Internet advertising: we aint seen anything yet

I attended a panel discussion recently on Internet advertising. The panel was an insightful and lively discussion on “What’s working, What’s not and what’s coming in Internet advertising”.

 

The moderator of the event was Tony Perkins, Chief Editor of Red Herring and founder of Goingon.com. The panel included heavyweight google and startups in this industry all vying for a piece of the pie. Gokul Rajaram, Product Manager of Adwords and Adsense at Google, Ujjal Kohli, Founder of Rythym New Media, Philip Kaplan, Founder and CEO of Adbrite, Jonathan, Founder of Socializr and a VC whose name I can’t remember now.

 

Here are some of the key takeaways and my analysis.

 

The boom in internet advertising is just beginning. Today the main spend on internet advertising is for transactional advertising which is basically e-commerce. We still haven’t seen companies spending on BRAND advertising on the internet, which is the main chunk of the spend on traditional media. For this to happen, demographics is key, without which it is very difficult to target the audience you want and think of a achieving an ROI. Hence the companies who can provide this will be king’s of this space. For ex: take a property like facebook, it can provide a potential advertiser who can for ex: run an ad for all male students in the age group of 18 to 25 who play college football! Companies who create a platform that will allow advertisers to do this will be king.

 

62% of content read by 21 year olds is generated by people who they know. This is a very challenging group to crack because they are generally numb to marketing or brand advertising for that matter. Hence brands are now looking to create content which users can interact with and getting young brand ambassadors of sort to create the buzz in order to penetrate into this hard segment. The internet and now mobile is probably the only way to reach this segment as they spend most of their time on the internet and rarely ever watch TV (You get your favourite shows now also on TV..and soon on the mobile). Such users want their IM, they want to be incharge, be seen, create and share content and take things mobile. This poses are very interesting challenge for advertisers.

 

An example of content that such users watch is silly videos. YouTube is the 15^th most popular site on the internet when I last checked. And interestingly not just young users, but everybody watches such videos. Hence embedding ads in videos, games (mobile, MMORPGS etc) are the next thing to look at. The challenge though when selling this to a brand advertiser is that they are very skeptical about where they will put their brand.

 

An interesting prediction make by one of the speakers was that, the mobile which is the 3^rd screen in our lives today will grow to twice the size of internet advertising today! That is a bold claim to make, but when you think of the number of mobile phones out there today (1 billion and growing like crazy), it’s not hard to fathom this.

 

Once again in this space, demographics are crucial. The operators hold this information today and the company who can rally these guys to create a business model and provide this as a service to advertisers will once again be king.