny), it in no way reflects on the McDonald's brand. Even if the case was Justin.tv and Nike:Just do it, I think that most people are sensible enough to see that it's just a case of coincidence. Anyone who gets seriously offended or angry in these cases is most likely trolling for attention or is completely clueless as to how advertising works on the internet. "wipe billions off the value of a brand"... really? come on!
  - ig1 18y ago
    "Do people really associate a brands reputation with the content of the site on which they may be advertising?" Probably. There's overwhelming evidence (in general; not web specific - but I'm not aware of any research which shows it doesn't apply online) which shows advertising context is critical in market positioning. Have a look at the Tesco-Levi lawsuit from a few years ago, Levi a premium jeans company sued Tesco a supermarket to prevent it selling Levi jeans, because putting premium jeans alongside vegtables damaged the exclusivity of the Levi brand. While I appreciate the example is from a different context, I believe there's no reason that the same principle don't apply online. Another way of looking at it - think about the following scenario: Say a consumer was looking at a porn site and it contained an advert for a dating service (called A), and later on the consumer looked at their church's website and it also had an advert for a dating service (called B). If you questioned the consumer about which dating service was more "wholesome" I'm willing to bet the consumer would pick B over A the vast majority of the time.
    - cfabbro 18y ago
      That's a pretty extreme case and wonderfully framed to back up your assertion, but even it is kinda wrong IMHO. Dating sites in particular tend to promote the values their clients hold. If it's a dating site where "wholesome" is the clients primary value then advertising on a porn website would be detrimental, however a company like adultfriendfinder benefits greatly from advertising on porn websites. What I assumed we were talking about was actual big brands like McDonald's or Nike. They, unlike dating sites, tend not to be as dependent on their customers moral values and so context isn't as important.