The Traditional Banner Ad Business May Be In Even More Trouble Than You Think

from the ad-blindness-everywhere dept

It's no secret that we're not big fans of the banner ad business -- and, in fact, part of what we're doing with Floor64 and the Insight Community is helping to offer companies alternatives to wasteful spending on straight banner ads. Just a couple months ago, I moderated a panel at a marketing conference, where we talked about "the death of the banner ad." And, while every person on the panel admitted that banner ads aren't particularly effective, they said they still bought them, just because it's part of what you do. However, that may soon be changing. The first hint may have come earlier this year, when people started realizing that banner ads on hot social networking properties were worthless. And, now, with the financial crisis freaking people out left and right, some are considering pulling back on their ad spending.

And, if they needed any more ammunition for that, a new study from Jakob Nielsen shows that ad blindness is more widespread and more comprehensive than almost anyone realized. Almost no one looks at banner ads. The only "advertisements" that people look at are search ads, because in those cases, people are actively looking for something, and the ads often provide it. In other words, in those cases, the ads are good content.

This doesn't mean that it doesn't make sense to reach out to the people who make up your market. It just means to stop thinking about just bombarding them with meaningless "push" messaging that they'll ignore completely -- and start actually engaging them and providing good content.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Buzz, Oct 16th, 2008 @ 12:33pm

    It's worse than that...

    I don't think some marketers understand: I would PAY to have them stop bombarding me with banner ads. It is that bad right now. Fortunately, I don't need to make such a worthless donation; I have the almighty Adblock Plus.

     

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  2.  
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    Ryan, Oct 16th, 2008 @ 12:49pm

    two sides

    but what about the other side? banner ads are the reason many sites (including this one) can continue offering up free content.

    I run several free web services that average about 25-50,000 unique visitors per day, and I couldn't afford to keep those sites online without banner ads.

    Granted, I don't do the annoying popups, expanding, make noise ones.

    As companies start pulling out of banner ads though, many popular websites (including major sites like Digg, MySpace, Fark, etc) will have to find other ways to pay their bandwith bills.

    All of you who are quick to bash ads - you still read this site... would you pay to read it without ads? I doubt any of you would.

     

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  3.  
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    Hudey, Oct 16th, 2008 @ 12:53pm

    I agree with Ryan

    It's tough to take an article about the "death of banner ads" seriously when the page the article is hosted on it being paid for with banner ads.

     

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  4.  
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    Ryan, Oct 16th, 2008 @ 12:54pm

    also

    what sites do you guys visit that have these annoying banner ads everybody talks about being bombarded with?

    I've never seen them on a news site or comapny website or online web application that I use daily.

    In fact, I don't think I've noticed an annoying ad in months.

    of course, i don't visit porn and warez sites either.

    In my daily internet usage, I haven't come across any - and I don't use adblock.

    Something tells me that the problem is either way over-stated, or some of you people visit some very shady websites.

     

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  5.  
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    formerly anonymous coward, Oct 16th, 2008 @ 12:58pm

    RE: Ryan

    Ok, would you as a web host be willing to include other types of advertising in your sites, depending on what you are doing with your sites they could still be ad supported without the banners. And those advertisements/content would still be paid for. Just rather than being pointless uneffective flash maybe it is a simple link. Maybe there is no link at all you just mention something that will be googled and come up with sales items. Maybe a paid for product review (you have the eyeballs) The death of banner ads does not mean the death of advertising. It is a sign of growth. Those companies still want to reach their customers, they are just looking for new and more effective ways to do so, instead of wasting money on something no one is paying attention to.

     

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  6.  
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    Anonymous Coward, Oct 16th, 2008 @ 12:58pm

    Have cake, eat too

    There are ways to make ads less annoying and 'noisy' but they require a little more info about the reader. Too bad people get so hopped up about their supposed 'privacy' that they don't want ad networks to know if they're been shopping for a car or a stroller. Anonymous behavioral targeting helps reduce the noise of junk banners, provides higher marketing ROI to advertisers and doesn't compromise personal information security. I guess we'll need to see a bunch of currently-free publications and other services die for lack of crap-banner revenue before the public shakes off the bogeyman and accepts better ad targeting solutions. FUD still stalks the Internets. Better to point your fear at insecure credit card terminals that 'phone home' with your credit card information!

