Internet advertising will be relatively unscathed in the economic downturn | Hacker News Reader

Internet advertising will be relatively unscathed in the economic downturn

economist.com

25 pointsmakimaki8 comments

This is quite interesting.

On one hand, this article really gets it: 'above the line spending vs below the line spending; objective cost-of-sale vs speculative cost of branding.' From an investors' perspective, this will give you the picture. I agree with the conclusions. I think that online advertising largely because of google/adwords/google analytics, their competitors & the complex of supporting technologies & services, mean that the base chunk of online ad spending is much more robust then the average.

But on the other hand, the article seems to be written in the context & jargon of the advertising world that doesn't get it "awareness, consideration, preference and loyalty" is part of the consumer behaviour concepts behind traditional advertising selling 'ordinary products for ordinary people'- washing powder, toilet paper & cars. It's really squeezed in here. Then they mention hulu. That's dumb (IMO). Hulu is part of analog tv advertising. It replicates the analogue environment enough to be able to take their customers with them. I have no beef with this, but there is nothing the about.com, facebook or even (i think) youtube can really learn from them.

The second thing is that the undertone seems to assume that big traditional advertisers are the driving force behind everything. They were in tv-land where there is only room for a few dozen advertisers that needed to reach everyone & above all wanted to become 'your brand.' That has nothing to do with online advertising. The revolution is that advertising is now in chunks of whatever size you want. You can advertise a local auto repair shop on a $1000 a year budget with approximately the same ROI as a as a big name nationwide chain. That's the revolution. I'm sure coca-colas & Fords will eventually take a big piece of this, their big companies. But it's not their pie.

I disagree - I think the Economist is right about Hulu, Hulu generated advertising money not becuase it's like analog tv, but rather because advertisers want to associate their product with high-quality and appropriate content.

There's lot of brands which only advertise on large reputable sites (newspapers, etc.) rather than on banner networks for precisely that reason.

For a lot of companies their brands are one of their most valuble assets and they don't want to risk them appearing alongside illegal/questionable/poor-quality content.

No sane brand manager would touch something like youtube or justin.tv, the suicide on justin.tv was horrific enough, imagine the reaction if it had been overlayed with "Nike: Just do it". A few seconds of bad footage could wipe billions off the value of a brand.

Do people really associate a brands reputation with the content of the site on which they may be advertising? Internet cynicism aside, I honestly don't think most people do because they understand how banner networks and keyword advertising work.

Example: On reddit there was an article about a boy who ordered McDonald's and ate it at the scene of the fatal accident he had caused. Later it was reported he had fled police custody and on the news site that reported this, a McDonald's commercial was featured prominently.

http://i34.tinypic.com/20ifms7.jpg

While seemingly inappropriate (and funny), it in no way reflects on the McDonald's brand.

Even if the case was Justin.tv and Nike:Just do it, I think that most people are sensible enough to see that it's just a case of coincidence.

Anyone who gets seriously offended or angry in these cases is most likely trolling for attention or is completely clueless as to how advertising works on the internet.

"wipe billions off the value of a brand"... really? come on!

"Do people really associate a brands reputation with the content of the site on which they may be advertising?"

Probably. There's overwhelming evidence (in general; not web specific - but I'm not aware of any research which shows it doesn't apply online) which shows advertising context is critical in market positioning.

Have a look at the Tesco-Levi lawsuit from a few years ago, Levi a premium jeans company sued Tesco a supermarket to prevent it selling Levi jeans, because putting premium jeans alongside vegtables damaged the exclusivity of the Levi brand.

While I appreciate the example is from a different context, I believe there's no reason that the same principle don't apply online.

Another way of looking at it - think about the following scenario: Say a consumer was looking at a porn site and it contained an advert for a dating service (called A), and later on the consumer looked at their church's website and it also had an advert for a dating service (called B). If you questioned the consumer about which dating service was more "wholesome" I'm willing to bet the consumer would pick B over A the vast majority of the time.

That's a pretty extreme case and wonderfully framed to back up your assertion, but even it is kinda wrong IMHO.

Dating sites in particular tend to promote the values their clients hold. If it's a dating site where "wholesome" is the clients primary value then advertising on a porn website would be detrimental, however a company like adultfriendfinder benefits greatly from advertising on porn websites.

What I assumed we were talking about was actual big brands like McDonald's or Nike. They, unlike dating sites, tend not to be as dependent on their customers moral values and so context isn't as important.

If you want a big company example look at what Burger King did to McDonalds in the late-70s/early-80s, BK decided to position themself in the adult burger market and move away from the childrens market. BK stopped running adverts during childrens tv.

McD's own adverts carried on running in between kids shows, the context of the ads (in contrast to those of BK) caused McD to seem like a childen's brand. This allowed BK to steal a massive chunk of McD's market share.

McD's own advert harmed the McD brand purely because of context.

While there were clearly other factors at play here, the context in which those adverts ran was a major contributing factor. You could see how the same could apply today with regards to adverts appearing on children's websites, etc.

That's true of traditional TV advertising, though I was under the apparently mistaken idea that internet advertising was what we were discussing.

The point I was making was that the 'sane brand manager' is part of the traditional media advertising that drives TV ads & the rest of the modern advertising complex. That sort of advertising is highly speculative game with winner take most outcomes. This is the game that created the 'household brands,' the purpose of this kind of brand management. We have clear successes in this field. Coca Cola, is essentially a brand: production, distribution etc. these are all details. They are 90% brand. Like Viagra is 90% patent.

The new online advertising Google's spearheaded. The kind that is resilient to economic droughts is not really a part of this. In some ways it is more similar to yellow pages, in some it is more similar to sales departments or direct marketing providers (eg telemarketers). There are all sorts of things that change in this sort of game.

2 of the most significant differences between the online advertising environment that adwords is a part of are: (1) It's has many small participants (rather then dominated by mega brands), (2)It is analytics driven (rather than 'theory driven.)'

Large 'brand' campaign needs to pass board rooms, advertising executives & consultants that theorise about the long term brand associations associations that will be drawn with brand a by using a girl or a boy in the next ad. They may be going on instinct or consumer behaviour research. It doesn't really matter.

Many small online campaigns are driven by 'how many phone calls will I get tomorrow.' That can be crude or scientific too. But it's fundamentally different. Hulu is a part of the former context They compete for ad dollars that would have been spent on billboards, tv ads & radio otherwise. Adwords does not. Or at least it does less.

For this reason, I say that Hulu is not part of the same thing. It has TV's clients, not Adwords'. It will be part of the same campaigns, follow the same textbooks, be recommended by the same consultants & used by the same companies as TV. It is an extension of the TV ad complex. Not an extension of the adwords one.

The fact that it is online is incidental.

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