Online advertising: what lies ahead?

[Sam Barona]

I have been noticing how many people have based their first ventures based on online ad-sense revenue models.

Advertising delivery platforms have a certain shelf life before they become common place and their effectiveness decreases, so while many are experiencing rich pickings now, what will happen to those whose sole income depends on ad-sense revenue?

I would like to pose this question: if/or when advertisers choose to no longer pay for your adsense fees, Where will advertiser dollars go next?

[sicnarftea]

thats a tough one, as one of the richest online companies are based on advertising revenue. with out it, there is pretty much no point having such high traffic websites.

Its like saying, "what if store owners stop paying rent", i don't really see it happening. I'm sure there will be new methods of advertising in the near future though, maybe the next big thing would be audio advertising for podcasts, and video advertising for video streams?

[Aletheides]

I have been noticing how many people have based their first ventures based on online ad-revenue models.

Just like magazines, newspapers, and tv shows...

Advertising technologies have a certain shelf life before they become common place and their effectiveness decreases, so while many are experiencing rich pickings now, what will happen to those whose sole income depends on ad revenue?

Advertising will have shelf life when people stop buying.

I would like to pose this question: what will be the next biggest revenue stream for your business if/or when advertisers choose to no longer pay for your ads?

When would advertisers stop marketing?? Marketing is the lifeblood for any business, to stop advertising would be suicide.

[MarcL]

advertising will never stop its how everyone gets there sites out... Without it no one would know about each others websites...

[Sam Barona]

Sicnarftea, If you are referring to Google, then you can rest asure that it will take a very long while before their core business changes from their current search engine based model.

I am refering more to smaller, much smaller businesses that base their whole futures on an advertisement delivery platform with a limited shelf life. Advertising dollars go where ever their audiences are focusing their attentions. At this point in time that is bloggs and content sites in the online medium. Once these people stop responding to adverts in blogs and ad-sense type adverts (just like they have with direct mail, leaflets, banners, etc.), advertisers will be looking to put their dollars to work else where. If this is offline, then that will be where the dollars will be spent.

Finding the parallels between property rentals and advertising (there aren't may by the way), yoy are way off the mark in saying that store owners wouldn't stop paying rent if, say, they were based in a town centre, but all of their business was going to out-of-town malls. THis is happening right now, whether you see it or not.

Yes, I do believe that there will be new methods to reach Mr and Mrs blogs with commercial communications, but what if these nascent delivery platforms come with much higher entry levels, making it virtually impossible for the small town center shop (to carry on with your store owner analogy) to acquire space in the outdoor mall.

My aim is to start here a debate as to what is likely to come around the corner, so that the members of this forum can benefit from this knowledge, I don't have any advertising revenue businesses, but as a marketer, I am intrigued.

Sam

[Sam Barona]

Aletheides, I agree; just like magazines and newspapers. Perhaps with the exception of TV, as thus far, its always been a highly monopolised industry, so it has been able to offer a medium that reaches like no other medium has reached (until the internet started eroding TV ad revenues).

When was the last time that you heard of an independent magazine, or newspaper making it big wihout massive investment??

Advertising mediums have a shelf life in as much as demand is concerned. If demand is high, and entry levels are low, like with blogging and content sites, then everyone is a winner. But thinking that this is a sustainable business model is less than naive, its stupid.

Those who think that they have sustainable business model by having a group of blogs or content sites based on revenue from Ad-sense and the like are not real business people. Yes, it might be a good short-term money maker to some, but what will they do when people just dont click enough to make it worthwhile for them. nor the advertisers?

This is not about advertising in general, but about business models based on content sites with sole revenue streams from ad-sense and the like.

Sam

[Sam Barona]

advertising will never stop its how everyone gets there sites out... Without it no one would know about each others websites...

MarcL, Advertising will never stop, this is obvious; but websites don't need to advertise, as such, online to get their websites visited.

In fact, most of the larger companies base their marketing strategies on TV, print and radio media (above the line) to get traffic to their sites, with most online marketing spend going on email, SEO, SEM and select affiliates.

But where will the marketing dollars go next?

[akula]

I would like to pose this question: if/or when advertisers choose to no longer pay for your adsense fees, Where will advertiser dollars go next?

great question

I don't know the answer, but I'll take up the offer and try to speculate

the problem: with adsense, the reason why I stopped advertising on network sites (following heaps of other guys), is because I was getting lower conversion rates on network ads as compared to SERP ads

so, if the ad dollars are gonna go any where, it's towards a solution with better conversion rates than adsense network ads. This may be a new format altogether (i.e. image ads, video, audio) or simply, advertisers are gonna do what i did and pump more money into SERP ads

the solution: ultimately, human powers of deduction are patheric, so if we're gonna get a decent answer to your question, we should analyse what advertising startups are getting funded - as a proxy for a prediction market.

