The other problem with this line of thinking (which I've heard perennially since the late 90's) is that even a 70% increase on today's click through rates are poor. 70% sounds big until you realize that this is an industry that has approximately .1% CTR. .17% isn't that much better, and for more things, it leads to dismal overall results.

I meant to say that for "most things, [a .17% click-through rate] leads to dismal overall results."

@Jim--A good point, but isn't a 70% improvement in click through rate still a 70% improvement in the economic value of an ad? And shouldn't that ad therefore cost more? Companies will migrate more of their ads online in the future, for lack of a print venue if nothing else. Ad budgets won't shrink 90% as a result. There's only so much viral advertising you can do. Where's that money going to go?

With CPMs in the toilet, a 70% increase in revenue isn't going to make a big difference, either; not in the big picture. As long as click-throughs are the metric, search wins and banner ads will continue to be devalued. If their branding value is acknowledged, though, the game changes, and engaging, interactive formats will definitely be a player.

In addition to the 70% lift, you also have to consider the value of the interaction: how much more valuable is something like an add to calendar, or a click within a product reel? A click in a banner ad can mean anything, and more likely than not given today's expanding/annoying ads, it's likely a misplaced click trying to find the close button. A Spongecell action demonstrates a much higher level of interest in the product, something that is even more valuable than the already impressive 70% lift.

Disclosure: I was a member of the original team that built the ad platform.

Cliff, you need to look at the Ultramercial business model. By repositioning the advertiser as the provider of content instead of the interrupter, an Ultramercial ad unit acts as "payment" for content.

It's an exchange based system, the viewer's attention in exchange for content. The ad becomes a micropayment. Last year they had an average click through rate of 4.1%.

http://www.ultramercial.com

@Nik---Thanks for that insight

@The Critical Advertiser---Wow. That's fascinating. I'll check that out. Thanks for the info!

There are a few problems with all this line of thinking

Clicks don't actually really matter. Numerous studies have found that clickers are actually bad, they don't really buy the product. So if you really want to drive sales for an advertiser, you need to optimize away from the clickers.
If you take a step back and think of a banner as a billboard on a highway or even the beloved magazine ad mentioned above, the performance actually is comparable, if not better. What percent of people magazine readers respond to a magazine ad? What percent of drivers respond to a billboard on the side of the road? I'm sure the data is out there but I'd bet it's comparable if not worse than the true response rate of display ads - and by that I mean what % of people who see the ad actually buy the product.
We've done expose vs control studies where we have proven that display ads do drive lift in sales.
Short answer is, stop focusing on the click, it's meaningless in display advertising. And don't compare it to magazines until you have a comparably meaningless rate for them.
That said, I did see Spongecell's technology at the meetup and it is fundamentally different. I'd need to test it, but I could see a Spongecell interaction being a very valuable measure of engagement.

@Mark---Excellent information. Thanks for taking the time to comment, Mark

Cliff, Youdata.com also provides a very similar model to Ultramercial. I think the Youdata click through right is slightly higher than Ultramercial's.

@Nik How do you know that a Spongecell action demonstrates a higher level of interest in the product? Just because someone is taking action (clicking, participating, whatever), doesn't necessarily mean they are interested in the product. Do you have metrics to support interest in the product as opposed to interest in the ad (if that makes sense)? I'd love to get more information.

@Mark Isn't the difference between billboard ads on the highway and banner ads on the net that banner ads are used to elicit direct action i.e. buy something. Whereas aren't billboards usually for awareness/branding campaigns? Perhaps the display ads aren't working but i'm not sure that you can directly compare banners vs. billboards...

@Tyler - both banner ads and billboards are bought to do one thing - sell things. I see billboards all the time with phone #s, urls, text #s, and addresses. Response to these is the equivalent of a click on a banner. Some banners are meant for branding (eg, apple ads on nytimes.com) while some are DR focused. Same with billboards.
Admittedly, it's not a perfect analogy.

@Cliff - why do you say Ad Revenues are tiny? Maybe for the old-world publishers who continually miss the boat. But there's a huge industry profiting from online advertising, from Google down to the tons of startups that are changing the industry every day.

