today featured a guest post by Eric Clemons, Professor of Operations and Information Management at The Wharton School of the University of Pennsylvania entitled “Why Advertising Is Failing On The Internet”.

In the lengthy post he argues his “basic premise […] that the internet is not replacing advertising but shattering it”, which due to its sweeping nature definitely warrants further examination. The post as of right now has generated well over 200 comments, on a Sunday, so it obviously hit a nerve.

Among other things, Professor Clemons makes the following points about advertising both online or via traditional broadcast media:

Consumers do not trust advertising. Dan Ariely has demonstrated that messages attributed to a commercial source have much lower credibility and much lower impact on the perception of product quality than the same message attributed to a rating service. Forrester Research has completed studies that show that advertising and company sponsored blogs are the least-trusted source of information on products and services, while recommendations from friends and online reviews from customers are the highest.

Consumers do not want to view advertising. Think of watching network TV news and remember that the commercials on all the major networks are as closely synchronized as possible.  Why?  If network executives believed we all wanted to see the ads they would be staggered, so that users could channel surf to view the ads; ads are synchronized so that users cannot channel surf to avoid the ads.

And mostly consumers do not need advertising. My own research suggests that consumers behave as if they get much of their information about product offerings from the internet, through independent professional rating sites like or community content rating services like or TripAdvisor.

While I would agree with all three points made, and would count them among important caveats for anyone choosing to advertise for anything in this day and age, I disagree with Professor Clemons’ basic premise. Here’s why:

I would argue that none of the major “Old Media” players online (or for that matter none of the “New Media” either) are anywhere close to having efficiently monetized their page views. Everyone is still clumsily fumbling around when it comes to intelligent targeting of ads, both as to offer theme, as well as to offer pricing.

(Or rather mostly lack thereof, as when trying to employ Madison Avenue “image advertising” without any clear offer being made. Which, if it ever worked on TV, etc., certainly isn’t working online. In fact, online it may increasingly create a negative image of a company/brand/product as “someone” who just doesn’t get it).

This is astonishing, when all it really takes is some common sense about selling people stuff that makes sense in the CONTEXT of what they were already doing.

First, let’s get clear on the fact that an article or opinion piece in e.g. the New York Times provides a lot more pointers as to readers’ state of mind/interest than most Google queries ever could (as do Web videos posted on such sites), so the failure to target properly is in part simply a form of laziness.

While it is true that a news reader does come with, on average, less intent to buy anything compared to the problem/solution mindset of many search engine users, the data we can glean from the readers of an article, especially the LONGER they stay on that page reading, is much richer.

They must be interested in the subject matter of the article, and will tend to approve of the author and likely his general area of expertise. They will also be in a news or opinion mode depending on the piece. So what you should offer them in this case is more news or opinions RELEVANT to the topic at hand. Make the information offered exclusive and/or in-depth, and make the offer cheap enough to ideally keep it in the range of an impulse purchase (offer a Paypal option to keep things simple and secure in the reader’s mind).

For example, German Newsmag DER SPIEGEL was selling in depth dossiers from their archives (including PRE internet!) for a few bucks at one point, not sure if they still are.

Sell books (more INFORMATION) related to the topic at hand, in fact, some newspapers ought to be able to do OK just as an Amazon super-affiliate (earning 4% or more on the referral to book or similar pages on Amazon). Especially when compared to the poorly/non-targeted ads they are now showing, e.g. I saw a comparative car insurance ad placed against a financial opinion column. That connection can only be called tenuous at best.

For another example, just earlier today I viewed a video excerpt from the Today Show on about micro-blogging service Twitter going mainstream, and they served up an ad for KRAFT dressing or something like that as a pre-roll ad. Completely pointless and a waste of my time and theirs, but in reality this kind of thing is still totally common, on,, etc. Everywhere.

Basically on all Web properties of Old Media companies (and most New Media companies for that matter). It is still the standard handed down from pre-internet TV advertising days. It’s as if content awareness and keyword-based targeting had never been invented yet…

What if they had served a super short pre-roll ad that said: “Stay tuned after the end of the video, we’ve got a major surprise relating to Twitter for you”, and then in a post-roll ad try to sell me something related to Twitter, social media, smart phones (to post to social media from my phone), etc. etc.

That would make at least some marginal sense. Getting me to opt in to a list by offering a free useful/in-depth report e.g. on how Social Media is changing the world, and then try to sell me off of there would be even smarter. Remember, it’s difficult to go “from Zero to Sale” in one step, especially if the price point is outside of “impulse purchase” range.

Or better yet the ad could attempt to hand me off to the account/profile for KRAFT foods on Twitter in order for me to connect there, maybe offering a special gift/incentive for doing so. You get the point, the only limit here is your imagination guided by basic common sense and direct-response principles.

