Wednesday, April 9, 2008

Web Ads

I was watching television last night--not any particular show, just the food network to have something in the background. There was a V8 commercial where a man is avoiding vegetables everywhere. He has a shish kabob with only cubes of meat while his wife has a classic kabob. He looks to get shredded cheese at the salad bar, but realizes he's in the shredded carrots bowl. It was hilarious, but it got me thinking, who watches commercials anymore? Pretty much everyone I know owns a TiVo or a DVR or uses on demand or Netflix. You either fast forward through the commercials or get content without commercials. There aren't too many occasions where people watch advertisements on television anymore. You have the Superbowl, New Year's Eve, and maybe holiday programming, where Christmas Story is replayed over and over again. And even then, people have a tendency to change channels to avoid commercials. So even though more people are watching television, fewer people are watching commercials. This has given many advertisers pause, since the classical thinking of advertising is based on exposure--the bigger your audience, the bigger the impact of the advertisement. And for the most part, exposure was seen to parallel the exposure of the television show. With the advent of DVRs and on demand, exposure is now likely overestimated.

But wait, you say. the VCR has been around for a very long time. people could just tape their shows and fast forward through commercials in the 1980's. While that is true, VCRs were only able to record one show at a time, and required more user input to program. Sure, there was VCR+. And sure, there was the ability to set a weekly recording schedule. But it was simply a pain in the ass, and being home for your favorite show was easier. Now you can set up season passes in a flash, record two shows at once, get your shows on demand, or get last year's season on dvd before summer begins. And with people multitasking more and more, there is less time to be spent watching commercials. Thus the last true haven for commercials is the big ticket sports event--the Superbowl, the NCAA tournament, the World Series, the Bowl games, etc. Sometimes if you have a hot enough show, you can get people to watch it in real time with the commercials, so they can talk about it the next day with their coworkers and friends, but even then all you have to do is watch it an hour later and you'll be able to skip the commercials.

So what are television advertisers to do? Some have tried heavier marketing for product placement within shows. There was even a brief attempt to create a seamless transition into a commercial by using the cast of the sitcom. It seems the future of television advertising is not in commercials. It will be in product placement within the shows. Commercials will still be watched by many people, but they will reach a much smaller audience and be less effective because of that. We may see a transition to greater advertising with movies and dvds. These two media platforms still retain some control over what you watch before the feature. If you get to the theater early, you watch trailers and commercials. If you put in a dvd, you cannot fast forward past the piracy warning, and now possibly, several commercials as well.

The web is facing a similar dilemma. There are millions and millions of website in the great ether that earn a great deal of money from advertising. And it is the same faulty logic that was carried over from television advertising. The exposure of the user (or viewer) to the advertisement is paralleled to the exposure of the user to the content (or show). But instead of fast forwarding past the advertisement, users simply ignore the advertisement. One survey estimates that only 0.02% of advertisements are "clicked through". That may mean millions of "click throughs" given the trillions or more advertisements one the millions of web pages out in the ether. But given the millions of products that are advertised, it seems an inefficient method of advertising. This is because most of the web advertisers are advertising for their internet business. And shopping on the web isn't like shopping at the supermarket. You can't walk down an aisle and notice the new granola bar that you saw advertised on a billboard when you drove into work. Business on the web takes a great deal more exposure to harness customers. Web ads are the equivalent to the impulse candy rack at the checkout lane or the bright neon signs above the buildings in Vegas.

Of course, I don't work for the large conglomerates that advertise through web ads, so why do I care how they waste their money? I actually don't care how they waste their money. But if perchance one day I can reap the benefits of this system, I will gladly join the crowd.