@Mark---I simply meant that ad revenues for publishers, relative to what they earn through print, are tiny. Obviously, the ad market in aggregate is quite large (though still dwarfed by offline ads), but the point for media is that online revenues aren't on track to make them whole, given current ad rates. As for new media publishers rather than those which began in print--they're still trying to figure out how to make money and produce original content. It's still the industry's $64,000 question.

The real issue here isn't whether one type of ad gets 70 percent more of a horrible clickthrough rate or not. That's moving deckchairs on the sinking ship. The much bigger issue that virtually never gets talked about It is that advertising is simply a horrible business model on the web. Sure, there will be a few exceptions here and there. Google, for example, but search is an exception that (so far). Facebook is putting up a nice front - but if it really did work, how come they keep needing to take venture money? As for the rest of us site owners, if you're not already thinking long and hard about what you can offer of real value that people will pay for, it's time to put your thinking cap on.

Here's what's going on: the media landscape is now one that is governed by the laws of abundance, not scarcity. In a world of scarce printing presses, scarce radio frequencies and scare tv channels, advertising worked. But now, I can go anywhere, instantly. All you have to do is annoy me one too many times and I'm gone, because I can get what you're giving somewhere else that won't annoy me. And I'm sorry, but ads are almost always annoying. Even MORE annoying if they fly up and want me to select something from a calendar and demand interaction.

My question is how to tell that a user isn't clicking simply because they're presented with a shiny, curious-looking ad with extra buttons? I know that I'm a sucker for cool web features and will likely click just to see what happens. Do I care about the content? Not a chance.

This is Cool I would also Recommend Reading Jeff Jarvis Book " What would Google do"

This is Cool I would also Recommend Reading Jeff Jarvis Book " What would Google do"

It seems to me that ultimately the sorry state of print media, especially with newspapers, is the responsibility of the publishers. The newspaper industry has continues to be controlled by the white establishment, which has been asleep at he switch. Consider the following:
1. In a state such as Hawaii, where I live which is less than 25%, white, in the 50 years that I have lived here, the majoe dailies were not responsive to the needs of the majoreity of the population
2.

To continue:
2. In the past 15-20 years, the non-Hispanic white population of the U.S. has dropped below the 50% mark
3. Urban centers around the country are looking more and more like Hawaii, with whites (those who can read) are moving out
4. The intense lives of today's families leaves little time to read anything, let alone the newspaper

5.

To continue:
5. The media elite talk only to themselves, live in neat boxes, and haven't a clue of what's going on in the real world

If the newspaper industry disappears, just think about the number of trees which would be saved. This would make their green environmentalist buddies happy.

Faithfully yours,
/s/ Harry H. Otsuji

The most important line of information this group should be following is the dollars being spent on ecommerce, currently going through double digit growth. The more Best Buy, Nike, MSFT even Dominos sees revenue increase via digital, the more their marketing team will push budgets. With more revenue tied to this medium creativity, placement, and engagement will improve. If anyone saw Jason Kilar (Hulu's) speech at Ad:tech he argues online, today, is getting a larger piece of the pie then they should based on consumer usage. As both usage and transaction continue to grow online the advertising industry will follow.

@Tyler Adams:

You can measure this by looking at metrics at the second level. Spongecell (It feels not writing we..) has a very rich metric and data collection platform, one where we can track the conversion rates to n number of levels, such as how many people actually buy something after clicking on an item in the product carousel. Tracking this conversion allows them to differentiate between "interested" actions and "curious/tell me more" actions - the former obviously much more valuable.

Using these metrics and predictive models to how various actions might in theory perform allows a flexible pricing system; imagine pricing based solely on completed actions, or on total interactions in general, or whatever n-level metrics you'd like.

Hope that helps!

@Nik Thanks for the info. Seems like Spongecell is doing some very interesting things. This is certainly something to look into. Much appreciated!

@Dan I think you raise an interesting point. Are your ideas about what's going on in the media landscape now based on keen observations or is there some research out there, that you know of, to back it up? My real curiosity rests in your dismissal of advertising on the web as "simply a horrible business model." Couldn't you argue that we are really in our infancy when it comes to the Internet and technology in general?

