Kiss My Ads:
as a primary revenue source, is history.
By Rob Frankel -- Ziff-Davis Internet
Business Magazine, May, 1998
OK, I know this is no way to start off
a relationship, but an item just came across my desk and I couldn't help
writing about it. I could have clunked out some trippingly, cheery tripe
about how wondrous This Thing Called Web is. But this was just too juicy
to pass up.
Before I get too far, you should know
I'm basically an ad guy. I do advertising and marketing for clients every
day. And roughly 99 out of 100 clients that waltz through our doors asks
me the same Larry, Curly and Moe of every new business meeting:
"Should I build a Website?"
"What will it cost?" And the ever-famous, "How do I make
money with it?"
It's too boring to go into what the answers
to Numbers One and Two are. But see Number Three hanging off the end of
that last paragraph? The part about making money? Well, that's our vicitim
of the day. That's the guy into whose heart our Grand Master of Online
Oddities, Steve Case, drove a stake when he announced that America On
Line was raising fees for unlimited access accounts.
The rate increase itself was no big deal.
What got me was why he was raising the rates. According to Steve, "members
are using the service three times as much as they did a year ago, [which]
means that our costs have risen dramatically. A big chunk of these cost
increases is being covered by companies who are advertising and doing
Hmm. Care to guess what's next?
"[W]hile those nonsubscription revenues
are growing quickly,...they aren't yet keeping pace with the phenomenal
increases in usage...," he whines, "...Therefore, we must find
new ways to cover this significant increase in costs..." yadayada.
Hey, that might be good enough for Ozzie and Harriet, but you and I know
what he's really saying: Advertising ain't cutting it.
Do you care about AOL raising rates? Do
I care about AOL raising rates? Does anyone? Not really. But you bet I
care why they're raising them. This is the death knell of the over-hyped,
under-performing advertising-as-a-primary-means-of-generating-income thing.
Ever since I clicked my first banner,
I've been telling anyone willing to listen to drop the advertising model
like a hot brick. After all, if AOL has a zillion subscribers and our
man Steve can't make it work, do you really think your site can do any
better? You're much better off sticking to your core business and booting
banners into the back seat with the crumpled Burger King wrappers.
Wait. You hear that? If you close your
eyes and listen real hard, you can hear the sound of angry media planners,
furiously clacking out e-mails about the "promise of the web"
and how if we all hold hands and chant, an advertising-based site can
really make a profit.
Yeah. Sure. And picture phones will be
in every household by 1968.
Look, I've got no gripes against ad sites.
But I'm a profit-oriented ad guy. I still tell my clients to install banners
on the off-chance that some yokel will actually pay for them. I mean,
if someone is willing to fork over bucks for banners, you'd have to be
a dope not to take it. But not as a primary means of generating revenue.
The fact is that when it comes to making
profits, you can get there quicker by selling stuff than you can advertising
it. That's why so many people jump into the web in the first place: if
it only costs a few shekels to start up, it only takes a few sales-and
a lot less traffic-to break even.
Well, sort of. But you get the point.
Remember when everyone at the cocktail
party held their "hits per day numbers" higher than their martini
glasses? Well, those days are over, scout. These days it's about content
and transactions. Commerce and cash. That's where the smart money is.
Just ask Steve.