14 Comments

Summary:

Content providers are wringing their hands over how to get advertisers to pony up the big bucks they once spent on display ads. Maybe that money is just gone forever.

Jonah Peretti

Content providers are wringing their hands over how to get advertisers to pony up the big bucks they once spent on display ads. Maybe that money is just gone forever.

Jonah Peretti, a founder of the Huffington Post and viral content site Buzzfeed, says the sun is setting on display ads, and publishers should focus instead on ads tailored for social media.

“People are trying to get back to the way it was,” said Peretti in a recent interview. “With traditional display, people have figured out clever ways to get more clicks out of ads that don’t perform well.”

Peretti sees display ads as artifacts of an earlier internet era when people went to portals to find content. That era — and its skyscraper and banner ads — has long passed as readers instead turned to search and, more recently, to social networks to find stories.

Peretti is not the only one to remark on the portal-search-social evolution. But his observations on the ad industry’s response to the changes are intriguing.

He compares online advertising to the paradigm shifts Thomas Kuhn described in his seminal book, “The Structure of Scientific Revolutions.” In this model, progress doesn’t occur incrementally but in a series of jumps. Everyone works under the same (often wrong) assumption for a long time until a new and better idea emerges; when a tipping point finally arrives, everyone eventually gathers around a new plateau of knowledge.

This is what’s happening in advertising, according to Peretti.

“Social is a Copernican revolution but it’s still in its early stages,” he said, noting that the new paradigm — social-based ads — is based on the right idea but that the infrastructure to support it is still young and unsophisticated. Meanwhile, many in the industry continue to plug away at the old paradigm, using statisticians and advanced behavioral techniques to wring more dollars out of display ads.

So what will the online advertising industry look like when it catches up to the new paradigm? One possibility can be found in Buzzfeed’s own office where a creative team works with the site’s advertisers to help make their content as social as possible.

On the Buzzfeed site, ads are seeded in the stream of stories and are supposed to be appealing in the same ways as the site’s native content. This is consistent with Peretti’s mantra that a publisher should ensure the ad type is native to the platform (advertorials in print newspapers, for instance).

Another possibility is the New York Times’ clever new Ricochet product which allows brands to strap their ads onto a Times article. The ads then travel with the article as it bounces around the social sphere of Twitter and Facebook.

Peretti and other media leaders will be talking about these  issues and more at paidContent 2012, May 23 in New York City.

You’re subscribed! If you like, you can update your settings

  1. Gregg Freishtat Saturday, April 28, 2012

    It reminds me of the music industry about 15 years ago. All the record label exec’s were banging the table asking “How can we sell more Albums?”. That of course was the wrong question. They needed to figure out how to sell songs.

    Publishing is in the same place. Its not how can I get more unique visitors, page views, and higher CPM’s — its how can I get paid more for my quality brand and content. We are on the front edge of a massive collision between the old publishing world and the new wave on online, inbound, social marketing. Gonna be a very interesting couple of years as these changes accelerate.

    Gregg Freishtat
    CEO, Scribit.com

    1. Per-song sales would have been smart, agree. That would’ve led them to ask “Who here knows how to build a brand-new content delivery ecosystem? Anyone? Bueller?” or “They’re at a weakpoint today, so what’s it gonna cost to buy Apple out?”

      1. I think its more who is going to the Itunes of publishing? The publisher’s window is closing but they still have time to participate…. Or someone from the outside (Apple/Itunes to keep up the music analogy) will step in, innovate, and create a boat of shareholder value.

    2. Gregg, the iTunes of publishing is already out there in the form of micro-syndication and on-demand micro-payments. Some of those systems, like our Znak it!, for example (http://www.znakit.com), work well with online advertising the way the NYT’s Ricochet works — the NYT did not invent it — or allow users answer brief market research polls to “pay” for content they want to access. These systems are a lot more effective than traditional display advertizing, and they can generate 8 times more revenue (per UU) than paywalls.