Do you think the collective decisions of NVCA members are a good proxy to answer "Where will advertiser dollars go next?"

[ronsharon]

All the articals I raed about online marketing say two things about adsense number one: don’t expect to get any sales from it two: you got to use it….
I am using adsense right now and exept burning my profits it dose not do anythig

[Sam Barona]

Finally, it took Akula to get it. I think that if we can get an indication as to what advertising-based innovations are being funded through NVCA members, it would partly answer the question.

THe aim of my question is really to get those who are involved in this type of business (which I am not by the way) to start thinking strategically, which is a vital skill in entrepreneurship.

As the responses from the poll suggest, thus far, there are far too many people who just don't get the big picture, nor are capable of understanding how technologies, including advertising platforms, actually have a life cycle, and thus, a limited shelf life (in terms of being a viable model to base a business on).

I was hoping for more inspired debate, since it really is a lowest common denominator type question. I was hoping for fresh ideas that would show that this forum actually has bright people in it. Thus far, I am dissapointed with the self-denial and defensive mind frames of most of those responding.

I'm still interested in finding out where the smart money is going Akula and posting such findings will hopefully help to guide those with an iota of business sense to where they should be looking to make their next move.

I never knew that there were so many sheep in wolves' clothing. People need to really start taking a long term view at things, realise that the gravy train that they are currently riding will arrive at its destination at some point in the future, and unless they have a connecting train ready, then they will have to go into the sheep compartment, or worst still; be left at the station.


Here's hoping

Sam

[The Stealthy One]

I do agree with you that the effectiveness of AdSense is waning. As for what will replace it, I think we'll see a lot more along the lines of advertisers actually integrating their brands/products into a Website - so instead of there being an explicit ad, the brand will become part of the user experience.

[Sam Barona]

This is something that we were doing (when I was in the consultancy business) for large brands. It started with clients of ours in the Pharma industry, who could not advertise directly to consumers (due to laws preventing direct to consumer advertising for non OTC drugs).

The strategies that we recommended included the creation of branded communities, forums and the like that allowed our clients to put their brand accross to their audience, as well as place in certain "under the table" recomendations for their prodcuts. I have been away from the industry for a few years now, but my understanding is that IP TV is going to make it huge is the next few years, as well as we will start seeing more and more video emails in our inboxes as more people adopt broadband.

The question then becomes how will entrepreneurs, or more to the point, online entrepreneurs capitalise on this developments? Who will start positioning themselves with an outstanding offering and what will this type of offering look like?

I would like to see soem fresh ideas on this thread and hope that those active here will help develop these ideas and perhaps take part in them as they develop.

Sam

[akula]

Finally, it took Akula to get it. I think that if we can get an indication as to what advertising-based innovations are being funded through NVCA members, it would partly answer the question.

Deal 1:

Jellyfish.com, a Madison, Wis.-based comparison shopping search engine, has raised $5 million in VC funding from Kegonsa Capital Partners and Clyde Street Investments

Most Important:

http://www.jellyfish.com/ourVision

....we want to change your relationship with advertising; making it something that always works directly for your benefit instead of wasting money interrupting and annoying you

and then goes on to predict several large changes in where the ad dollars are gonna go

e.g. A Major Shift in Online Search Advertising: From Pay Per Click to Value Per Action

eerrr....i'm not sure that i'm gonna systematically raid the databases for this thing

[akula]

Deal 2:

Liquid Air Lab

Liquid Air Lab GmbH, a Germany-based developer of "spodradio" mobile radio and podcasting solutions, has raised $10 million in Series B funding. Benchmark Capital Europe led the deal.

Deal 3:

mVisible Technologies

mVisible Technologies Inc., a Deerfield Beach, Fla.-based, developer of mobile content delivery solutions, has raised $3 million in Series A funding led by World Angels Inc.


Deal 4:

MobiTV Raises $30m

MobiTV Inc., an Emeryville, Calif.-based provider of mobile and broadband television and music services, has raised $30 million in additional Series C funding. The total round now comes in at $100 mil

errr..i'm gonna stop now...

[mjohns]

Just like magazines, newspapers, and tv shows...

Yes as you may know im creating a Magazine at the moment and my business plan states that the majority of money will be coming from advertising revinue!