It is the online eEconomy and not the “real world” that feeds the growing revenues of the web’s display and search advertising engines and that is why we are wrong when we assume the Web is responsible for the fall in Newspaper, Magazine and TV Revenues. The reality is new media and old media service two very different economies. For an eBusiness to conduct eCommerce in the eEconomy it requires eAdvertising to attract eCustomers.
Traditional advertising was all about directing people to locations in the “real world”. Online advertising is all about directing people to locations in the virtual world.
This is what makes the smart phone such a massive opportunity. These mobile devices are the touch point where the virtual world of the web interacts with the real world. They have the potential to blend the virtual and the real worlds into a single eco system.
When we see forecasts on the future growth of online advertising that predict online advertising will replace Newspaper and/or TV within the next 5 years what we are really seeing are predictions on the growth of the eEconomy.
Now one of the key differences between the old “real World” economy and the new eEconomy is the role of advertising in the sales cycle.
As I have explained before the old Browse with Us, Buy from Them advertising model has been replaced online with the Browse with Us, Buy from Us sales model. This new model renders advertising as we know it redundant.
In the old economy I would see a Hire Car Ad in a Magazine. This would prompt a “call to action” that would lead me to picking up the telephone to make a booking. In the new eEconomy there is no call to action I just click through the banner Ad and I am redirected to the Hire Car web site to complete the sales transaction.
Now you are thinking nothing has fundamentally changed. A Hire Car ad on a web site is no different to a Hire Car ad in a magazine. I’m there for the content and I get hooked into thinking about hiring a car. The content site and the Hire Car site are two different web destinations. Therefore we encounter two unique economic transactions Advertisement is Step 1. Booking is Step 2.
The problem is I may have encountered that Hire Car Ad 10, 20 maybe even 100 times on my virtual travels before I make the decision to click through. However with the Pay per Click Advertising model it is the last click that takes the money. In this context online advertising is more like a lottery than a business model.
Chris Dixon explores this idea even further in his recent post on the failure of the existing online advertising model to track the sales lifecycle on the web.
Companies spend millions each year on online metrics trying to identify the Tipping Point that makes the sale. But what if there is no Tipping Point? What if what online sales are in reality a “string of activities” and these Strings are merely threads within a more complex adaptive living system? How do we measure, monitor and influence this system?
The reality is my web travels haven’t been about visiting 2, 10, 20 or even 100 destinations. They have been a about exploring one or more “strings of activity” within a single eco-system. The web therefore isn’t about destinations. It is about threads. This is the reality of a world dominated by FLINK! To thrive and profit in a world where FLINK! is King you need to be in the business of creating threads – not destinations.
Most people think that Google’s huge success is due to their ability to profit from assisting others to monetize their web site and their traffic. Actually Google success comes from being the first player to recognize the Web was more than just building web sites and/or attracting traffic. They were one of the first to build a platform that profited from the virtual “strings” that enhance, improve and amplify the experience of the traffic roaming around the web.
If you are still thinking about the web in terms of data [content], nodes and connections then it is time your thinking evolved beyond the limitations of network theory. Threads are more important than destinations or the strength of the connections between destinations. Destinations are, after all, just stepping stones in your daily online journey.
Today we spend a great deal of time and effort measuring the performance of destination (Think: traffic, search terms, link backs, referrals, page views, number of visits time per visit etc) We do this because despite all the evidence to the contrary we still believe content to be king. What we should be measuring is the performance of FLINK! and to do this successfully we need to discover a way to track, measure and monitor the threads. If we can do this we will be able to build better search engines, better advertising platforms and better exchanges. After all today’s media is all about Find Me, Find You and Let’s Exchange
Browsing with you but buying from them >>
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Advertising Network
February 26, 2010
In some cases there aren’t enough advertisers in niche topics, and in others the users just isn’t likely to click. Advertising Network