Online advertising is the biggest revenue generator in the Internet business. Google struck gold with its contexual advertising model and led to a whole slew of companies to enter this fascinating World of online advertising or in Malcolm Gladwell‘s words, led to an online advertising epedemic. But is this epedemic here to stay (or expand further) or is it reaching a point where people are getting ready to develop immunity to the advertisements alongside the information they are looking for on the Internet?
The online advertising business is revolutionary. But this is not the first time something like this has happened. Every once in a while a new medium of information broadcasting comes along and marketers look for ways to use it by putting a part of the trillion dollar advertising budget on to it. For example with the advent of telephones, marketers jumped on to use tele-marketing as a source of selling products. Same thing happened as fax machines took on the mainstream and when people started using emails to interact with each other. But gradually, people became more adapt to these technologies and developed an immunity to these sales calls. They started to ignore, if not hate, most of the marketing messages on these mediums.
Where does online advertising stand? To analyse this, it is very important to understand the different types or classifications of online advertising. It will be a big mistake to generalize the customer immunity to online advertising as a whole. We can classify online advertisment budget in a couple of broad ways.
First type of classification is based on how the advertisers pay for the advertisements. Based on this, there are two main categories of advertisements – click based advertisement model, where the advertisers pay per click on their text ads, and impression based advertisement model, where the advertisers pay per visual impression of their advertisements on the website. If we look into the immunity of the audience to these two types of ads, I think impression based advertising has an edge. As the Internet users get more adapt to using the online resources, they are less likely to click on the advertising links in general. The audience are more likely to be attracted to the relevant information they are looking for on the Internet. But on the other hand, for visual impression of advertisements, audiance are more likely to glance at them while on the website.
Another way of classifying online ads is based on where they appear. Based on this premise, advertisements can be classified into two broad groups. First, the ads that appear next to search results. These ads are mostly click based contextual text ads which appear next to the search results. Google, Live and others do a good job of clearly marking the advertisements as sponsored links. This broad group can be further classified in two parts – ads next to product searches and ads next to information searches. Analysing this group, it is somewhat obvious that audiance are going to develop a high immunity to the advertisements next to the information searches. Reason being, when they are looking for certain information, they would tend to go for the search result that is closest to their request rather than on some sponsored link. On the other hand, in case of product search or local search, where people are looking for a certain product or service, they are more likely to click a sponsored link because that is some page where they will find the product. In this case, it also makes sense for the customer to click the sponsored link because these advertisers are trying to attract the customers to buy the same stuff they are looking for.
Second type of advertisements based on their location are the contextual ones that appear next to the information on the web. Advertisements on these websites largely depends on the context of the website. If the context of the website is like an online mall where people are looking to buy products (like eBay or Amazon.com), the customers will be less immune to the ads. On the other hand, if the context of the website is more informative like news, the immunity to the advertisements will be comparitively higher.
This gives us a general understanding of how more web savvy customers would react to different advertisements. Based on this, more informative decisions can be made on what kind of advertisements should be displayed at what destinations. For instance, if a customer is doing a product search, or is on an online shop, it is better for the advertisers to display click based contextual text ads. While on the other hand, if the customer is searching for some information, or watching some video or surfing some news site, visual impression based advertising should be the prefered model.
I think immunity is something that is prone to be developed for Internet advertising. But to tackle it, the ad placement need to be done in a smarter ways. Like any other epedemic, in order to let this epedemic grow and spread, there need to be ways to counter the immunity towards it, and with lessons from the history and endless supply of monetary muscles from the ad based revenues, it doesn’t seem to be an unattainable task.