Putting consumers at the heart of online advertising

December 29th, 2009 by Yali

In today’s FT, Nikesh Arora, president of Google’s sales operations and business development, and David Eun, Google’s vice president of strategic partnerships, are both quoted recasting the nature of online advertising.  They make two points:

  1. We should no longer distinguish online advertising from radio, print and TV advertising – as these “old” forms of content are increasingly distributed over the internet
  2. The nature and format of ads online today need to “catch up” to exploit developments in the online ecosystem.  Copying TV ad breaks, for example, will not be good enough

Mr Arora and Mr Eun are right – there does need to be a fundamental shift in the way people think and treat advertising online, both to exploit the new opportunities that the internet presents, and also to ensure that advertising can continue to support content creation.  The key change necessary, however, is that people in the industry need to put consumers at the heart of online advertising.

  1. The consumer needs to be at the heart of advertising.  In traditional TV, print and radio, the consumer passively consumes advertising as part of consuming content they’re interested in.  Because of a limitation in the number of channels available to consumers, advertisers were in a position to pretty much force consumers to watch whatever ads the advertiser wanted to foist on them.  As a result, what advertising consumers were interested in was not very important.  That is not true on the internet, where consumers can choose from a plethora of content unimaginable before.  There has to be a rebalancing, with a greater amount of spend on advertising that consumers actually seek out and consume of their own volition.  (Leveraging viral marketing and social media.)  Even where advertising is forced on visitors, more effort needs to be put into make sure that advertising is both appealing and engaging to the consumers who are exposed to it
  2. The consumer needs to be given a more transparent choice between consuming advertising and paying for content.  Consumers understand that ads in commercial breaks on TV make TV less expensive for them.  Online, that choice isn’t so clear, because it often isn’t presented to starkly.  Where publishers can, they should offer their visitors the choice whether or not they’d like to pay for content, or look at ads as part of their content consumption.  Consumers who know they are saving a certain amount of money might be less likely to mind about more intrusive online advertising formats.  At the same time, they might more actively opt to choose to consume more ads on sites where the ads more interesting and appealing, benefiting advertisers who then have a higher level of confidence their ads are capturing attention
  3. The consumer needs to be put at the heart of new technologies e.g. behavioural advertising and ad exchanges.  We’ve said it before and we’ll say it again here.  Behavioural targeting is a transformative technology because it allows advertisers to decide who they’d like to advertise to rather than where they’d like to advertise, which is fundamentally more important to them.  But to work, consumers on the internet need to be able to have say over “who” they are, where they are identifiable, the interests that are ascribed to them, and understand how advertisers use that to target them.  Relying on cookies, and trying to work out what people are interested in based on their web browsing history (vs letting them express it themselves) is inefficient, ineffective, and has already sparked a consumer backlash.
  4. The metrics around online advertising need to change to capture consumer attention.  Currently, online advertising is measured in impressions.  Consider that any publisher can double, triple or quadruple the number of ad units per page and suddenly they have got twice, 3x or 4x as much inventory to sell.  What advertisers are interested in are not impressions, which are fairly arbitrary units at best, but units of consumer attention:  there are 60M people in the UK, they have a finite number of hours a day, and spend a finite percentage of those hours consuming media.  There is therefore a finite amount of consumer attention that advertisers can hope to attract, and a finite amount that each publisher can hope to offer to an advertiser.  

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