The Inefficiency of Internet Advertising

When people surf the net they are willingly participating in more than one activity. Commercial messages pushed through in the form of ads, banners, etc. in order to reach a potential customer who is in the middle of doing something else, are not effective. It’s not that we no longer need information to initiate or to complete a transaction; rather, we will no longer need advertising to obtain that information. We will see the information we want, when we want it, from sources that we trust more than paid advertising. Instead, we will use information that we trust, obtained at the time that we want to see it. Consumers do not trust advertising, do not want to view advertising, and do not need advertising. People trust more information obtained from a known and respected source, i.e. professional /product reviews and peer reviews, rather than advertising. Indeed, the problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed. There are three general categories for creating value that can be monetized, including selling real things, selling virtual things and selling access. Amazon and Zappos already sell real things, and they do it very well. TheNewYorkTimes.com sells virtual content and information; ITunes does the same with music. Yahoo! and AOL sell access. The net will find monetization models and these will be different from the advertising models used today because it is very difficult to capture attention when the attention is diverted. Better targeting of ads using individual interests and individual behaviors will ensure that we do not bore or annoy as many people with each ad, but cannot address the trust issue. The most efficient way to address trust issues is with word-of-mouth abundant on social networking sites. It is no secret that the social networking audience has grown rapidly. In 2008, 79.5 million people—41% of the US Internet user population—visited social network sites at least once a month, an 11% increase over the previous year. The growth that social networks have exhibited over the past few years shows little sign of abating. By 2013, an estimated 52% of Internet users will be regular social network visitors. The steady stream of updates and news will become a weekly or even daily habit for many people. That stickiness is good news for social network providers. The bad news is that—sticky or not—social networks are still struggling to develop workable revenue models. Will 2009 be the year that marketers and social networks figure out how to harness the myriad bits of information that consumers share about their likes, dislikes and purchase preferences—and turn them to a profit?