     

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  7.  
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    Steve Stone, Oct 16th, 2008 @ 1:02pm

    Banner Ads, A bad idea since Trintext

    The first time I saw a banner ad was on Prodigy (Prodig started out as Trintext, a joint venture of Sears, CBS, and IBM in 1987). It was a bad idea then. It is a bad idea now. PopUps are the absolute number one worst ad in my book. http://money.cnn.com/magazines/fortune/fortune_archive/1987/09/28/69589/index.htm

     

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  8.  
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    Petréa Mitchell, Oct 16th, 2008 @ 1:03pm

    New?!

    He's been talking about this since at least 1997!

     

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  9.  
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    paul hill, Oct 16th, 2008 @ 1:04pm

    why don't you buy your banner activity on a pure cpa basis?

    dear sir,

    in reply to your article on banner advertising, why do you still buy them on a cpm / cpc basis - are you mad?
    and please note, people have been talking about the death of the banner ads since 2000 and they are still going strong!

    thank you

    paul

     

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  10.  
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    Anonymous Coward, Oct 16th, 2008 @ 1:16pm

    Re: I agree with Ryan

    I, And lots of other people, run a nice little program called Adblock. It was a long time before I even realized Techdirt had ads. it is quite believable that some companies are starting to realize how ineffective they are and reduce the amount they buy. that doesn't mean that everyone will do that though, just that less people will buy banner ads.

     

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  11.  
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    matt, Oct 16th, 2008 @ 1:17pm

    The new banner ads are...

    ..sneaky "text" ads in news articles where you're just trying to click on the text window so you can scroll down with the mouse wheel and instead you get an annoying pop up window.

    These are so annoying. I also have seen a lot of sites lately that make a popup appear the first time you click anywhere on the page. Very annoying as well.

    They made ads so invasive and so annoying that nobody reads any of them any more. I don't think I've clicked on an advertisement on the internet and completed a purchase EVER, not even ONCE. And I have been an active internet user for fifteen years.

     

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  12.  
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    Anonymous Coward #42, Oct 16th, 2008 @ 1:23pm

    I don't completely ignore them, but 99.9% of the time I don't see anything worth clicking on, especially those completely retarded "Punch the monkey and win a prize!" Flash ads. Part of the reason I don't click on them is because they always send you through redirect links, and you never know if somehow you're going to get routed to a malicious site. Usually, if I see an interesting ad, I'll google whatever it's about, and find some direct links.

     

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  13.  
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    SeafoodMan, Oct 16th, 2008 @ 2:00pm

    Check this out for better ad types

    I agree, banner ads are useless. But there are many other forms of advertising on web pages that have been highly effective for me. For instance, check out: www.EATFISH.COM

     

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  14.  
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    Anonymous Coward, Oct 16th, 2008 @ 2:11pm

    Re: New?!

    Then why is there a banner ad on his page. I have no respect for his hypocrisy.

     

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  15.  
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    Anonymous Coward, Oct 16th, 2008 @ 2:29pm

    Re: Re: I agree with Ryan

    I never realized techdirt had ads until I turned off adblock after reading all these comments.

     

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  16.  
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    Petréa Mitchell, Oct 16th, 2008 @ 2:35pm

    Re: Re: New?!

    "Then why is there a banner ad on his page."

    I'm not seeing anything there that isn't text.

     

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  17.  
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    bjc (profile), Oct 16th, 2008 @ 3:01pm

    Interesting article... until Google announced their earnings at 4PM. Huge growth year over year, the vast majority of it from banner ads.

    I think you will find smart companies increase their ad spending during a recession. That's how they fight for a bigger share of people's reduced discretionary spending.

