Chris Dixon

To be sure the web economy is much more concentrated than even the “agencies” and while overall amount of dollars will increase so will the concentration of people or companies who can scale the solutions.

So bottom line – it will suck eve more for most. The is no trickle down economy on the web, only trickle up.

Or perhaps a significant amount of those dollars will go to content marketing rather than display advertising (this is a 3rd category – not direct mail either… perhaps closer to an 'infomercial' model, but usually not such direct sales pitch.) It's the actual creation of content that is interesting and/or entertaining to the reader, and beneficial, though perhaps indirectly, to the advertiser. We're already starting to see such content marketing grow rapidly.

Certainly there is no shortage of journalists available to assist with such efforts.

All the display ad networks are focused on optimizing standard banner ads, but as an advertiser, I'm looking for something entirely new that makes better use of some unique aspects of the web. Display ad technology hasn't evolved much beyond standard IAB ad units targeted to some basic demographic bucket… which has been around since the 90's and is modeled too much on the offline world. Online brand advertising should be more social, viral, personalized, or something than it's offline equivalent. Google, or rather Overture, took offline direct marketing principles and applied them to the web in an entirely new way that was far more efficient through simple text creative, search keyword targeting, a bidded marketplace, and other innovations. The brand side of the industry needs an equally innovative approach. Seems like social networks are best positioned to make the leap.

Advertisers are still operating in hunt and shout mode. They hunt consumers down using targeting information they haven't gained permission to use, and then shout at them to try to cut through the noise. Hopefully the next phase of brand advertising is more about connecting with consumers with their permission (opt-in) and having enough knowledge about the consumer's interests to be able to deliver a message that they're interested in, in an environment where it will be heard. Once they have a connection with the consumer (i.e. some form of relationship) they can work on getting the messaging right – new formats, content marketing, and maybe personalised content.

To quote Rob Norman's take on the current situation – “consumers are wasting time on the uninteresting and advertisers are wasting money on the uninterested”.

Unfortunately, it won't work quite this way as technology adoption is massively deflationary to current markets. If absolutely all the remaining 90% of offline ads came online, it would triple current online spend — at most. If another 40% comes online as you suggest, we'll all be very lucky if the current online spend doubles.

http://rafer.tumblr.com/post/90175534/only-5-of…

Hey chris: great post. Feel this drawing me out of my cave to respond…

So far as I can tell, advertisers love the web for brand advertising, the same way cola companies love a generic sweetner to NutraSweet, or Americans love Canadian drugs. For major advertisers, or their agencies, the web is seen as an alternative to tv (and other “traditional” media) today, but one that primarily presents pricing pressure for reaching targeted audiences. They're all happy it's there, but not always looking for a piece of that online audience goodness.

As for your suggestion, “economic logic suggests these problems will be figured out,” I'd argue: they have been. Traditional brand spend (tv ads) is more efficient today offline on a property and reach comparison. If you'd like I can produce data (albeit imperfect) to show this.

For online to become a more realistic (and economically viable solution) for national brand advertisers, we're going to have to address measurability and attribution effects of online ads. Or find an alternative to selling ads per discrete property.

The clearest solution proposed to date is viewthrough metrics and a standard for tracking need to exist. ComScore and Microsoft have been working hard for the last two years to convey that clickthrough is NOT the end-all-be-all measurement standard for web ad effectiveness. That's obviously vested interests laid bare — ComScore measures impressions and Microsoft is fending off Google — but I tend to think they're close to accurate. Here's some of the rhetoric http://ow.ly/Qh4a

But you're touching something much bigger. Enabling a brand advertiser across the web — that's clearly unsolved, and exciting because it's the promise of advertising with context, with relevant (personal, meaningful) targeting to people based on their own searches, interests or selections. It's built across properties and over time. It's where no one owns the audience, and where possession matters more than ownership. It's has the potential to be closer to a real relationship, and a lot less like “advertising.”

So if economic logic is what will govern decisions by advertisers and agencies, this suggests that advertisers will seek the least expensive options for achieving their objectives at all times. And for brand advertising, the largest unsolved problem is how to advertise off-property, across property, or sans-property. The closest thing to this is AdSense today, and it is still far from a perfected system or model for brands. The issue goes beyond “safety” — it gets to the heart of what brands are looking for… impact, engagement, relevance.

Your fourth point on inhibitors to brand advertising dollars on the web: big brand advertisers seem scared of user-generated content, today’s major source of ad inventory growth.

Reminds me of stories before the NASCAR boom about AT&T and others. They said no to sponsorship, afraid of their logos being transformed into heaps of flaming car wreckage.

While I'll never be a fan of the sport, big brands love NASCAR today. It's one of the boldest expressions of identity that money can buy, and for much of the decade has been one of the fastest growing “sports” in America. Times change, fears subside, and like you say, advertisers will go where the consumers are.