I'm not sure that the laws that govern the media landscape are in fact dictated by abundance or scarcity. I think we are all still trying to figure it out.

This is very cool. I've even seen some new media companies adding commerce to banner ads. Checkout www.alvenda.com. They've basically converted banner ads into checkout-enabled storefronts for some very large retailers.

So much is made of changes in advertising, in finding new ways to convince people to buy stuff by creating messages that are more personal, interesting, and relevant. But is it possible that part of the decline is simply because people don't need as much "stuff"? It feels like we are saturated with ads, saturated with deals, and 99% of the time will tune out an ad the moment we realize it's an ad.

I guess it goes back to the indisputable trend that getting and holding people's attention is getting more and more difficult.

--
My Blog on Society/Technology:
http://www.mikailum.com

What if people are just fed up with the overkill of publicity, by any kind of media? What if it doesn't matter anymore WHO or WHERE publicity done, because at the end all publicity says the same: BUY BUY BUY.
However, I have a proposal to get more income from publicity, not for the publishers though, but for society as a whole! It goes like this: Multiply TAX on PUBLICITY (2x, 3x,..)
You can find it at:
http://www.thepetitionsite.com/1/multiply-tax-on-publicity-2x-3x
and you are free to sign it!

"Part of the big problem with getting advertisers to pay for Web ads is... " that people just don't want to be bothered by advertisements and to have their privacy invaded, be distracted or interrupted.
Maybe the click through rate is the first time ever really tangible result of how much attention people actually pay to publicity. Most surely they would actually pay more attention if there was less publicity.

The problem has nothing to do with online adds, etc - the print media is dying because they never got the message -- Their value is to meet what customers/clients/consumers want -- which is to get the information almost in real time - and strive, have 100% of their employees buying it; for example I had a subscription with The Wall Street Journal print edition- last year out of 52 weeks - every week I only received 3 to 4 issues out of 6; when I call their 800 number (made at least 15 atempts to fix this problem); their excuse was the delivery issues (missing issues, not enough printed issues, bad weather, etc) had nothing to do with the customer service department - it had everything to do with the printing department. Like the printing and customer service departments were part of different companies.

This Saturday July 11 2009 - I received my new year 1st issue -- well apparently my subscription began back on Jun/19/09.

This is precisely the reason the print media is dying, nothing to do with the internet ads -- guess what I do when I do not receive my "daily" issue - I go online and read the information I need. Hopefully they finally get it - their revenues are shrinking because of bad service,

The problem has nothing to do with online adds, etc - the print media is dying because they never got the message -- Their value is to meet what customers/clients/consumers want -- which is to get the information almost in real time - and strive, have 100% of their employees buying it; for example I had a subscription with The Wall Street Journal print edition- last year out of 52 weeks - every week I only received 3 to 4 issues out of 6; when I call their 800 number (made at least 15 atempts to fix this problem); their excuse was the delivery issues (missing issues, not enough printed issues, bad weather, etc) had nothing to do with the customer service department - it had everything to do with the printing department. Like the printing and customer service departments were part of different companies.

This Saturday July 11 2009 - I received my new year 1st issue -- well apparently my subscription began back on Jun/19/09.

This is precisely the reason the print media is dying, nothing to do with the internet ads -- guess what I do when I do not receive my "daily" issue - I go online and read the information I need. Hopefully they finally get it - their revenues are shrinking because of bad service,

The problem has nothing to do with online adds, etc - the print media is dying because they never got the message -- Their value is to meet what customers/clients/consumers want -- which is to get the information almost in real time - and strive, have 100% of their employees buying it; for example I had a subscription with The Wall Street Journal print edition- last year out of 52 weeks - every week I only received 3 to 4 issues out of 6; when I call their 800 number (made at least 15 atempts to fix this problem); their excuse was the delivery issues (missing issues, not enough printed issues, bad weather, etc) had nothing to do with the customer service department - it had everything to do with the printing department. Like the printing and customer service departments were part of different companies.

