Online Advertising Trends

I was catching up on Ad Age Online, and hit upon an interesting string of articles that gave me more insight into the wooly world of online click advertising. Like, how it’s going to change.

As an added bonus, I am including examples of online click advertising in this very post! ;-)

US Advertising Spending Total

Advertisers spent a total of $143 billion in 2005. Of that, Internet-based ads drew $8.3 billion (50% from web companies). Local newspapers, by comparison, grabbed up $25 billion. National newspapers, which might be more equivalent to the reach of the Web, drew $3.5 billion. The power of locality has been on my mind a lot lately as a business strategy; there’s a lot of money in the local markets, but it’s spread thin across the whole of the United States so it’s hard to harvest. However, every town seems to have an Office of Economic Development, a Chamber of Commerce, and a Small Business Development Center…I imagine that these would be good resources for figuring out the economic lay of the land.

Online Advertising: Sue! Sue! Sue!

Of that $8.3 billion spent on online advertising, advertisers are griping that between 5% and 35% are fraudulent, and they blasted Google and Yahoo at the Search Engine Strategies Conference in NYC. They also complained about sham websites that served only to harvest and deliver low-quality clicks. That’s really interesting; I had assumed that those sham websites that exist purely to rank high on search engines and derive revenue from AdSense, while pure crap, actually did provide a service by sending advertisers tons of traffic. Au Contraire! The advertisers hate them too, because no one buys! So they’re suing Google and Yahoo in increasing numbers to do something about it. When the money is threatened, companies get on the ball or they die, so I’m looking forward to seeing some improvements here. Google’s acquisition of Urchin and Measure Map make a lot more sense to me now, as they will provide the “full picture” needed to squash low-signal / high-noise crap websites.

The Hammer of Click Justice

Apparently Google is already getting serious about this overseas; they de-indexed the German BMW Website for employing fishy optimization tactics, such as serving different pages to search engine spiders. These were not the same pages that users saw; I imagine the special pages were SEO’d to deliver very targeted results. I admire the trickiness, but detest the underhanded lameness.

Who Will Pay for Content?

There’s good news and bad news. Bad news first: creating content is expensive. In the case of newspapers with both print and online editions, it takes 20 to 100 online users to make up for one print subscriber in terms of revenue. The newspapers, we’ve all been told, are losing subscribers to the Internet, but the Internet ain’t paying for it.

The good news is high-quality content will pay off even more, as Google and Yahoo address the concerns of online advertisers. Complaints didn’t work; litigation talks!

This is where a blog network like 9rules could make its money; a carefully-cultivated blog network represents a higher quality source of links. In fact, blog networks represent the evolution of the Newspaper more than I imagined, since they can flexibly repurpose content into more granular categories and pushing editorial responsibility into the actual reporters /content generators. Of course, it’s one thing to form a blog network, and quite another to build a news organization. It’s got to deliver tangible value to both advertisers and content creators, which is an interesting line to straddle. The difficulty I’m thinking is that blog readers don’t generally click on ads, so repurposing the content for a larger general audience that does will be critically important. Harder said than done.

So it’s Portal Tactics versus SEO yet again, referreed by Google. What round is this again?