Display advertising problems

Some of this news is old but its still relevant. The economy is either contracting or growing slowly and so businesses pull back on advertising. The question is whether this has an impact to online advertising.

In one sense, the answer is "of course". I mean, if online represents a growing portion of advertising, then a pullback in advertising in general will result in a pullback in online too.

But let's go deeper. Online is split between "search" and "display" advertising. If search is ok then "display" is feeling the pain. If you look at AOL's and Yahoo's earning announcements from Q2, you might also draw this conclusion.

Listen, display's problem is that most of it is a diffuse, run-of-network, untargeted (really) commodity. And a commodity that has a low blended click-rate will sell only for a low price in order to get under an advertiser's acquisition cost. And if the supply of that commodity is increasing (blogs, widgets, twitters, on and on), then the price gets lower ann lower (assuming no other efficiencies drive down acquisiton cost). So, advertisers may be spending the same amount (or even more) on display, but the wealth is distributed across a greater number of impressions and at a lower per unit cost.

Just in case someone is really reading this - I'm not talking about display ads appearing on focused, medium sized  (quantcast rank between 20 and 2,500) sites that may be selling either direct or exclusively rep'd. I think those ad impressions have a much higher value to advertisers - ask me why if you want.

The fixes for the diffuse display problem are coming - here is one idea;

and here's another

but there's more coming - including from me and my pals at a new company.