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Lots of people are getting excited about the prospects of putting ads into eBooks and eMagazines.

1. Hearst are so excited half of their Skiff Reader pictures have people clicking on ads. You’d think they were creating an electronic ad clicker and perhaps they are.
2. Google Editions is looming and if it weren’t for Amazon’s ‘ads in ebooks’ patent and Apple’s ‘ads in the OS’ patent Google would probably have ads in both Android and in Google Editions eBooks.
3. Perhaps Google will go ahead anyways.

Newspapers killed themselves by buying the ‘give away content and make money from ads’ siren song of the Internet.

You’d think that would convince content creators and companies selling content to stay away from advertising. However, it doesn’t seem to be enough.

Users don’t really like Ads

Users are showing their reluctance to be herded like cattle -

1. Research shows that users ignore advertising on the Internet.  
2. The only ads that seem to work are deceptive ones i.e. ads that don’t seem to be ads. That’s why text ads are such big hits.  
3. People use technology like ad blockers to strip out Ads.
4. There are numerous other data points that indicate users dislike advertising and are not as impacted by advertising online.

A great example of the last point is the dismal click-through rate for ads on Facebook.

Still, advertising companies and content creators fixate on ads.

Why are so many companies fixated on ads?

Advertising hasn’t worked for the overwhelming majority of start-ups. It certainly hasn’t worked for newspapers.

What makes content creators still cling to ads?

1. Advertising is a known thing.   
2. It’s easy to imagine, then think, then hope, and finally believe that advertising will work online.
3. It’s easy to do ads and be lazy. 
4. You can blame extrinsic factors.
5. It’d be a huge, uncomfortable change to move away from advertising.

Perhaps the biggest factor is that Internet companies prey on the fear and greed of Publishers.

Companies fooling companies that want to fool people

At some level we should be happy about this.

1. A magazine says – Go Ahead. Show ads to our readers and get them to buy things they don’t need.  
2. The advertising company or Internet company says – Yes. Why not make your magazine free. Then even more people will click on your ads and you’ll make even more money.  
3. The magazine is confused – What if Ad revenue isn’t enough?
4. The advertising company says – If you don’t do it your competitors will. Trust us – look at how well newspapers did.  See what happened when newspapers tried to move to paid content.
5. So the magazine starts giving away its content and hoping for advertising revenue.

Karma kicks in. Magazines sell their users to advertizers and users return the favor by totally ignoring all advertising.

Who benefits? Users and Advertising Companies. Who gets killed? Greedy, scared Publishers.

Would an Internet company really exploit a Publisher?

Of course not – all Internet companies are made of sugar and spice and all things nice.

1. There are lots of real-world companies that are extremely inefficient.
2. When they start to transition over to the Internet, which they don’t understand at all, they are like fattened cattle being sent to the slaughterhouse.  
3. Users, due to years of abuse, and Internet Companies, in search of profits, are glad to strip old world companies bare.

Although both users and Internet companies push the notion that Online Advertising will work -

1. Users don’t really do anything with ads.
2. Internet Companies still keep selling old-world companies the promise of eventual huge profits.

The illusion that advertising works online is very convenient to everyone in the online eco-system – that’s the only reason it has survived.

Will companies like Hearst ever figure out that advertising isn’t the answer?

Probably not.

When we find success with a model we are reluctant to believe it could stop working or that another model would work.

1. Which is why Web start-ups keep making things free and putting ads in. Search is the only thing where this has worked and yet new companies try advertising models everywhere – rationalizing away the lack of profitability.
2. It’s why Newspapers and magazines are doomed. They are scared to embrace non-advertising revenue models – at some level they don’t understand anything except ads and subscriptions.

Apple and Amazon have shown a remarkable ability to not fall into these patterns of behavior. Probably a function of the CEOs.

It’s not that big of a conceptual leap to understand that readers are now smart enough to ignore ads.

Advertising does not work online – except in Search and Search Ads are actually shortcuts. They are taking users where users already intended to go.

Hearst’s desire for a return to the good old days when things worked the way they are supposed to is overriding the giant example of newspapers and almost every start-up not named Google.

Filed under: thoughts Tagged: | lack thereof, utility of advertising