     

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  18.  
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    Geoffrey, Oct 16th, 2008 @ 3:05pm

    All media outlets need some form of revenue to provide their services, if it's not sold on a subscription basis. While I agree there is a lot of advertising overload, brand advertising requires a more dynamic canvass to convey their messaging and you simply don't find that in a text link. Pop ups are a ridiculous creation, but quality banner advertising (not a "punch the monkey" ad) provides a strong user experience, without being intrusive. People have rung the death bell for banners since their inception, but done correctly, they offer more flexibility for marketers, at a much lower cost, than TV, radio or print. Plus, as users media consumption begins to transfer moreso to digital platforms, those outlets will have to find a way to monetize their content. Pre-roll videos can't do it alone.

     

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  19.  
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    Mike (profile), Oct 16th, 2008 @ 3:49pm

    Re: two sides

    but what about the other side? banner ads are the reason many sites (including this one) can continue offering up free content.

    Uh, no. That's wrong. We don't rely on banner ad revenue. In fact, that was the point of the opening of the post. Our business model is designed to work even if banner ads disappear completely.

    So, what's "the other side"? That some sites choose a bad business model?


    I run several free web services that average about 25-50,000 unique visitors per day, and I couldn't afford to keep those sites online without banner ads.


    So you chose a bad business model. You could choose a better one.

    As companies start pulling out of banner ads though, many popular websites (including major sites like Digg, MySpace, Fark, etc) will have to find other ways to pay their bandwith bills.

    And those business models may be much, much better for everyone.

    All of you who are quick to bash ads - you still read this site... would you pay to read it without ads? I doubt any of you would.

    Nor would we expect them to. That's why we built a different business model that does not rely on banner ads.

     

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  20.  
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    Mike (profile), Oct 16th, 2008 @ 3:50pm

    Re: I agree with Ryan

    It's tough to take an article about the "death of banner ads" seriously when the page the article is hosted on it being paid for with banner ads.

    As we discussed, quite clearly, on this site over and over again, our business model is not banner ads, and they represent a very small portion of our revenue.

    So, no, the site is not being paid for by banner ads. There are some, and they do bring some revenue, but it's a small amount.

    Besides, shouldn't that make it even more credible? If our revenue was all banner ad based and we talked up how wonderful banner ads are, *that* would be suspect. But criticizing banner ads, even while we do make some money from them should be pretty clear that we're speaking from actual experience, rather than what drives our wallet.

     

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  21.  
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    Mike (profile), Oct 16th, 2008 @ 3:53pm

    Re:

    Interesting article... until Google announced their earnings at 4PM. Huge growth year over year, the vast majority of it from banner ads.

    Actually, no. The vast majority of Google's revenue is from SEARCH ads, which we discussed in the post itself.

    And, even though banner ads are making *some* money for the companies that host them, like Google, that doesn't mean they're a GOOD BET for the advertisers. And that's the potential problem.

     

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  22.  
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    Mike (profile), Oct 16th, 2008 @ 3:56pm

    Re:

    All media outlets need some form of revenue to provide their services

    Who said otherwise?

    if it's not sold on a subscription basis

    There are more options beyond just subs and ads.

    While I agree there is a lot of advertising overload, brand advertising requires a more dynamic canvass to convey their messaging and you simply don't find that in a text link.

    Again, that doesn't mean banner ads are your only option.

    Pop ups are a ridiculous creation, but quality banner advertising (not a "punch the monkey" ad) provides a strong user experience, without being intrusive.

    The research suggests otherwise, but ok.

    Plus, as users media consumption begins to transfer moreso to digital platforms, those outlets will have to find a way to monetize their content. Pre-roll videos can't do it alone.

    The fallacy here being that the only options are banner ads or prerolls.

    Expand your concept and you'll see there's much much more.

     

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  23.  
    identicon
    Anonymous Coward, Oct 16th, 2008 @ 4:00pm

    Re: Re: I agree with Ryan

    But they still represent revenue. Hypocrisy!! You are always railing against old business models and yet you continue to receive revenue from these models. If they represent such a small potion of your revenue why are you using them?

