Selling Ads Without a Precise Brand = Bad Business Model
JP Morgan Chase published a research on internet companies titled Nothing But Net [PDF], hyping the future of web ad growth.
Yahoo!, a leading internet brand (a brand that means nothing) is up for grabs. The NYT, a generalist news company, is also seeing their stock tank, in spite of a market leading position in their vertical.
As large media sites open up to user generated content they are going to keep losing brand and value to niche channels owned and operated by people who are so passionate about their subject that their brands have purpose and lasting value.
Published: February 3, 2008 by Aaron Wall in business
Comments
I agree to a certain extent, although I would say that most Madison Avenue ad folks still subscribe to the idea that bulk numbers mean more than branding alone.
For example, in the sports genre (football in particular) there is a certain threshold of traffic (unique visitors, etc...) that they look for. And it's hard to land those large fish if you don't have that threshold.
That being said, forward thinking ad folks are starting to look beyond that tired old point of view.
Niche is certainly the way to go as the marketing climate continues to evolve into a "marketformation" climate.
I'm reading a lot of posts on other blogs blaming Yahoo's demise on too many products and line extensions. I don't really think that's the problem. Having too many products is not bad per-se. Look at Google: Google Maps, Google Shopping Cart, Google Shopping (Froogle), Blogger, Google Videos (plus Youtube), Google Groups, Google Documents... the list goes on an on.
I think the main issue is that while Google dominates search and can leverage that dominance among many different products, Yahoo didn't have one core competency in which they were dominant enough to add value to all the other properties.
Yahoo! had too many half done projects. For example, they do not have a public facing keyword tool that is reliable, the old tool that existed never branded their own network, and the keyword tool inside their ad platform is typically only available in the middle of setting up an ad campaign. And then you need to sign up a second account if you want your ads seen in the UK.
With their internal network being that inefficient it is no wonder that Google heavily out-monetizes them.
Yahoo has a powerful brand, people like me use them every day - even more than I use Google search. Yahoo understands community building much better than Google can, and many other things.
The main reason that ad revenue is dropping is because of the looming recession - not a poor brand. Google's earnings are dropping as well - everyone is being hit by this downturn.
Also, you need to remember that internet advertising is still in it's infancy. Out of the $1 Trillion spent on advertising each year, only about $15-20 billion is spent online, which is only 1% of the overall market. That is freaking small! As time goes on, that portion will become larger, as major brands become more comfortable with the internet ad model and as viewership of traditional media continues to fade. However this transition is not going to be a quick one. I had an internet company back in 1997, and I thought the ad market would be enormous by 2,000 (and so did a lot of others), everyone was wrong. Google has done a lot to improve that, but for a company that is valued at $150 billion, they only take in $15 billion a year. That is really tiny compared to a Microsoft or another major company that does $120 billion a year in revenue (essentially 10X that of Google). So things are still in their early days.
The biggest problem with sites like NYT is that still have a print mentality. I used to work for a print media company trying to internet and they just don't get it and don't want to listen to people who know what they are doing.
In my opinion they are also doing too much bundling of advertising, often practically giving away online ads in order to get a customer for their print product.
nobody has crystal balls in front of them, but i've heard that if you advertise enough you can sell anything. mr. yang isn't opening up to the world through his bully pit and is giving the inpression he's intrested in anymore ventures. may he hav reached his saturation point with alternative ventures? and msn's gambit has jarred the door for other buyers maybe not as well suited (complemented). not a bad model per se' but a protective way to keep your marbles for yourself. "it's good to be king" even if your country isn't growing any more.
Add new comment