Web Companies Scrambling for Holy Grail of Ads
BY Erik Sherman
Internet companies are chasing new ad strategies, even as their economic effectiveness is called into question.
It's like we hit the Silicon Valley's Run for the Roses, only instead of horses, there is a line of social networking and media companies, and instead of a blanket of roses (and a whole lot of money), the prize is advertising sales (and even more money, in theory). Such companies as Facebook and Twitter are heavily on the hunt.
That's got to mean it's a sound revenue stream, right? Because the wunderkind are out in front. Maybe not. Although there's a lot going on, there are also massive red flags that suggest using advertising as your main business model may not be the road to long-term sustainability.
Some sites are packing more ads per page than you might get sardines in a tin, all to boost revenue, even though realistically most ads won't get any attention.
What all these companies and approaches have in common is desperation. Facebook is desperate to grow quickly enough to justify its stock price and investor expectations. Twitter needs enough growth to justify all the investment it's received. Details, Mental Floss, and Mashable are, well, just desperate. Any time you start breaking up the furniture to burn and keep warm, things aren't looking cheery.
What breeds desperation? Fear. And that comes from the powerful forces like the following:
Ad-blocking software vendor AdBlock is raising tens of thousands of dollars on Kickstarter to advertise its wares. If it can raise enough, this would become a Times Square billboard, a New York Times full-page ad, or--and this would take millions--a Super Bowl ad. One of their approaches to revenue is to charge companies to allow some ads through. Sound like a shakedown? Google is reportedly paying to play.
Some studies suggest that huge portions of ad traffic are fake, which means companies are wasting money. If as much as 46 percent of Web and 35 percent of mobile ad impressions are fake, someone will want to rein in spending.
In other words, the future of ads on the Internet is shaky. Although users seem disinclined to pay for pretty much anything online, ads have been a fallback. But they may no longer be, and it's time to investigate alternatives (such as they are).