Web 2.0 and Advertising: Do We See Eye to Eye?

Do developers of Web 2.0 and the advertisers they are pursuing for revenue see things the same way, even their own way of working together? Do advertisers and consumers of the Web see eye to eye?

These are the questions that kept coming up for me at the Monaco Media Forum, an event organized in early November 2007 by Publicis, a French-based global network of ad agencies. Attendees at MMF were from media companies and ad agencies, with a strong presence from Europe. Most were there to understand how Web 2.0 (or whatever you want to call it) were changing the media business and that meant looking at the changing world of advertising.

One of the heads of an ad agency showed a clever video that parodies the advertiser’s view of his relationship with the consumer:

To my surprise, this video was produced by Microsoft.

The conceit behind this video is that advertisers think they know consumers and know what they want but they really don’t. Nearly every Web 2.0 business model depends upon the promise of delivering more targeted advertising. The ability to make advertising more relevant will determine whether Web 2.0 succeeds in the market.

Ad agencies will admit to the limits of traditional media, saying, okay, maybe we don’t know consumers the way we ought to but this new technology is going to give us all that. With social networking and viral videos, we will learn more and more about consumers, and produce advertising that is more relevant to them.

I had the feeling that I was watching the ongoing courtship of agencies and Web 2.0 companies like Google, MySpace, and Facebook. It has progressed from them staring at each other across the room to now where they are laughing at each other’s jokes. Each one thinks they know the other pretty well, and they’ve agreed to talk about the future in the same way. Like an arranged marriage of members of distant royal families, they are talking about a union that will bring together very different worlds. The Web companies expect to become rich as advertisers pay more to reach an audience that can be sorted and selected on any set of attributes. Advertisers and their agencies are drooling that they will deliver highly targeted advertising messages that audiences will find more relevant, producing better results than they’ve seen in the mass media. The big question is what does the consumer, the commoner, think of this proposed royal wedding?

Advertising trades in simplifications that are true enough — I am male, 35-55, etc. But like the woman in the video above, I don’t think that information tells you very much about me or what is truly relevant to me.

Will my online profiles and detailed behavioral tracking draw a truer picture of me? Will I like that picture? Who do I want to see it?

Esther Dyson kept asking questions of both technology and media companies to find out what advertisers mean by relevance. She says she’d like to see advertising for new cars, even though she doesn’t own a car and doesn’t drive. She’s not in the market for a car but she’s interested in learning more about new cars through their advertising. How would an advertiser know about that preference, and would they care to know?

Another person asked how profiles might accommodate personas so that people could describe themselves in different contexts, such as at work or with the family. Given different contexts, you could consider yourself a different person.

I wonder how ad companies will interpret the rich set of self-identifying attributes that FaceBook or MySpace offers them. What messages might they trigger? How sophisticated and how flexible will the technology become to target messages to you and me? Will this be truly useful or simply annoying? Past attempts at serving up content based on detailed profiles have not proven useful (my.yahoo.com and others). (If you say you’re interested in news on “banking”, you’d get every possible article with the word “banking” in it.) On the other hand, Amazon’s product recommendations seem moderately useful, although it can’t distinguish a short-term interest from a long-term one, or a category of book I buy as gift for another person from one I buy for myself.

The basic fact is that it is hard to describe yourself and your needs and desires. On some level, we struggle to understand others, even a spouse or a parent. It’s hard to find gifts for people I’ve known for decades. (The reason Google ads make sense is that they are linked to an activity — my search terms — not my interests. It reflects what I’m interested in right now.)

The conversation at MMF centered around how this arranged marriage would be good for business, but few asked if the consumer accept the “happily ever after” part of this fairy tale? The advertisers seemed so certain we’d all be happy and that we’d love this new kind of advertising. I found little skepticism. Was it just me? I know my bias is to generally believe technologists when they tell me that they are building something better for the world. I like their optimism, even though some of it is false. The best ones are truly idealistic. I don’t have the same inherent trust in large media companies and advertising agencies. When they say that we’ll be getting better advertising, I don’t know what to expect but I’m skeptical.

Now, there are many different views of advertising. Some people even like ads. Few people say they do. Advertising might be viewed as a kind of tax that we agree to pay on the pleasure we get from media. If the tax gets too high, it begins to take away the pleasure. One seeks to avoid advertising (if possible through pop-up blockers or TiVO), just like death and taxes. On the other hand, most people understand the bargain: that content and a variety of services are free to the extent that they are supported by advertising.

In traditional media, there are common practices governing the proportion of commercials to programming on TV or the amount of advertising to editorial in newspapers and magazines. Google also established a fairly comfortable mix between advertising and content on its search pages, reducing the amount of clutter found on other search engines. How much advertising is enough on YouTube videos or your Facebook and MySpace homepages?

