Reprinted from an old column I once had on advertising. This was actually one of a series on Internet advertising and CTRs (Click Through Rates). It’s been modified somewhat to include necessary information from the previous pieces leading up to this, and to make it a bit more understandable to a lay audience.
As the Internet took off, it seemed perfectly feasible for major publications to be hosted online without charging their readers a penny. Since the cost of the actual publication would be drastically reduced, the entire enterprise could subsist on ad revenue alone.
So what happened? Due to a ludicrous misunderstanding, we became convinced that online ads were far less effective than print ads, and so publications were forced to reduce ad rates to a pittance.
One obvious problem was the decision by the early designers to limit ads to the highly-inefficient “banner” size. This limitation, however, was fairly rapidly supplemented with ads that were far closer to the size and shape found in traditional publications.
What really drove down the price of online ads, however, was using the Click Through Rate, or CTR, as a means of measuring performance.
The reasoning (if such it could be called) was that the interactive nature of the Internet would allow consumers to see an ad and immediately click on it, thereby being taken directly to the point of sale. The CTR could be easily measured, and the higher the CTRs, the more effective the ad and therefore the higher the cost of placement.
Since the Internet is often referred to as the “information superhighway,” let’s look at the logic of this from another form of advertising introduced because of a different kind of superhighway.
Following WWII, the face of warfare had changed. Enemy nations on the other side of the world were now capable of launching attacks on North America, and the weapons at their disposal could annihilate entire cities. To meet these new risks, the military wanted a means that would not only allow fast and efficient troop movement across the country, but also allow rapid evacuation of cities under threat. As a result, the National Highway Act was introduced, bringing about 40,000 miles of modern superhighways.
These new superhighways were also a boon for the fast-growing car culture, and North Americans entered into a new age of mobility. But as beneficial as they were for car owners, their speed and width spelled the end for the familiar and intimate, road-side ads like those made famous by Burma Shave.
To adapt, advertisers turned to the billboard.
In other words, the (non-information) superhighway occasioned a brand new advertising medium.
Now imagine if the ad agencies had pitched the idea of the billboard to their clients like this:
“Okay, so you’ve got people already in their cars, and there is always an offramp within a few miles. We can measure the success of each billboard by counting the cars that passed it, and then turned off at the next exit to purchase the advertised product. This is the ‘Car Through Rate’ or CTR, and it would set the cost of the ad. The higher the CTR, the higher the cost.”
Of course, drivers on the superhighways (like those on the information superhighway) are generally going to specific locations, and therefore highly unlikely to stop along the way simply because they saw an ad for Coke — although they may well buy one when they get to their destination. The CTRs would be minimal, and agencies would have been forced to sell billboard space for a pittance. But while the CTRs may not have been impressive, the signs themselves would still have performed the function of advertising — putting images and copy in front of the consumer.
The result would have been highways absolutely littered with billboards. If you think it’s bad now, consider what it would be like if they were one-tenth the cost.
It would look like the Internet.
Had Internet advertising been recognised from the beginning as no more, and certainly no less, effective than ads found in the pages of any other publication, the cost would have better reflected their worth. This, in turn, would have discouraged the explosion of cheap and poorly-conceived ads while attracting high-quality ads created by professional agencies.
There are differences, of course, between online ads and those appearing in physical publications, the most important, perhaps, being the restriction of real estate. But if small publications like TV Guide and Readers Digest could command high rates for their ads, then surely websites with equivalent readerships could have done the same. And as the size of screens increases, the real estate problem becomes far less of a problem
The problem with Internet ads has never been that they don’t command people’s attention — that’s a problem faced by all ads. A well-designed ad placed in front of 50,000 readers of an online magazine has exactly the same power as the same ad placed in front of 50,000 readers of a paper magazine. The problem is, when they didn’t produce unrealistic and completely irrelevant metrics, we began giving the online ads away — and then complained that they weren’t brining in enough money.
- “Free. Free. A Trip. To Mars. For 900. Empty Jars.” (neatorama.com)