But the simple facts are:
Our attention is all in the stream. As evidenced by the eye-tracking studies – they will remain in the stream. We know that celebrity endorsement works. It has for decades. Celebrities care about their personal brands so will naturally rebuff requests to sponsor inauthentic products. The beauty of social media is that consumers can vote with their “unfollow button” so it has a natural self-correcting mechanism. If you get economic value out of having followers you don’t want to lose them over one ad. And if you don’t follow anybody who Tweets ads you don’t see them at all! Sure, there needs to be ad disclosure. And naturally we have built in quality controls like: frequency capping, automated measurement so we can pull ads that people respond poorly to, A/B testing tools, data analysis to tell celebrities & brands which products will resonate, etc.
But I can tell you as my firm invested in Overture who created the category of pay-per-search that Google perfected – our company underwent three years of ridicule in Silicon Valley until people looked at the performance data and realized that efficacy matters. The technology blogs will be aflutter with continued criticisms of in-stream ads while mainstream consumers continue to click on links provided by the celebrities they respect and will buy products accordingly. We already have the data that proves it.
In Image Ads
Another areas that I’ve been really focused on over the past 2 years is “in-image ads” as another form of integrated media. When you think about the eye-tracking we know that people care about the story and the images. And it is already an accepted fact that in many cases the ads & images are blended as any lady who reads Cosmo or Vogue will tell you. The big splashy image ads is part of their reading experience.
So we put our money where our mouth was an invested in the largest in-image advertiser on the web, GumGum, whose network now reached over 100 million monthly uniques with 3 billion ad-compliant images, delivering an average CTR of 0.4% (2x industry average for banners). The eyes are in the image. We believe this is why Google Ventures invested in Pixazza.
As you can see from this image, the ad is unobtrusive and potentially valuable to the reader. The ad unit is served up based on algorithms that determine what is actually in the image and also for whether an ad placement would impair the image. We could even target ads better based on who the end consumer was.
What else is out there in the field of integrated advertising?
Vibrant Media & Kontera have both built large and fast-growing businesses around text-based advertising and there are new entrants doing it in new ways like SkimLinks. Vibrant has a reach of 250 million uniques, making in the 12th largest ad-focused property online and has 3rd-party verified studies suggesting up to 50% increase in brand lift following their in-text ads (I’m not an investor in any of these companies). Text is shown to deliver higher CTRs than banners. Text is what we’re reading. It’s integrated.
There is a whole industry being spawned in the Internet video world and especially in the integration of devices (second screen TVs) and the TV experience. Some of the interactive experiences I’ve seen in recent demos are simply mind boggling and are starting to form new opinions in my head about how we will consume big screen TV in the future (I’ll save that for a future post).
The games industry has massively changed over the past several years to more of an integrated advertising / purchasing media with the growth of virtual goods and ads. An obvious example of integrated media would be the new Rio Angry Birds version. It’s actually very cool. There are increasingly incentivized offers to get more powerful swords & shields in battle games. This has proved far more effective than small crappy banners at the bottom of each screen.
There will always be a tension between advertising wanting to reach audiences through whatever means they can to capture their attention and help them discover new products and consumers who claim a strong preference for ad-free products. Yet the other tension between ad-free products that cost more versus ad-supported models have a clear winner: ads. On products where I’ve seen data the “ad free” versions have converted at 4-6% of the user base at maximum.