Friday, August 8, 2014

The future of advertising

by Don Keith N4KC

The way advertisers attempt to reach and influence potential customers has been basically the same since the first newspaper ad.  The first radio ad was a 15-minute "infomercial" for a housing development on Staten Island.  Not long after the first TV station signed on the air, we had our first "We'll be right back after these words from our sponsors."

Display ads in print, spot announcements on radio and TV, "showings" of billboards...these were how companies tried to create brand awareness and direct response.  That has all been changing rapidly in the last decade.

An article from one of my news sources today:

Twitter is targeting ad dollars spent on Facebook with an upcoming pricing model change that moves from any interaction with ads to allow advertisers to specify which action they wish to pay for, such as downloading an application. The fee structure is likely to boost ad prices as target audiences receive more attention and Twitter can appeal to small and midsized businesses, 

With the advent of the Internet, Google, and social media, creators of goods and services have a whole new way of reaching potential customers...and paying for it.  No longer are they limited to running a schedule of commercial announcements--30- or 60-second commercials on radio or TV, all clustered together in what the industry calls a "spot break."  You know, when you can run to the kitchen and fix a sandwich.  Or hit the button on the car radio to see if another station is playing music.  Or, more likely today, when you can hit the "Skip" button on the remote control and get past the commercials entirely.

No, today advertisers can purchase and pay for actual response.  If someone sees an ad on a web site and clicks on it or does a search and clicks on a link, then the advertiser pays a small fee.  If nobody does anything, the advertiser owes nothing.  That is called "pay-per-click," and in the case of Google and other search engines, it is called "search."  You can pay Google for clicks, too.  That's what those first three or four results at the top of the page and the stack of links down the right side of the search result page are: ads in which the advertiser owes nothing unless you click on the link.  But they are ads that only show up if the searcher is looking for something relevant to what they were looking for.

You know how you have to sit through those Viagra commercials whether you have an interest or not?  Or have to hear that shouting car dealer ad on the radio whether or not you are in the market for a car?  The ads you see on Google only appear if you are searching for something that the Google algorithms deem are relevant.  And if you visit a web site for, say, a new Toyota truck, you will suddenly begin to see ads everywhere for Toyota trucks and local dealerships.  But unlike radio or TV where time is linear, you can ignore the ads on those web sites if you want to.  Or you can click and learn more...and that is when the advertiser pays for you, not when you just see and ignore the ad.

It is even possible for advertisers to purchase "pay-per-lead" ads, meaning the company owes nothing unless the person who clicks on the link costs the advertiser nothing unless he or she submits a "more info" request.

With spot advertising, businesses are paying for ears and eyeballs as determined by ratings surveys.  If the ad works and they sell product--which sometimes happens--the advertiser is happy.  If not, tough.  "It must have been bad creative," the media say.  Or, "You didn't spend enough money.  Let's go again and double the investment."

With pay-per-lead, pay-per-click, search and even more exotic ways of digital advertising, companies now can still reach potential buyers with their messages, but, in many, many cases, they only pay for those who actually respond.

And that is the future of advertising.

No comments: