That was a tough title to write.
I was there in the beginning of online advertising. The very early days. The days when banner ads had to be hard-coded on to a website. The days when targeted banners were often sold in a sponsorship format, because there was tremendous value, but never enough impressions to go around. Those were the days when the idea that brands could pay to rank on a search engine seemed both foreign, and like the search engines were poisoning the well. They were interesting times. Mostly, because the promise of what could be was so real. The ability to target messages on specific sites to specific people. Millions of websites, each with a passionate and active user base. Plus, it was the Internet! Super-measurable! We will know exactly how many people saw they ad, clicked on it… and would take action. Real advertising. No waste. A new dawn, where indie publishers could build new and different platforms from the mass media entities. The bigger media companies were skeptical about the Internet’s power and new crop of content makers were blooming.
Digital advertising is now a $50 billion dollar business.
The Internet over-delivered on its promise. For all of it’s marvels and foibles, the Web really did deliver many new types of content and media formats. It enabled brands to connect with consumers in a myriad of ways, and it has introduced newer business models to the world in a highly disruptive and beautiful way. That’s a far cry from plugging a cable into your phone’s wall socket and connecting through data instead of voice. For all of the problems that come with the Internet today, it really has empowered businesses and individuals in ways that many of us old-timers could never have imagined. My pedigree in this space is in the media and marketing realm. The IAB announced today that, “U.S. digital advertising revenue rose 16% to $49.5 billion in 2014 compared with the prior year… The report, prepared by PricewaterhouseCoopers U.S., shows that fourth-quarter 2014 numbers reached $14.2 billion — up 17% from $12.1 billion in the fourth quarter of 2014. Hidden in the numbers: social media advertising jumped 57% to $7 billion in 2014. During the second half of the year, social-media revenue was $4.1 billion, with the increase reflected in the 55.0% compound annual growth rate of social from 2012 to 2014, as a result of years building up social networks.” (source: MediaPost - IAB: Digital Ad Revenue Approaching $50 Billion Annually).
Belly rubs and lollipops in the boardroom.
There is good reason to celebrate. The numbers continue to increase, and in doing so it validates what many of us believed. Watching ad dollars shift. Seeing brands wake up to the possibility that advertising can be something a whole lot more relevant than the traditional 30 second spot. Still, in this powerful news about the industry’s dominance and growth was something deeply troubling. It’s this: “the IAB data ultimately makes clear to us once again that Google and Facebook continue to dominate the industry, as the two companies capture more than 40% of non-search digital advertising, and more than $30 billion, or 60% of the industry, if we include search, as well.” That’s not a typo. Sixty percent of the industry’s revenue is going to two players. We used to complain about the fact that there were only three major television networks that a brand had to deal with, if they wanted to reach the mass. I’m not a Google or Facebook apologist. I am a deep and proud evangelist for both brands – and what they’re capable of doing to connect with the right kind of customer. With that, the Web stills offers us so many other places to get information, connect and share. It’s – somewhat – disappointing to see this number, and then be faced with the reality that the Internet is very homogenous. For all of its diversity, niches and types of media (text, audio, images and videos), brands and agencies are still acting in a very traditional manner. They’re looking for mass reach and achieving it with very traditional types of advertising solutions. Most of it still acts as an interruption instead of an opportunity.
What should be a better signal than the sound of advertising dollars shifting over?
It’s not about the amount of dollars that have shifted over. The reasoning for the shift is that the money follows the eyeballs. The bigger thought lies in the first paragraph. It’s the idea that better data, better targeting, higher focus on relevancy and the depth to engage in a more profound way should make that dollar many times more efficient than when it was being spent in another channel. While many brands will claim that this is the reason why the dollars are shifting, it still feels like we have only begun to scratch the surface on what this really means. Many brands still believe that online advertising is cheaper than other media and that they can plaster messages in more places.
Fundamentally, that can be true, but why not make those advertising not just cheaper ad faster, but smarter?