     

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  24.  
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    bjc (profile), Oct 16th, 2008 @ 4:17pm

    Re: Re:

    I'm not sure how you are breaking SEARCH ads out of Google's revenue. They claim 67% of their revenue is from sites in the Google network, but this includes Gmail, Blogger, Youtube, Google Maps, Google Earth, Calendar, Finance, Picassa, etc.

    I know I spend much more time on Gmail and Youtube than I do searching for stuff.

    I agree that context-sensitive ads are much more useful and probably generate better clicks as well, but they show up in more places than search.

     

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  25.  
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    Anonymous Coward, Oct 16th, 2008 @ 5:16pm

    EH, BE A MAN, DO THE RIGHT THING

     

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  26.  
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    Mike (profile), Oct 16th, 2008 @ 5:36pm

    Re: Re: Re: I agree with Ryan

    But they still represent revenue. Hypocrisy!! You are always railing against old business models and yet you continue to receive revenue from these models. If they represent such a small potion of your revenue why are you using them?

    Actually, I've addressed that in great detail. They still make money for us, so what's wrong with *us* using them? The problem is for *advertisers* who will eventually recognize it's a bad buy, and stop buying them. And if they do that, good for them. We're ready for it.

    But, can you please explain how it's hypocritical? We don't *buy* advertising -- which is the part that I think is a bad model. Please understand the difference between a publisher and an advertiser before you accuse someone falsely of hypocrisy.

     

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  27.  
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    ConceptJunkie (profile), Oct 16th, 2008 @ 6:20pm

    Re: Re: Re: I agree with Ryan

    Um, the word "Duh!" comes to mind. They're getting revenue, aren't they?

    If they are smart, they'll continue using banner ads as long as they provide revenue. That's kind of the point, don't you think?

     

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  28.  
    identicon
    Ryan, Oct 16th, 2008 @ 7:13pm

    Re: mike

    there's nothing wrong with my business model. I chose a business model that works, and it happens to be banner ads.

    It works because people still click on them and companies still see value in putting them there.

    If they ever stop working, I'll have to adopt to a new business model. That model will still "work" - as in it makes more money than it costs, but I'm sure it will involve some paid walls and some pissed off users.

    While I love reading techdirt, You're very quick to bash every business model out there without offering any suggestions.

    let's suppose MySpace and Facebook ditch banner ads all together. How do they make money without pissing off their user base. Go with it.. That'd be a post I'd like to read.

     

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  29.  
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    Mike (profile), Oct 16th, 2008 @ 9:07pm

    Re: Re: mike

    there's nothing wrong with my business model. I chose a business model that works, and it happens to be banner ads.

    There's nothing wrong with banner ads right now -- but the research + common sense makes it clear that it's unlikely to be sustainable. That's my point. And, as I note, they may be ok for you *now* but they're increasingly not okay for advertisers, which means you may be in trouble once they realize that.

    If they ever stop working, I'll have to adopt to a new business model. That model will still "work" - as in it makes more money than it costs, but I'm sure it will involve some paid walls and some pissed off users.

    If the business model involves pissing off users, then it's unlikely to work very long either. There are business models that work without pissing off users. That's what we talk about all the time, with examples. I know you're a regular reader, so are you really going to believe that those examples don't exist?

    While I love reading techdirt, You're very quick to bash every business model out there without offering any suggestions.

    No offense, but we offer suggestions ALL THE TIME. Not only that, we point to examples of how it's working. Hell, in this very post we explained how WE'RE building a business model that doesn't rely on banner ads.


    let's suppose MySpace and Facebook ditch banner ads all together. How do they make money without pissing off their user base. Go with it.. That'd be a post I'd like to read.


    We actually have discussed that in the past as well. Banner ads aren't particularly effective on either of those sites, with tiny CPMs and ridiculous low CTRs.

    But what those sites do have is a great platform for actually *engaging* with people and fans of brands, and offering up a platform on which other great ideas can grow. From *that* you can build a model that involves not inundating people with ads they don't want, but providing them with services that they need. Think about what we're doing with the Insight Community, which is much smaller than either Facebook or MySpace.

