Advertising is dead. Don’t tell Google’s investors though.
Like a tsunami wave washing out the coastal shanty, the web may be washing out the first wave of Internet companies that have aligned themselves too closely with advertisers and not with the needs of their users. The disruption won’t leave an empty beach, however, but models more true to a web medium than ever before.
In its early days AOL had it right but then got lost. In the mid 1990s to late 1990s AOL used to be about people chatting. People to people was the value: many to many. Then it got wide-eyed for old media, bogged down in a merger with Time Warner that I never understood. And now AOL is the Kmart of the web, a store past its prime needing a way back.
Right now the darling is Google but I think Google is more of a library-information lookup model. Search for info. It’s not a web model. Fetch and retrieve, like an information Labrador retriever. Besides, Google inserts ads into its Gmail service, an indicator that it really doesn’t value its users for anything other than an “ad view”.
The web model is really many to many, people to people. The early signs of this are myspace and facebook, although I don’t believe either is the long-term winner.
If you look at a company like Yahoo its stock has gone nowhere in the past 7 years. It’s down.
Yahoo has underperformed because it is the old model: The broadcast model. Yahoo’s approach: here’s the information from the top 10 media companies like Reuters, AP, etc., re-purposed for the web and that’s it. Yahoo has tried to get into the many to many model but hasn’t struck gold yet.
Microsoft and Google are not really making the right moves either in the many to many model. They, too, like Yahoo, are enamored with old media brands and content, as if this legitimizes their operations, sanctions it with “real content”. Advertisers feel comfortable with the old brands and this dependency actually could make Yahoo, Google and Microsoft footnotes down the road as the web model grows (as opposed to the advertiser-brand model they all rely on).
Even a property like YouTube, which hails itself as a grassroots video site, made its name by posting copyrighted comedy clips from Saturday Night Live and others. It’s embedding ads from the same old brands. Hardly grassroots.
This first wave of web companies is in the spotlight today but I don’t think it will last for any of them if they keep on the course they are on. The web is full of companies who got it right early when nobody pressured them, and then molded into a “Madison Avenue” puppet in order to keep their stock prices up and options in the money.
You cannot serve two masters, advertising and users. They fundamentally are at odds the way they are done today.
Traditional advertising is not ideally suited to the web model. Notice on a site like facebook that few ads are clicked. Why? it’s not the right way, message, approach. Ditto for myspace, which is full of flashing annoying ads from products nobody wants.
Ads that litter your web pages now will look rather out of place as the web model grows and replaces the misplaced advertising that dominates today’s web.