      1. Appreciate your comments.. Greg, I agree there are parallels to the music industry but I’m not sure iTunes is the appropriate analogy for a solution.. (though if we’re using “iTunes” as shorthand for a radical new distribution model, then yes..)
        Gregg, agree that surveys or new ad models are infinitely preferable to display and paywalls .. Adweek has been asking readers to answer a poll before reading an article.. The model is quick and seems intuitively fair to the reader and useful to the advertiser.. Onwards..

  2. Brilliant guy. Methinks Peretti may have cracked the code on inventing a way to get paid for shares and re-shares he “seeds.” Has he? Is it being used now? If so, is Jonah licensing the new business model, or is it strictly for BuzzFeed and his content network?

  3. The minute you mention clicks and display media you really don’t get display media.

  4. Kirill Titievsky Monday, April 30, 2012

    The social revolution may be real, but it has little to do with “display.” More importantly, the artificial conflict between the two hurts the industry by focusing on the medium not on proper use of creative and context or the unfortunate business models that have emerged around the medium. In fact, the sensational headline here draws attention away from this very point made by Peretti.

    Bad display creative execution and media buying is a pervasive problem. But just as pervasive is the opportunity for brands to benefit from display ads properly paired with content — be it classic editorial or the newest iteration on social and local. That is why BuzzFeed and any other clever packaging medium will remain a platform for making better display ads possible, not irrelevant. So long live display and long live great advertising. Now go figure out how to put the right display creative and the right content together.

    Kir Titievsky

    1. Great points Kirill! I could not agree more. Sure online display is broken. Sure it can and will get a lot better and sure “earned” media has some interesting legs to it. But that said, Jonah’s points while interesting (and I love the allusions to social ecosystem theory) are at the very least REALLY self serving and as such should be taken with more then a grain of salt. And most importantly we have literally warehouses full of high quality research that shows that advertising works and specifically online display advertising works. Empirically there really is no discussion to be had here.

      Now that all said we have to fix the system which is woefully broken…attribution is wrong, the metrics we track are wrong and the very infrastructure we use to transact is archaic…At some point we will in fact start to focus on the right issues and not get all excited about these side discussions.

  5. hmmmmm…”it’s all going social”

    yet the gabillion $ valuaton for Facebook (see social media) is based on…what? display ads.

    * rests case *

  6. Buzzfeed’s “solution” is branded content, delivered in stream with editorial. The branded content is highly shareable so you get “earned” impressions, sure, but it’s basically just a microsite. http://www.buzzfeed.com/toyota Not exactly cutting edge.

  7. I have to disagree with Peretti’s assertion that display is going the way of the dodo. eMarketer suggests that display will pass search spending by 2015. Who to believe? Why would we think that “social” sharing and what not, which is a digital analog for “word of mouth” marketing, will ever have more share of voice than it did before the Internet? Important, yes. Besides which, the notion that the primary value of display ads is “clicks” has been thoroughly debunked.

  8. Sam Bonfante Tuesday, May 1, 2012

    Interesting article indeed, but the concept that human commercial endeavors such as advertising follow the same patters as scientific evolution is far-fetched, especially as related to to the development of the web. Rates of adoption vary, and are dependent upon product development, innovation and economic conditions. However, when you look at digital product and service development over the arc of time you discover that the major disruptor (the web itself) has been followed by a fairly steady stream of incremental product innovations.

    I’m not arguing against Peretti’s main premise: display, as a stand-alone pillar of web advertising is dead. But the fact that it was able to hang on for so long is evidence that there was a slow and incremental advertising evolution.

  9. the next time you need an operation ask your neighbor..he’ll know the answer.the next time you buy a house ask your cousion he’ll have all the answers.the next time you have a sex problem with your wife ask the 20 yr old stud he’ll know the answer. Thats how stupid social is..opinions that are worthless.and thats the revolution?
    display ads are dead? what about branded disply ads and corresponding content and domain names? I have stated that for 12 yrs with real estate people and they still buy newspaper ads..thats how stupid they are.

Comments have been disabled for this post