Wednesday, November 19, 2008

How disruptive is online advertising?

A Forrester Research report quoted in a Wall Street Journal article, neither of which seems easy to access on line, says that Kids These Days spend more time online now than they do watching TV (apparently a good chunk of that time is spent gaming). Widespread adoption of broadband connections (or at least, considerably-faster-than-dialup connections) has been a big driver for this.

This is causing both major advertisers and major online advertising players to re-think how best to reach consumers in the new higher-bandwidth In the case in point, Proctor & Gamble and Google are going so far as to exchange employees, the better to understand each other's cultures and outlooks. An odder couple you couldn't ask for, and yet it appears to make business sense.

On the one hand, this is just another chapter of the "How do we make money off this 'web' thing?" saga that's been playing itself out slowly but surely for the last decade or so. But on the other hand, it gains a bit more urgency when rephrased as "We need to make money off this 'web' thing. The other stuff is drying up!"

My feeling continues to be that the web will have much more impact on how companies make money than on which companies are making it. That certainly seems to be the lesson from the boom and bust: WebVan folded but brick-and-mortar grocery stores still take orders online. EToys got bought out by KB Toys and Walmart and Target went online. Not to say that new companies haven't sprung up -- Google, Amazon and EBay come to mind -- just that old companies adapting has been more the norm.

In fact, the how is not necessarily changing that much. P&G still makes money selling soap, grocery stores still sell groceries and toy stores still sell toys. The big difference is in how they reach their customers. And even then, an ad still looks pretty much like an ad and an online catalog still looks a lot like a catalog.

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