Summary
The ad market has been brutal - the decline has been steady and hit 15.1% in Q1 according to Bernstein Research Ad Tracker. No sector grew including online which was a first. And while many, including ZenithOptimedia, still predict growth in online ad spend this year, even they have cut their projection in half to 4.5%. However, there are strategies for companies to make money in online advertising. It is key for online marketers to monetize their business - now more than ever.
Analysis
With the economy having been brutally hit and ad spend down 15% or more, it is a critical time for business leaders to re-evaluate their priorities.
As the article points out, many believe that the ad market is beginning to stabilize. If so, this would be welcome news but does not address the losses many have suffered in the first two quarters this year. The follow up comments to the article are perhaps the more interesting. 3 ways to now make money in advertising: 1) grow share, 2) increase ads on a page boosting numbers, and 3) expand reach to expand your piece of the pie. I would add a fourth and that would be disruptive innovation. Perhaps it will be what will help online marketers expand reach but it is a unique approach requiring its own discussion.
4 Ways to grow online and in online advertising
To grow share one must target high potential customers and generally set goals to grow revenue and margins or share of wallet with those customers. Then it is key to market and pursue those customers in a thoughtful and meaningful way. Often it is said that one must target growth accounts in a big way for big rewards, and that sufficient time may be needed to succeed.
The idea of throwing up more ads to boost numbers is a bit like target shooting with a shotgun. You are hoping you will grab more of the people you have window shopping. This can work but it is a somewhat of a short term solution that must be refreshed or re-turned to hold the attention of your visitors and can be hard to maintain as a primary growth strategy.
Expand reach to grow your piece of the pie is an interesting approach. There are a number of ways to accomplish this including partnering, targeting new verticals, expanding to new geographic markets - online this may be by marketing in new languages to local markets and backing it up with support.
Being a disruptive innovator was defined by a Harvard Business School professor, Clay Christensen in several books including The Innovator’s Dilemma and The Innovator’s Solution. It means that as a product or service improves over time eventually overshooting the needs of most customers, a disruptive innovator will enter the market with a cheaper usually less sophisticated, simple and responsive product. This product is underestimated by those original market leaders. At some point the lesser solutions become good enough or even better for the majority of customers. This is the disruption of the old where customers flock to the new solution.
We could be nearing the time when online display advertising is becoming the disruptive innovation that overtakes print. One might argue that search engine technology has been the real advertising disruption - think Google text ads. Anyone can create a Google Adwords ad even though not everyone can create a good Google Adwords ad.
Other forms of innovation in online advertising - areas to watch out for include: pop-ups, inline text ads which are gaining in popularity, and interstitial ads. There are mixed emotion by users about these forms of advertising but there always are. The key is where they work and which areas are growing the fastest.
The latest wave of disruptive innovation has been in social media. However, I am not convinced this is true innovation from a business perspective - yet. The reason is that as interesting as I find social media, it is tough to monetize the model. And for a business to be a business, there really must be a viable business model. In the case of Twitter, Facebook, social news distributors, bookmark services, user-driven content sites... these are conversations of sorts that may or may not build brand. Some are doing more to build brand than others and some actually involve the business more than others. In fact, in some cases, the company is quite passive and really only responds to its users when and if appropriate. That in and of itself is fine and could just be a new model for online advertising if the opportunity for an advertising model can be found. But it really must be found.
In the end, each new wave of advertising does not make the previous one obsolete. Nor should one path be chosen over another. In these difficult times, it is critical to select a multi-pronged approach that will speak to your target group that promises the greatest opportunity for growth. Even if the market overall is not growing, as the article (or comments to it!) point out, there is an opportunity to grow share, boost your numbers, and expand your reach. I would also look at innovating.
