Where to Spend Your Time

If you're building an online advertising business or one supported by advertising, the numbers released by eMarketer today--their forecast of online advertising spend over the next few years--might be of some help in deciding what kind of advertising spend to target.

Here are the subcategories and the compound annual growth rate of each category from 2006 through 2011, sorted by CAGR:

 Rich media/video  35.6%
Lead generation   22.9%
Paid search       19.5%
Classified        17.8%
Display ads       17.3%
E-Mail            13.3%
Sponsorships       0.6%

   All            20.0%

Rich media/video advertising is pretty competitive, but there's not nearly as much energy being spent making lead gen a better business.

Bad News is Bad News and Good News is Bad News Too

I wasn't really planning on talking about the impact of the credit crisis on online advertising anymore, but I just read Blodget's take on the news that online financial advertising was up 10% in the third quarter (compared to the third quarter of last year) while online advertising in general was only up 1.3%.

The beauty of blogging versus other forms of writing is that I can flog my personal beliefs no matter what the evidence. So can Henry. Personally, I try to let my beliefs change when confronted with evidence to the contrary. Henry prefers "anecdotes" that support his conclusions.

Things can always change, but it remains my contention that advertisers will respond to difficulty in finding new customers by increasing ad spend in accountable media. Like online.

The mortgage crisis is the result of mortgage lenders seeking customers who were bad risks. Fees for servicing these subprime mortgages are high and the borrowers are eager to borrow so easy to find. The non-risk-adjusted ROI on subprime borrowers is astronomical. Risk-adjusted: not so good.

The appropriate response by mortgage lenders is to tighten credit standards and give money to a smaller segment of borrowers, those more likely to pay. To find these borrowers, the lenders still have to advertise to the same pool of people because the amount of money spent targeting potential subprime borrowers specifically was a small piece of the ad pie. The ROI may decline, but the dollar spending doesn't.

Some financial firms will stop advertising, sure, because the impact of their prior mismanagement will leave them unable to invest in the future. The ones who do this should be put high up on the list of likely bankruptcies.

Every Hundred Years Media Changes...

...And it did, some six or seven years ago.

Read Dare Obasanjo commenting on Danny Sullivan's article in Advertising Age on what is evolution and what is revolution in online advertising.

The bottom line: the revolution is helping the consumer find what they want, not in finding better ways to get the consumer to buy what you're selling.

Facebook Got Gamed

As Homer Simpson says: "I'm no super-genius... or are I?"

About thirty seconds after reading the news about Facebook's new advertising initiatives I blasted them as "overreaching." I think that was obvious to anyone who's involved in advertising and seen the various privacy debates and debacles over the years.

So why did smart marketers like Coke lend their name to the initiative if they knew it was going to fail?

Probably because they didn't know it was going to fail. They probably suspected it was going to fail, but they couldn't be sure. If I was the evil genius running marketing at Coke (no offense, Joe, Carol) my thinking would be:

1. If Facebook succeeds, Coke gets a premier spot at the table and a brand boost for being savvy about the intertubes thing;
2. If they fail, we back away slowly and say they misrepresented what they were doing and we would never be involved in anything so disrespectful of our customers, never.

And, even if Facebook gets beaten up for their overreaching, next time around the public is more used to the idea that their privacy is an illusion. The erosion of our expectations of privacy has taken place slowly over the past hundred years, two steps forward, one step back.

In other words, Facebook was cannon fodder.

The Facebook partnership with Coke was no partnership, it was a free option for Coke and the other "landmark partners." Coke almost certainly knew how this was going to play out before they agreed to participate. They didn't throw Facebook under the bus after things went sour, that was the plan all along.