     

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  30.  
    identicon
    Dohn Joe, Oct 16th, 2008 @ 9:12pm

    Nice Banner Ads!

    Hey TechDirt, nice banner ads! You know...the ones on the right side of the page which advertise Chevy, Intel, and "GOBI"(WTF?!?).

    Oh...wait...according to your article I wasn't supposed to notice those.

     

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  31.  
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    Mike (profile), Oct 17th, 2008 @ 12:29am

    Re: Nice Banner Ads!

    Hey TechDirt, nice banner ads!

    Is it really that difficult for otherwise intelligent people to understand this? I have addressed the point in the past as well as multiple times in the comments:

    The point is that banner ads are bad for *advertisers*. For now, they work (somewhat) for publishers like us, so we'll keep them (within reason). But we hardly rely on them as our main business model, and have built a business model where we'll be perfectly fine if they go away completely.

    Our assertion is that more and more companies are recognizing that banner ads are a bad buy (as advertisers) and eventually that will trickle down to publishers.

    The fact that we still have banner ads doesn't refute that point in the slightest.

     

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  32.  
    identicon
    Twinrova, Oct 17th, 2008 @ 3:52am

    Re: Re: two sides

    Uh, no. That's wrong. We don't rely on banner ad revenue. In fact, that was the point of the opening of the post. Our business model is designed to work even if banner ads disappear completely.
    Isn't it difficult to tell people to change their position on business strategy when Techdirt doesn't even follow its own advice?

    Tell you what: Drop the right sidebar, the intrusive ads upon posting, then talk about "content=ad" instead of telling businesses they have the wrong model.

    "We're giving away our content as advertising for our business", Mike will reply. So what's the excuse for the intrusive ads if you already have ads on the site?

    While you may tell us "it represents a small amount" of revenue for running the site, don't you think this may be the reason other sites do it?

    Practice what you preach, please.

     

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  33.  
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    nasch, Oct 17th, 2008 @ 7:22am

    Re: The new banner ads are...

    Firefox + NoScript will probably take care of those for you.

     

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  34.  
    identicon
    Petréa Mitchell, Oct 17th, 2008 @ 9:08am

    Re: Re: Re: I agree with Ryan

    "I never realized techdirt had ads until I turned off adblock after reading all these comments."

    Same here, with NoScript.

     

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  35.  
    identicon
    Twinrova, Oct 17th, 2008 @ 9:08am

    Re: Re: Nice Banner Ads!

    Is it really that difficult for otherwise intelligent people to understand this?
    Read below for your answer.

    The point is that banner ads are bad for *advertisers*.
    Actually, they're bad for everyone. If advertisers are getting the clue (finally) these damn things don't work, then this means they don't work for sites like Techdirt, either.

    Yet, look around. They're everywhere, so somewhere, somebody doesn't get it and yet you claim we're having difficulty understanding this?

    How is it these banner ads "generate a small portion of the revenue" Techdirt (and others) make if they don't work?

    We intelligent people would like to know this, please.

     

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  36.  
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    Mike (profile), Oct 17th, 2008 @ 9:28am

    Re: Re: Re: Nice Banner Ads!

    Isn't it difficult to tell people to change their position on business strategy when Techdirt doesn't even follow its own advice?

    *sigh* We *do* follow our own advice. We tell our advertisers there's a much better way to accomplish what they want to do. Some are willing to try it, some stick with what they know, even though it doesn't work very well. But our advice is quite clear to ADVERTISERS: look for more effective ways to spend your budgets, and to PUBLISHERS: Don't rely on just banner ads, because that market may dry up.

    We follow both of those pieces of advice. We do not rely just on banner ads and expect that market to dry up, and we do not buy any banner ads.

    While you may tell us "it represents a small amount" of revenue for running the site, don't you think this may be the reason other sites do it?

    For most other sites it represents *all* of their revenue. That's what we're warning about.

