Monday, September 27 2010 @ 12:03 AM CDT
Contributed by: Andy Updegrove
Have you discovered The Alexandria Project?
Page through a major newspaper (remember newspapers?) today like the New York Times, and you’re likely to run into two enormous ads, one by Google (almost two full pages) and one by AOL (a full two pages). Leaving aside the irony of Google advertising in a form of media that it has almost competed out of existence, there’s something potentially transformative going on here that’s worth exploring.
What both companies are pushing is display advertising. Google, because it wants to lessen its dependence on the increasingly competitive search ad business, and AOL because AOL has been in serious trouble since, well, forever. It’s probably also a clever effort on AOL’s part to ride the coat tails of Google’s big investment advertising – which also includes an enormous electronic touch screen display in Times Square in New York.
There is some substance to the effort in that what each company is pushing is higher quality, more interesting, more diverse display ads. The Google spread in the Times touts incorporating all of the following into display ads: augmented reality, 3D gaming, chat, interactive video, live streaming and more. The AOL ad spread focuses instead on a cleaner, less cluttered overall page view, with fewer, larger, less intrusive, and more interesting display ads.
So why would I call these campaigns potentially transformative?
Let’s start by checking where we are today, and how we got here. To date, Google’s Web based advertising has brought about only the destructive part of a classic creative/destructive transformative process. Advertising, like anything else, is priced on a supply and demand basis. When Google brought text ads to the Web, the supply of ad venues exploded by many orders of magnitude. With a virtually infinite supply of billboards, if you will, the per-impression cost for advertisers predictably fell through the floor, devaluing what traditional media could charge for print and video placements as well.
When Google developed increasingly sophisticated methods to target individual Web users, traditional media lost again, because now advertisers could target individual customers on line more precisely than they could by advertising in particular magazines or newspapers. And, since the cost of on-line advertising continued to drop, traditional media couldn’t recoup their losses by launching Web sites and selling advertising there.
Which brings us to the present. And now Google is suffering from its own success. There are only so many advertising dollars to go around, so Google’s growth is inherently limited to its share of that pool, and at risk to its competitors, like Bing, that may eat into its market position. So where does Google go from here?
Into display ads, of course, because you can charge more for display ads than you can for text ads, and because you can place them at other sites besides Google’s own search portal.
But there’s a more subtle side to this story as well. Google’s lofty stock price is predicated on the expectation that it will continue to grow. To continue to grow, it needs to either open new lines of business…or somehow increase the cost of advertising, so that the global ad spend turns around and rises again.
Now that’s really ironic. After enabling a dramatic drop in the cost for advertisers to achieve desired results, Google now needs to pump the balloon back up in order to satisfy its investors’ voracious appetite for further growth. The best way to do that is to raise the perceived value of the ads it sells, and that’s hard to do with ten words and a link.
This is where the creative part of the cycle has an opportunity to kick in. If the cost of advertising rises, then so does the opportunity for traditional media to survive, albeit perhaps on line rather than in print. And not just traditional media in the business sense, but the journalists, photographers, fact checkers, researchers, editors and others that have been marginalized out of economic existence by bloggers and stock photo sites.
This is not to say that bloggers and new media sites like Politico should disappear. In fact, they should prosper and become more sustainable as well. But (to my mind), we are very close to losing something of great value as the viability of traditional newspapers continues to diminish. A newspaper provides a broader, richer mix of news, as well as a platform that can sustain in-depth, ongoing investigations, particularly at the local level. To date, this role has largely not been taken up by bloggers.
Hopefully, Google’s push, presumably to be followed by Yahoo and others as well as AOL, will succeed in revaluing the advertising market upwards, thereby stabilizing, and hopefully increasing, the economic viability of the traditional news industry.
I certainly hope so. Because it’s almost too late already.