This Saturday July 11 2009 - I received my new year 1st issue -- well apparently my subscription began back on Jun/19/09.

This is precisely the reason the print media is dying, nothing to do with the internet ads -- guess what I do when I do not receive my "daily" issue - I go online and read the information I need. Hopefully they finally get it - their revenues are shrinking because of bad service,

The problem has nothing to do with online adds, etc - the print media is dying because they never got the message -- Their value is to meet what customers/clients/consumers want -- which is to get the information almost in real time - and strive, have 100% of their employees buying it; for example I had a subscription with The Wall Street Journal print edition- last year out of 52 weeks - every week I only received 3 to 4 issues out of 6; when I call their 800 number (made at least 15 atempts to fix this problem); their excuse was the delivery issues (missing issues, not enough printed issues, bad weather, etc) had nothing to do with the customer service department - it had everything to do with the printing department. Like the printing and customer service departments were part of different companies.

This Saturday July 11 2009 - I received my new year 1st issue -- well apparently my subscription began back on Jun/19/09.

This is precisely the reason the print media is dying, nothing to do with the internet ads -- guess what I do when I do not receive my "daily" issue - I go online and read the information I need. Hopefully they finally get it - their revenues are shrinking because of bad service,

The problem has nothing to do with online adds, etc - the print media is dying because they never got the message -- Their value is to meet what customers/clients/consumers want -- which is to get the information almost in real time - and strive, have 100% of their employees buying it; for example I had a subscription with The Wall Street Journal print edition- last year out of 52 weeks - every week I only received 3 to 4 issues out of 6; when I call their 800 number (made at least 15 atempts to fix this problem); their excuse was the delivery issues (missing issues, not enough printed issues, bad weather, etc) had nothing to do with the customer service department - it had everything to do with the printing department. Like the printing and customer service departments were part of different companies.

This Saturday July 11 2009 - I received my new year 1st issue -- well apparently my subscription began back on Jun/19/09.

This is precisely the reason the print media is dying, nothing to do with the internet ads -- guess what I do when I do not receive my "daily" issue - I go online and read the information I need. Hopefully they finally get it - their revenues are shrinking because of bad service,

People who are sophisticated with social media may seemingly want a richer experience but before one starts dreaming about how to make money here, one should put some mind marbles on maybe educating from the fact that interactive and richer ad media is something that has a user learning curve attached to it, which can involve significant lifestyle involvement. What I do still see is principally industry people conversing with industry people, but who is inspiring the conversation with rich media communities or even prosumers? I had to do a few searches to visually get what Spongecell is trying to do and then I saw how their approach could transform into a worthy conversation and how that would serve to produce a richer set of metrics that includes online app utilization and even meatspace interaction. When I saw that Spongecell braintrust is employing some fine Carnegie Mellon science graduates who are consequently creating this richer form of media and other numerati inspired stuff, then IMHO it may be a bit redundant to ask why print media is failing or if advertising quality is the issue, for then the issue as I see it is goes back to social consumer education, a form of education that should totally redefine the end-user conversation, That goes back to the old saw of "What's in it for me?". The "Me" here isn't social media experts or ad industry insiders, but it's the me as in the social "ME"dia community who with each passing year should through experiential marketing become incrementally more sophisticated as media consumers - for if I "get it" then the media industry will get it also, which becomes a virtuous cycle of attention and not a vicious cycle of media as well as brand proliferation. The concept of the long-tail and its resulting math is something akin to fast food to me - because who are the educational leaders here that changes end-user interactions of what should be ever increasing sophisticated online consumers? Making prettier and tastier online ads would not be a great USP personally for me, when the holy grail seems to be a consumer centric approach (if not smarter interaction), but of course if it is only about clicks, then its still about counting the sheep, which for me is no game changer, but in the immortal words of The Who . . . "Meet the New Boss, Same as the Old Boss". . . M.

Who waits for print news when you can pop open your laptop. Even news via radio is delivered faster for today's news on demand culture.
Jacksonville Waterfront Homes

Agreed, it could very well be the adds to blame they can not be avoided especially online, people should stick to basic online printing again.