Google also followed traditional media’s rules that kept a clear separation of paid placement and useful content. This separation has defined the dual role of modern media — to serve its audience while also serving its advertisers. This so-called separation of church and state serves us well, but it’s not clear whether the distinction between content and advertising will survive the web.

I heard several content producers talking about “co-producing” content with ad agencies. This “co-produced” content would be distributed as original content via YouTube. One hopes the relationship would at least be disclosed. Think of LonelyGirl15? When I asked panelists about respecting the separation of content and advertising, they were dismissive. This isn’t a problem. Didn’t I know that soap operas are called that because they were developed by companies trying to sell soap? This is the way media works today. The CEO of Blip.TV said that she thought it was important to preserve independence for producers of content because that was a characteristic that attracted people to the content in the first place. I couldn’t agree more. If Web content loses its independence, it loses credibility.

I also worry that the co-production of content by producers and advertisers begins to narrow the universe of content that would be created. Can you imagine advertisers wanting to “co-produce” a documentary on the aftermath of Hurricane Katrina in New Orleans or coverage of the Iraq war. (Apple’s naming conventions have caught up with me: I first typed iRaq.) We are more likely to see the kind of fare produced by MTV than PBS. What we have believed about the Internet is that it would increase our choices, not limit them.

Nonetheless, there is the good news for the commoners.

If sites or services become too commercialized, or as users catch on that the content is really a commercial in disguise, then they can choose to go elsewhere. They can shift their attention to a new site. I hope the threat of user migration is enough to keep Web 2.0 sites honest, and counteract the aggressive tendencies of advertisers. This is the risk that MySpace and Facebook are confronted with as they increase the amount of commercial activity on their sites. If advertisers increase the level of annoyance, even worse than strangers asking to be friends, then people will look for new sites that get it right. It’s a bit like FM radio. Get the balance between songs and commercial chatter wrong and people will flee to a new alternative.

So my basic takeaway from MMF was: Will the new advertising that targets the audiences of Web 2.0 sites and services be seen as relevant and useful by that audience?

However, the most memorable part of MMF was a dinner talk by Elie Wiesel, the Nobel Prize winning Holocaust survivor, author and teacher. (His first book, “Night“, which I read after returning home, is the moving story of the loss of his family and his survival as a 16-year-old in concentration camps at the end of the Second World War.) He is a powerful speaker unlike most of those who are labeled as such. His voice is low, raspy and heavily accented and he speaks very slowly with distinct pauses. Yet I kept wanting to hear more. He began with a fable, a Yiddish tale about the search for truth that ends with a bittersweet message: “it’s okay to lie” — a funny thing to say to advertisers. His story prods us to change modes and become a kid listening to a master storyteller. We enjoy the story and feel something in our heart and wonder what it really means. If nothing else, Wiesel reminded us that life is much richer and more complex than what we normally let on to each other, especially at a business or technology conference. He closed his talk by saying that people ask him what’s the one thing they should learn from his books, from his teaching, and he responded: “Think higher and feel deeper.” At once an admonition and an aspiration, Elie Wiesel’s message was wonderfully relevant.

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  • Very good article.

    What I see is advertisers getting involved with social networking sites in two ways.

    1. They buy banners, its tried, its tested, it has a fixed cost and a controlled output.

    But the social interactive consumer is increasing blind to these dated forms of messaging, and the response is inherently weak.

    2. They get involved, they create a profile, an online fan club, open communication with customers, both good and bad.

    But this is complicated, it takes time to manage and their brand is out of control. But get it right and it will be worth Millions.

    The interesting question is, Is no. 2 really advertising. They probably didn’t pay for it directly, the consumer may not have considered it advertising.

    So if the best rewards come from the things you don’t pay for, where do the social networks plan to get the long term revenue from?

  • I’ve been observing this space for a while and it seems that the focus on currently conceived revenue models is kinda like trying to force more cars on the same stretch of road in hopes that traffic would move faster. Sounds absurd? My point exactly.

    Instead, maybe reinventing advertising models like how Zopa.com and Prosper are reinventing finance maybe closer to a solution. Multiple avatars, profile matching, WOM networks through Facebook and Opensocial apps are a given. Their real power though, I believe belongs to the individuals and NOT mass marketers looking for another channel.

    This is something I’m personally working on, and I’d like to see more of in terms of interesting approaches and business models that empower average people “relevant” reach.

    Shared contexts from networked connections that reveal themselves through easy-to-understand analytics (like the weather) that’s monetizable in the same way we pay for broadband to stay connected. The opportunity is not in the CPM, it’s in the “enabled connection” (clever acronym to come later:)

    Of course, real disruption won’t come easy while there are still shareholders to please. Still, business stopped being “as usual” sometime back and the Ad biz may not be that usual yet…

  • That video is hilarious.

    I think consumers and advertisers are still playing around with web 2.0 and other tech, so there’s probably nothing too settled yet. The advertisers want to go where the consumers are, but the consumers have a wider variety of choices, so they are all over the place. For advertisers this is probably bad.

    A few decades ago, there were relatively few media outlets that a person could consume. Now, there are millions of websites, thousands of TV channels, thousands of video games, and so on. Each one of those outlets is its own media market. The problem for advertisers is with a wider variety of choices for consumers, it’s harder to create a one-size-fits-most advertising campaign.

    I think advertisers can achieve a finer granularity by identifying smaller and smaller groups of people, but if they have an advertising budget that isn’t increasing as fast as consumer choices, they will be reaching fewer people for the money they spend, because the advertising market becomes more diluted with each new venue.

  • Chris

    People purchase newspapers for their advertising content, a concept foreign to most media. Where else does a consumer go to discover who’s got what on Black Friday?

    http://www.naa.org/advertiser/presentation/presentation_files/v3_slide0029.htm http://www.naa.org/advertiser/presentation/presentation_files/v3_slide0095.htm http://www.naa.org/advertiser/presentation/presentation_files/v3_slide0028.htm

  • Hi Dale.
    Thanks for the effort of writing this long post. It was one of the best I read lately.
    I think you are 100% right in what you wrote. One of the big discrepancies today is the fact that advertisers spend millions of dollars on making ads, while users spend their money on technologies that will block the same ads (Tivo, Pop Up blockers…).

    I came back from Ad Tech a few weeks ago with the thought that advertising should be reinvented as something that actually give users some contribution and benefits.

    We at NuConomy are working on a few things that I think could change the picture.
    I’ll be really happy to get a chance to chat with you about some of it and hear your thoughts.
    If you are willing, please ping me back at shahar at nuconomy dot com.
    Thanks.

  • Jim Banister

    The disparity between the “ad industry” and the “changed consumer,” loosely repped by the so-called Web2.0 movement, is a compound chasm… but I believe it can be characterized accurately and practically as a “change in narrative.” If you can accept for a moment that the definition of *narrative* can be thought of as the “relationship between communicator or auteur with their intended audience,” then the disparity described above (and in the video) becomes clearer. A “storytelling” narrative is necessarily one-directional. An individual or institution, however well-informed on the nature of the audience, packages a message– a story– in the form of 0:30 spot, television show, film, book, magazine article… whatever. It is a paternal, one-to-many kind of relationship that treats the “audience” as consumer– reader, viewer, listener, etc. The roll of the *creator*– individual or institutional– is to create the story… the message. But what’s the role of the *creator* who created the game of chess? Or an MMOG? Or basketball? Or Facebook? Their role is to create a WORLD– a themed framework with a set of social morays and rules (that, oh by the way, can be broken) within which audiences can and will do whatever they want… and then to watch that world, adapt to it, and evolve it. This is “storydwelling” form of narrative that requires the individual or institution to become world designer, world builder and world manager, wherein story *emerges* from audiences participation in that world– and THIS audience is multi-dimensional, able to take on more roles than just that of “consumer.” They themselves can and should be activated as producer/director, distributor, marketer, vendor or exhibitor. With even marginal success, these worlds become are self-perpetuating engines of engagement. Looked at this way, the creators of eBay, mySpace, World of Warcraft and team sports are of similar ilk, but vastly different from those who create film, commercials, tv shows, or print ads. Storydwelling demands a completely different literacy than the ad industry is built around– a predominantly storytelling industry. What about interactive agencies? Not quite. The best they’ve come up with are campaigns like Subservient Chicken, Elf Yourself, and an array of interactive apps that beget viral behavior. While brilliant in their own right, they don’t build permanently populated communities with their investment– a perpetual engine of engagement. And with the amount of money spent on ad campaigns, it’s a crime they aren’t *always* augmented with such an engine, that at the very least will provide long-tail value, and might resonate far beyond the exposure/engagement gleaned from the initial spark created by the core tv/radio/print/event campaign. BTW– the storydwelling narrative process has been codified and can be taught, and executed with more predictability.

  • Very nice post and great video!! Astonishing that it’s from Microsoft!!

    On the topic have a look at what British VC Nic Brisbourne says.
    http://tinyurl.com/2o8rox

  • Will the new advertising that targets the audiences of Web 2.0 sites and services be seen as relevant and useful by that audience?

    Web 2.0 means user generated content and inevitable user generated advertising as a result of the content

  • That video is pretty creative for Microsoft. It seems more like something the Apple people would have come up with. Maybe Microsoft has learned a trick or two from the PC vs. Mac ads that Apple has been effectively embarrassing them with for so long.

  • Mae

    In my opinion the best way to get direct to consumer is to go where they look. Not on billboards, not on website ads, not on commercials. The consumer has in a way evolved to block out this type of advertising, the idea is now to go where they want to see the ads. Classifieds, not in the daily paper, but free online classifieds. The traffic on sites like Craigslist, Kijiji and Stumblehere.com is phenomenal. It is sites like these where the consumer wants to be sold on an item. I advertise my business on sites like this all too frequently.