Decoding the new economy

The advertising revolution still awaits

Mary Meeker flags big changes for the mobile phone industry but advertising still remains stuck in the broadcasting past

As usual Mary Meeker’s internet trends report lays out the current state of the online world.

Two things that stand out in the mass of statistics are how the smartphone market is now commoditised and that the advertising funded media model is redundant on mobile with adblockers proliferating in China, India and Indonesia – the world’s three biggest emerging markets.

While Mary Meeker flags those changes, she also continues to point out how broadcasting still gets a disproportionate spend of advertising revenue, something she’s been flagging for five years.

For advertisers sticking with the media they know is understandable but it does open some opportunities for a great disruptions.

The design of Meeker’s slides leave some people unimpressed though.

The rise and fall of a social media influencer

The story of one Tumblr influencer illustrates much that is wrong with the social media industry.

Jess Miller from suburban Melbourne was a social media star. Two years ago at the age of sixteen she was earning $10,000 a week as ‘Pizza’ on Tumblr.

Miller was a classic social media influencer, with 700 thousand young followers she was popular with advertisers then along came the payday of reposting fake diet pill testimonials.

Miller started to make serious money. She’d already been able to make a little cash: fashion companies and some small Etsy stores paid her to post pictures of clothing on her blog, with a nudge to her followers to check out their sales. She’d earned about $4000 in this way.

But then the big one came along. Two 18-year-old American social media entrepreneurs, Zach Lilley and Jeremy Greenfield – fans and friends of Pizza – approached Jess Miller and other top-performing Tumblr bloggers in April 2014 with a proposition for a money-making scheme. It used a decidedly old-school lure: diet pills.

Lilley, Greenfield and their associate Dennis Hegstad ran a website called Exposely, which connected brands to people with strong followings on social media. Lilley and Greenfield used their social media skills to create diet pill ads that masqueraded as Tumblr posts, essentially fake testimonials from women talking about their weight-loss journey. Miller would re-blog these posts, and get a small payment if the user clicked on the link. If the user bought the pills, Miller would get $23 and Exposely would get $26. She watched the money roll in – to her mother’s PayPal account.

Eventually the breaches their terms of service, not to mention ethics, became too much for Tumblr’s management and they deleted Miller’s blog along with a group of others in the scheme.

Miller’s story illustrates the manipulation that is a big part of the social media influencer industry with behaviour that’s almost certainly illegal and most definitely unethical. It also illustrates the risks of basing an income or business on service where you can be closed down any time.

For Miller, she seems relieved her time of fame is over. Those building their businesses around these platforms may not be so philosophical.

How the old advertising models fail on new media

Online display advertising is broken. Which should surprise no-one.

Understanding how a new technology will change industries is a challenge that has faced every generation in modern times.

Two of the industries most challenged by the rise of the internet have been the publishing and advertising sectors which have seen their established and wildly profitable ways of doing business demolished.

One of the mistakes almost every industry and business facing technological disruption makes is trying to apply their old models to the new methods which almost always produces poor results, the transition from live theatre to movies and then to television through is a good example of this.

So it’s not surprising that the advertising industry is now admitting that display ads on web pages have never worked and from that follows the maxim that print dollars equate to digital dimes.

For the online publishing industry, we’re still waiting for our modern day David Sarnoff to figure out how to make money online.

Facebook has another attempt at local search

Facebook has another attempt to capture the small business search market

Before the web came along, advertising for the local plumber or hairdresser was just a matter of placing an ad in the local newspaper and a listing in the Yellow Pages. Then the internet and smartphones swamped those channels.

One of the greatest missed opportunities has been small business online advertising. With the demise of phone directories, particularly the Yellow Pages, it’s been hard, time consuming and expensive for smaller traders to cut through the online noise.

This market should have been Google’s for the taking however the local search platform has been drifting for years in the face of company apathy, mindless bureaucracy and silly name changes to fit in with the Google Plus distraction.

While Facebook has been playing in the local business space for a while they are now ramping up another service with a new site for local services search.

TechCrunch reports Facebook are experimenting with the local search function and while it isn’t anywhere near as comprehensive as Google’s at present the rich data the social media service has been able to harvest could well make it a far more useful tool.

However it’s not Facebook’s first attempt and Apple too has been playing in this space albeit with little traction.

If Facebook or Apple does usurp Google, the search engine giant will only have itself to blame for missing the opportunity as it was distracted by loss making ventures while letting potentially lucrative services pass.

The local business search market should be a lucrative opportunity for the business that gets it right. It may well be that all the big tech giants are unable to make this market work.

Publishing in an ad blocker world

The era of ad blocking isn’t going to be good for readers

The latest release of Apple’s mobile operating iOS with an inbuilt ad blocker has again raised the issue of blocking website advertising.

Some see it as good for the advertising industry, believing it will force advertisers to think beyond intrusive pop up ads while others point out that ad blocking will devastate most of today’s online publishers.

While both views are probably right, it underscores how the media world is still waiting for a modern David Sarnoff to appear as the current model that sees publishers’ revenues declining is clearly not sustainable.

In the meantime though we’re almost certainly going to see more aggressive ‘native content’ – adverts posing as articles – as publishers try to find revenue and advertisers attempt to get their message across readers can expect more desperate attempts to get attention.

Those cheering for the end of the current advertising model should be careful of what they wish for though, the scramble for revenue and eyeballs is going be unseemly as we enter the era of the blocked advert.

Tag: advertising

The advertising revolution still awaits

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