Why Advertising is Failing on the Internet

Good question… Is advertising actually failing on the Internet?

The answer is yes, or at least that’s what Eric Clemons, Professor of Operations and Information Management at Wharton – UPenn, stated in a TechCrunch article, the other day. “The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed,” he writes, arguing that the Internet is actually shattering all forms of advertising because is a free medium where people don’t need ads to help them make their purchase decisions.

I assume that we all know deep down inside that advertising, on TV, radio or even the Internet, is mostly an intrusive way of capturing a small slice of the customer’s mind. Because of its intrusiveness, the human mind has created natural self defense barriers, such as banner blindness, for example. Even ourselves, as marketers, if we’re not wearing our professional hat that makes us watch ads, we are actually doing our own informative research when we want to buy something.

Clemons states that the reasons why advertising fails are the following:

  • Consumers do not trust advertising – and there are books and studies to support this argument (Dan Ariely, Forrester Research)
  • Consumers do not want to watch advertising – see banner blindness above or think about how we tend to switch channels on TV during ad breaks
  • Consumers do not need advertising – when was the last time an ad (even supported by a product website) was the deciding factor for one of your purchase decisions? (see all websites focused on product reviews or communities focused around a brand or category and how successful they are)

With advertising failing, what is for the web publishers to do, since they do have to sell their virtual wares in order to make a living? Clemons offers suggestions here as well:

  • Sell content and information – from digital music to information and news, although assumed free by most Internet users, it can still be sold in a form or another (subscriptions, micro payments, etc)
  • Sell experience and participation in a virtual community – much like you sell experience and participation in an offline environment
  • Sell accessories for virtual communities – there are models here as well, from Second Life to World of Warcraft, for example
  • Sell access to customers – communities formed around common passions or interests are extremely attractive for advertising customers, if only they would be interested in more than just buying ad space

In closing, Clemons makes this statement: “The internet is about freedom, and I suspect that a truly free population will not be held captive and forced to watch ads. We always knew that freedom comes at a price; perhaps the price of internet freedom and the failure of ads will be paying a fair price for the content and the experience and the recommendations that we value.”

So what do you think, is advertising on the internet failing or will it adapt and find a different form?**

Update: (Cristian Manafu) spotted in AdWeek an IBM study mentioning that marketers are lagging behind digital savvy customers*. This might be one of the reasons why advertising is failing on the Internet. What do you think?

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