By the way, if you’re not capturing prospects’ email addresses and then marketing to that list, you are making the biggest mistake of all. Back to the opinion piece/columnist example, they should all have big, fat lists ranging in the 100’s of thousands if not millions of subscribers (and the NYT in this example could retain an “ever-green backend” commission from the columnist on any follow-up sales via such a list being built for the columnist).

Also, there should ALWAYS be a big bright ad for the columnist’s current book placed for crying out loud, and if you’re really smart you’d switch that ad out every 20 seconds or so (motion drives attention) to an offer for… the audio-book version, earlier books, “Columnist XYZ sayz…” quote mugs, T-shirts, etc. etc.

Anything will be better than what they are doing now. It bears repeating: All it takes is some common sense about selling people stuff that makes sense in the CONTEXT of what they were already doing.

The bottom line is, any online content property like the NYT simply needs to do a lot more with all of the attention that it already has. In an information economy, attention is the only scarce resource. And they happen to already have plenty of that very resource. It is a CRIME to fail to monetize it efficiently.

To bring it all the way back to Professor Clemons’ post, while I will agree that advertising may currently be largely failing online, in my view this is due not to some basic law of the internet (because there is a good number of people successfully marketing online), but to the fact that it mostly hasn’t even been TRIED, in any intelligent reading of that word, by the usual suspects of major media.

16 thoughts on “Is Advertising Failing On The Internet?

  1. This is a very interesting article. We have launched a new Social Value Network site. My research on the internet for the best way to get advertisers to our site, I have found that more and more advertisers are looking to advertise through the social network sites to be able to reach more of their targeted market that is available to them through these sites. I am searching the best methods to produce the best advertising to the media through our site. I am also interested in getting more articles of interest out to the media. Your article is interesting and you also have a very nice website.

  2. And just when I thought this conversation was all wrapped up, you post this little gem. Wow. I’m impressed.

    You make some great points here. Bear in mind that the bucket of advertisers for a particular publication doesn’t always match the subject matter/content they produce. That’s how you end up with ads for Kraft, Crest or Ford – even if the story they are matched to have nothing to do with cooking, dental care or automotive interests. The way media buyers work doesn’t lend itself to a fluid, context-matching model. (Yet.)

    Nevertheless, the point needs to be made and made and made until they figure out a way to do this better.


  3. Olivier, thanks so much for your kind words, and good point re:media buyers priorities. Obviously, as you recognize as well, without profitable campaigns there ultimately won’t be either the media/content properties or the buyers left. Which is why I’d argue that the media properties need to view the attention they garner more as something to guard jealously:

    If the advertisers are getting poor results, that is a waste of the most valuable resource there is at this point. And someone needs to direct any advertising/selling activity against that as intelligently as possible.

    Companies like the NYT should take commissions rather than CPM peanuts, and exert tight control over what is shown alongside the content.

    This is BTW the exact opposite of what Google is trying to do with its new universal Adsense content-network activity tracking efforts, which may result in targeting, but the kind that may appear creepy and may thus cause significant consumer backlash.

    They are already being called on this out by some:


  4. Not exactly true. Clearly they are interested in the subject matter or else they wouldn’t be reading it, but I very often like to read what the political opposition is saying – and these are authors I definately do not approve of, but they represent the prime intellectual force of the opposition. Readers of an article are as likely to be strongly opposed to the author’s viewpoint as they are to agree with it.

    “They must be interested in the subject matter of the article, and will tend to approve of the author and likely his general area of expertise…”

  5. Advertisers are represented on websites in proportion to the money they are willing to spend, regardless of the content of the article. There is only one way to get enough ad $$$ that are relevant to the article content. And that way is to eliminate all restrictions on political contributions. Let’s face it. Only candidates seeking office or people with an interest in changing the laws (or preventing the laws from changing) are going to be willing to spend vast sums of money on opinion and political issues. As long as political contributions are severely limited by law, those scarce resources will go only to television. It is only when there is enough money in politics to completely saturate the broadcast markets that large amounts of political cash will go to internet advertising. And currently, there isn’t enough political money to come even close to saturating the broadcast markets. A tenfold increase wouldn’t saturate broadcast. The best thing for internet media would be if the SCOTUS declared the existing campaign finance laws unconstitutional. And there is not much chance of that happening with current court membership.

  6. I think it’s clearly true that we don’t want/trust advertising. We never have. Ads exist to persuade, not to provide helpful information to consumers.

    The crucial characteristic of the Internet is that it makes it so we don’t have to see ads. We’re active users, and we have access to superior information in the form of consumer-generated reviews.

    I wrote a longer response to Clemons here:

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