    Actually, they're bad for everyone. If advertisers are getting the clue (finally) these damn things don't work, then this means they don't work for sites like Techdirt, either.

    Yes. I agree. But, as I thought I said clearly above (oh, look, I DID say it above), they are working somewhat FOR PUBLISHERS, but not for THE ADVERTISERS.

    So, as long as that's the case, we'll still use them. But the point is that eventually THE ADVERTISERS will recognize they don't work well, and when that happens, banner ads will not support publishers.

    How is it these banner ads "generate a small portion of the revenue" Techdirt (and others) make if they don't work?


    Again, as I explained clearly above, you need to understand the difference between an ADVERTISERS' perspective and a PUBLISHERS perspective.

     

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  37.  
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    mhhfive (profile), Oct 17th, 2008 @ 6:51pm

    No Hypocrisy... But Why Do We Have To Kill Off Everything Old To Promote The New?

    I'll throw in my own two cents here... Because we seem to have fallen into the classic trap of "the new and improved must kill off the old classics" -- when it is perfectly legitimate for both new and old to co-exist and share the market in ever-changing ratios.

    As an unrelated example, electronic books arguably have many advantages over printed books. But that doesn't mean printed books must die in order for electronic books to succeed. Eventually, as the cost of e-books falls and the advantages of e-books become more obvious to more consumers, the industry of e-books may at some point equal, and then exceed, the printed book market. It may take quite some time for this particular example to actually cross that line, but someday we may all be reading books on e-book screens. But that doesn't mean printed books will ever completely go away. Nor does it mean that printed books must somehow fail or cease to be a profitable business/industry before e-books can expand its market share.

    By analogy, banner advertising has its usefulness (just like printed books obviously do). And it's not hypocrisy for Techdirt to display banner ads (while Techdirt and the Insight Community builds up its "digital content" business). Techdirt is anticipating a future when banner ads may not be as ubiquitous as they are now. The shift away from banner ads may take some time, but we're looking forward to the change. And it's an easy trap to think that banner ads must *completely* die before the ad=content models can rise up, but banner ads might never go away. Techdirt is simply preparing for the growing adoption of the ad=content business (and letting everyone else in on the plan).

     

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  38.  
    identicon
    Keith Tauber, Oct 23rd, 2008 @ 2:15pm

    Banner ads do work and so does email ads

    I am the Director of Marketing with MortgageLedger.com a news site for the mortgage industry. While banner advertising is still being used I will agree times are tough right now especially in the mortgage sector. But companies still buy banner ads and still look to sites like ours to help them target their prospects.

    In addition to website ads we also employ what is called an Advertorial ad. This is emailed and is extremely effective. The reader opens the email and is provided with real information that they can benefit from and yet still be "sold" from the company who is doing the instructing. This ad concept allows both parties to experience value and thus provides a better return for their investment.

    I enjoyed the article, but I will continue to promote both online advertising as well as, email marketing.

    Thank you.

     

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  39.  
    identicon
    Mark, Nov 4th, 2008 @ 12:32pm

    They work alright

    Everyone, especially techie people, dislikes bad push advertising. It's a common theme.

    Good advertising works, though. If done well, it can provide a great user experience. There are many, many examples of solid, relevant display ads, television ads, etc. prompting people to go to search engines to search for more info. A good display ad can boost your awareness, it may even peak someone's interest to sign up for permission marketing, which will allow you to continue to provide relevant content marketing to them. Sure, you can't just throw up a banner and expect cash to flow. But it can be part of an effective overall strategy, when combined with search, good social PR, and a good permission asset focused on content.

     

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  40.  
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    Bob, Jan 10th, 2009 @ 2:31pm

    kmb281989@tamu.edu

    Interesting.

    kmb281989@tamu.edu

     

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  41.  
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    Jessica, May 14th, 2010 @ 4:03am

    Uh.. There are TWELVE separate ads on this page. Just this one page!

     

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  42.  
    identicon
    Evan, Apr 24th, 2011 @ 1:36pm

    Banner is not dead!

    This is 2011 now and banner ad are bigger than ever!

     

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