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Is There A Backlash Brewing Against Online Advertising?

Posted by: Bruce Nussbaum on August 2, 2007

Online ad growth is slowing to about 19% for 2007, down sharply from the 30% plus of the last three years, according to eMarketer. Why? I mean, WHY?

This is a huge decline in the growth rate of online advertising and saying that it is still in double-digits is not mollifying. When the delta of this magnitude changes in a trend, you have to dig into the reasons. And I haven’t seen much beyond “oh, it’s temporary, it will rebound,” or “it’s still really high,” or “it doesn’t matter, it’s all going that way.”

eMarketer says the growth rate will rebound to 22.1% in 2008 thanks to the Olympics but that’s not much of a rebound and it extends the declining trend to another year. And remember, all of online advertising still comes to less than 6% of total advertising—about $16 billion. The growth rate is off a very tiny base. Slowing down that rate means the shift to online will take longer.

So, again, what’s going on? The quickest explanation is that all advertising is slowing—for print (that is for sure), tv, and online. Cars and tech appear to be slowing their ads. Anything connected to housing must be slowing thanks to the subprime crisis. That may also hurt financial advertising to a degree.

But a 10 percentage point drop in growth is very sharp and may suggest deeper factors at work. Are companies tiring of ad agency blah blah about social networking being the only place to be? Are they questioning the metrics touted by online agencies as not much better than the metrics touted by print and TV? Are companies finding their ads lost in the overwhelming flood of online information. Are they seeing customers getting actively angry at their ads being thrown in their face online? Is search played out as a space for advertising?

In short, is there a backlash beginning against online advertising that we are seeing in the sharp drop in online ad growth? Dismissing the eMarketer data as simply a short-term blip that can be ignored is probably a serious mistake. We need serious answers to the backlash question.

Reader Comments

Brandon W

August 2, 2007 5:03 PM

I believe advertising is dead, whether it be offline or online. People are utterly inundated with information of all sorts and humans haven't the mental capacity to either handle it or filter the torrent. Using differentiation is useless; the odd shaped raindrop won't be noticed in a downpour. I think the future for marketing is nicely laid out in Malcolm Gladwell's book, "The Tipping Point".

Scott Shamberg

August 2, 2007 9:01 PM

While we should not dismiss the eMarketer number, I don't see a backlash brewing.

Social media and community are channels that are here to stay. While brands and agencies know that, they are still figuring out the best way to monetize those channels. They have to create experiences, not ads and they have to listen instead of just talking. Why? Because consumers consume media when, where and how they want it. They set the rules. This means a different approach to planning digital media today than previous new tactics like email, banners or search that were fairly straight forward.

The odd shaped rain drop may not get noticed in a downpour, but it would if it stopped mid-fall amongst the other rain drops and asked me what I thought about its odd shape.

Pete Mortensen

August 2, 2007 9:35 PM

I basically agree with Brandon. While the Internet is perfectly tailored to the dissemination of viral videos and other such campaigns, these can be done without paying anyone to host the content. And in that world, ads become lower and lower value as companies pour money into alternative-reality games and the next "Tea Partay" (a great Diageo ad campaign that they have never paid to have broadcasted or narrowcasted).

Why would you pay to put your clever ad on a popular web page and have it ignored as an ad when you can put it on YouTube, get Boing Boing to link it and then enjoy all the benefits with none of the costs? It's a no-brainer.

rachael taggart

August 11, 2007 2:29 AM

Pne of my companies has been selling online banners in the niche Computer Aided Design market for the last 16 months. While optimism was still high in early 2006, since then major advertisers have started asking for 'beyond banners' in their advertising - what we call 'specials' - promises of editorial linked to the ads. Interstitial banners between pages or when people enter the site, and then we are asked for other 'unique ideas' we may have to help them promote online.

First we resisted a lot - these were pretty big agencies asking us to give them ideas for their campaigns which we didn't think was appropriate. Secondly, where readership has to be protected we didn't want to piss-off the readers with yet more intrusive banners to click over and avoid.
we tried to find ways that were innovative but which did not upset the readers who are the currency of the sites.

There is another mistake being made even by the big ad agencies:- we also see a lot of banners in our market that fail to address the audience and this may be the biggest problem: in a niche market readers don't mind seeing banners that relate to them, and detest banners that do not. Take, for example, a beautiful flash ad by a major software vendor that is on a mechanical engineering site. When you view the ad, it features a financial firm...WTf does that have to do with engineers? they don't care about a financial firm's business drivers!

All-in-all, this results in fatigue from the readers, and an out-and-out avoidance of ads by them. The advertisers need to treat the readers with respect and understand that there can be such a thing as too much advertising. Conversely, a well-placed, well-targeted ad can still have an effect.



March 21, 2008 7:43 PM

When I see a pop up, an ad in front of a news video, I hit the "X" button and make a note of the advertiser. The same is true for even ligitimate email campaigns (as opposed to viagra, porn and other spam). Then I expressly refuse to buy products from those advertisers.

The same is true on TV where the same ads run ad nauseum over and over. Bottom line message to ad men: If you want my business, stop irritating me.

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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