Google AdWords/AdSense were terrific when they launched. They challenged the ad pricing structure that had been established by the Web Bust Crew. It was about time. Online advertising grew. But now it looks like that although the growth is there, we're at an inflection point. What's my take on this? The companies providing the ad platforms (including Google, Yahoo, and Microsoft) are moving faster up market than they are enhancing the "low end." From a business point all this makes sense. However, as AdWords/AdSense proved back in the good old Web 1.0 days, there's huge growth in enabling the tail. And the tail is in desperate need of moving up out of the classified-ad model.
Here's the problem: Look at many of the focused editorial sites on the Internet. Some of them are heavy influencers in their respective markets. Some of them drive huge traffic. Many of them have loyal followings. Almost all of them have the same problem: Contextual ads aren't up to their editorial level. They want better, more appropriate ads. They want to control the ads when it makes sense. They want to be as professional as possible in their ad placements and management as any publication is. Most sites have their own ads systems, but there's a huge gap between the major ad platforms from let's say Google AdSense/AdWords to what these sites want.
And there's an equally large opportunity on the ad buyers side--both large and small. The current systems are not efficient enough in terms of getting the desired ads on a focused site, paying for the ad, or managing it. Take something as simple as purchasing an ad. How is a large company going to buy a rich-media banner ad on TabletPCPost, for instance? Are they going pay with a credit card? Who's card? What if they are using an ad agency? What if they want the ad on ten different sites, two weeks each? Going to each site individually and negotiating with them is way too inefficient. The inefficiency drives up costs needlessly, which then suppresses the growing tail of the market. Exactly what you don't want.
Look what sites like TechCrunch and TechMeme are doing with ads--they've gone with alternative ad systems that give them quality, ads. Not generic ads for eBay, NextTag or sites to lists of lists with Google ads on them. The readers don't want it. The content providers don't want it.
All this chatter of the money to be made in the Web 2.0 world drove the market upstream. Too far. I hope someone, somewhere realizes that enabling the tail is where the big bucks are. Adding a magnitude of efficiency to the ad market for online sites will bring in more advertisers--yes at lower rates, but it'll also enable a new generation of revenue growth.
Who do I think will fix this? For awhile I thought Google would. I don't think so anymore. They have a lot invested in their current advertising infrastructure and pricing models. Yahoo has a similar problem. Microsoft is a slim possibility--if only it realizes that cloning what competitors are doing is not the complete answer for today. What will help, I hate to say it is an advertising bust that clears out the over spenders on the high end of the market.


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