Author Archive - Joshua Stylma
The Economics of Online Advertising
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Written By Joshua Stylman | September 12, 2007 | Share This
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When I get a MarketWatch alert pointing out how volatile the market has been in a given day or read in the news that ad spending is in trouble, I think of a recent post in which Henry Blodget of the outstanding new blog Silicon Alley Insider (here’s their feed) addresses the flagging market’s effects on online advertising. He suggests, in response to this Reuters article:
Please do not hallucinate that this will somehow not affect online advertising. In most prior recessions, advertising spending on all media except small, emerging ones has declined. The Internet no longer qualifies as “small” and “emerging.” (And this status didn’t spare it last time). Online ad spending should do better than spending on traditional media, but if current trends continue, this won’t be saying much.
Of course, I understand that an economic downturn has a ripple effect through all aspects of the economy, and marketing dollars are generally going to get cut first. I do wonder, though, if within overall media budgets, marketers will have a harder time axing their online initiatives.
In the late ’90s, I often wondered how some marketers were able to pay the premiums that publishers and networks were commanding online. The answer always seemed to be that they were either testing new channels for the future or buying market share – and would figure out the economics of the business later. Of course, when the market turned, marketers didn’t have the numbers to justify their Internet budgets to their boards and investors, and those expenditures were cut.
Nowadays, as Henry rightfully points out, Internet advertising is no longer “small” and “emerging,” and so perhaps it is more susceptible to the chopping block. But I’d argue that not only isn’t Internet advertising no longer a novelty, it’s also so vastly different from traditional advertising and from its nascent form that it ought to be the very last line item to get cut from media budgets. That is, I think the promise and hype of the late ’90s has been fulfilled: Web marketing is immediate, quantifiable, and most important, wildly efficient. Large marketers and their agencies actually have staff to plan and execute campaigns, and web analytics systems are no longer held together with duct tape. Internet advertising provides a minutely measurable return, so when utilized correctly, it really pays for itself. There’s no medium other than the Internet that allows that level of accountability and relative transparency, and essentially takes the guesswork out of advertising. That ought to mean that while there’s still a ways to go, the web is no longer the great unknown to advertisers, and if the old adage in marketing is “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half,” I’d imagine that the known and unwasted component of marketing budgets - online advertising - will remain.
To clarify, I don’t claim to be an economist, nor am I suggesting that digital advertising is recession-proof. What I am wondering is if marketers might actually embrace the Internet as the last channel standing, if and when overall marketing budgets get cut because of macroeconomic trends. Maybe that’s just wishful thinking, but in any case, if this is a recession, it will be an interesting test both for Internet advertising and for marketers.
In Good Company at SMX
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Written By Joshua Stylman | June 7, 2007 | Share This
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Yesterday, I returned to New York after spending a couple of days at the inaugural Search Marketing Expo, hosted by Danny Sullivan and Chris Sherman. I wasn’t going to attempt to blog the individual sessions because no one could have done a better job than Barry in doing so at Search Engine Roundtable.
As Danny’s first hosted conference since his breakup with Search Engine Watch, SMX was expected to run like a repeat of its predecessor event, Search Engine Strategies. Though SMX definitely had a “getting the band back together” feel, the event was surprisingly different from recent Search Engine Strategies shows. Like SES, the conference featured excellent content and a strong range of speakers, but the dialogue was noticeably more sophisticated. Whether talking about strategic issues (e.g.: privacy or industry concerns) or tactical methods (quality score, spam penalties, etc), the attendees exemplified a level of passion that has long been lacking from SES. I had equally outstanding conversations with in-house marketers from Fortune 500’s like Time, Inc and CondeNast to more niche companies, but equally savvy folks from organizations such as PlasticSurgery.com. It was very reminiscent of search shows from the early part of the decade, when the audience was familiar and the attendees seemed truly excited about the industry.
As such, the hallways conversations were less about lead generation for exhibiting companies, and more about actual innovations in search. Granted, the competitive lead-driven atmosphere of SES isn’t necessarily a bad thing, but it is perhaps the inevitable result of industry maturation. Nevertheless, I really appreciated the grass-roots feeling that resonated throughout SMX - if for nothing other than to exemplify that, though the industry is growing, search events don’t have to be corporate.
On that note, I’d like to say Congratulations to Danny, Chris and the rest of the SMX team for a phenomenal debut. And, yes Danny, you can lose the suit…we’re all more comfortable when you’ve got your Vans on.