Long time lurker here, finally got an account to comment on this item.
I agree with Andrew's take on the new advertising paradigms, but I can't agree with his premise that display advertising on the Internet does not work. It works, and not only that, in some cases it works brilliantly. Not to say that it works for every audience (like HNers), or every product for that matter.
His point about low CTR is accurate but not entirely relevant. The user who asked in the comments "What is the CTR of the magazine ads?" hit the nail on the head. It's not always about CTR, but also brand impressions, reach and frequency.
Case in point: I did a campaign for a new brand in another country, which included display advertising. CTR was low, and initial conversions were low too. But over time, many would search for the brand after the visit, returning to the page and they converted! In so many other campaigns I would combine display with social media, email marketing and other stuff and get great results. Yes, I said email marketing. That still works too, and with some audiences, it is literally reeling them in. (No, I'm not talking about spam).
In short, Andrew is writing with an either/or mentality with advertising, when one needs to be thinking of and'ing: of all the tools available, which ones are going to work best together? Take a layered approach. Display advertising may be a hammer, but not every problem is a screw.
Andrew's thesis is very interesting, but he's a little too quick to throw out various babies with their bathwater. Take his dismissal of psychological approaches to advertising, for instance. Why? Why are sociology and psychology no longer relevant? Maybe they're irrelevant in the old-school, Don Draperesque sense of their use (i.e., people sitting around in a boardroom and telling narratives about What People Want, and so forth). But then again, no one's done advertising or marketing like that in 50-odd years.
Psychology is as relevant to digital advertising as it ever was in analog advertising, and it'll be massively more important in social advertising. Understanding how the human mind works, why it chooses what it chooses, and how people are influenced and, in turn, influence others -- these things are still the bedrock of advertising. Media types may rise and fall, but the human brain is still the human brain. Group behavior is still group behavior. Psychology and sociology will be increasingly important tools in the marketer's arsenal as we move into the media of the future.
It's not an either/or proposition between psychological theory and real-time data analysis. Savvy marketers should combine the two. Both have their place. (As you've pointed out, the piece tends toward too many "either/or" implications that needn't be).
Weissman needs to differentiate more. He seems to be mixing up marketing, advertising and sales. I would argue that "people sitting around in a boardroom and telling narratives about What People Want, and so forth)" are still core to successful advertising.
At the core of advertising is the "idea" - almost similar to a startup. Neither number crunching nor some psychological tricks are able to replace this. In fact their purpose is in my opinion just to evaluate or optimize towards better follow up investments.
Now this might be a different story when talking about (direct)sales where you can try to quantify action-reactions related to a specific product. And for most businesses the role of marketing ("all processes for creating, communicating, delivering, and exchanging value") is far more complex than just Tweets, Facebook and Foursquare.
I mixed those concepts up purposely in order to make the larger point which is that we may be on the cusp of native monetization schemes - ones that are consistent with how users use web services
"...we may be on the cusp of native monetization schemes - ones that are consistent with how users use web services..."
Perhaps, but that doesn't negate the strategic fundamentals of either marketing, advertising, or sales. The emergence of breakthrough tactics -- even disruptive tactics -- does not necessarily upend strategy. In some cases, it simply allows the marketer (or advertiser) to pursue his/her strategy more effectively.
"The product sells itself" is, to some extent, a misperception. Even in the coming state of things. No product ever truly sells itself -- even if it is found in search, or recommended by a friend, or stumbled upon. The art and science of building, distributing, pricing, and positioning that product -- so that is is recommended by the right people to the right people, stumbled upon under the right circumstances, or searched for in the right context -- still draws upon all the knowledge built up in the marketing field to date.
I think the either/or mentality is entirely rooted in billing; you either pay CPC/CPA (Cost Per Click / Cost Per Action), or you pay CPM (cost per 1K impressions), but not both. The interesting question is, why not charge for both?
I see your point but I don't believe that generally web display works because it interupts a user's activity. But I agree, maybe it is not all either/or
While I agree with the author's conclusion that better integrated "ad" units like StubleUpon's Paid Discovery, and Twitter's Promoted Tweets will become both more prevalent and affective, his premise that contextual ads don't work is just false. He's also also wrong in thinking that these more integrated ads are entirely new concepts, divergent from old media such as television, cinema, magazines, and periodicals.
The truth is that integrated advertising on these new social web services is just catching up to what has long been standard in traditional media. For example, in TV and cinema, product placements by brands have been an effective alternative or supplement to standard commercials. In the same way, magazine and periodicals have long accepted "advertorials" by staff writers that passively mention/promote specific brands/views along with their traditional page layout ads.
While he's correct to think that these more integrated types of ads will be more affective on the web as they're more "consistent with the way their services natively work," it's something that traditional media advertisers have known for a long time.
i dont think traditional media advertisers have applied these principles to web ads; thus my conclusion that display doesnt work. New products - maybe even some that I mentioned - will work better
I think the more obvious and less 'revolutionary' way of stating his point is that ads that focused on awareness (i.e. i wasn't looking for information about this but you are telling me anyways) are dying in the face of ads that focus on conversion (i.e. I was looking for this and your ad helped me find it and buy it).
This isn't a radical change or even the end of advertising, its just more efficient.
Really well put. The author's right, but I'm sensing he feels this is revolutionary. It's not. It's been coming for a long, long time, as display gets moved more to the 'branding' column and paid discovery, paid search and other technologies get more and more love from marketers.
There seem to be two points to this article; (1) CTR is a terrible metric for ad effectiveness, and (2) the web is an extremely rich medium for displaying ads, and there's still potential that has yet to be discovered. I'm not sure why the author combined those points in a single thought, but they're both valid, and (I think) very true.
I agree with Andrew's take on the new advertising paradigms, but I can't agree with his premise that display advertising on the Internet does not work. It works, and not only that, in some cases it works brilliantly. Not to say that it works for every audience (like HNers), or every product for that matter.
His point about low CTR is accurate but not entirely relevant. The user who asked in the comments "What is the CTR of the magazine ads?" hit the nail on the head. It's not always about CTR, but also brand impressions, reach and frequency.
Case in point: I did a campaign for a new brand in another country, which included display advertising. CTR was low, and initial conversions were low too. But over time, many would search for the brand after the visit, returning to the page and they converted! In so many other campaigns I would combine display with social media, email marketing and other stuff and get great results. Yes, I said email marketing. That still works too, and with some audiences, it is literally reeling them in. (No, I'm not talking about spam).
In short, Andrew is writing with an either/or mentality with advertising, when one needs to be thinking of and'ing: of all the tools available, which ones are going to work best together? Take a layered approach. Display advertising may be a hammer, but not every problem is a screw.