Good news, bad news.
The Good News: Study after study is confirming that marketers are spending more on word of mouth advertising at the expense of more traditional advertising. Marketers are finding consumers to be far better and more valuable marketers of their product than media companies. Nice Work!
The Bad News: We don’t get the money.
But volunteering makes you feel all warm in the inside right? Not in this case. You and I provide the value. We do the work. Advertisers write the check. The money just isn’t flowing to us. But it can.
Over the next 2 weeks, I’ll be blogging more often and more specifically about an effortless way to redistribute the flow of advertising dollars to consumers. To you and me. After all, advertisers are spending more on word of mouth. We should be getting a raise.
4 comments ↓
This has always been the case. Nothing new here. Of course you are going to listen to a trusted source rather than WOM.
Of course, we aren’t volunteering, we get endless hours of entertainment through advertising supported media.
The IAB just did a study titled - Economic Value of the Advertising-Supported Internet Ecosystem
http://www.iab.net/insights_research/530422/economicvalue
Makes sense. Sometimes putting the $ directly into the people’s hands is not the best thing to do. Do cash payments to the homeless work? Not really, booze and drugs get bought, rarely food or shelter. Of course there is the rare case. But we got rid of Cash payments in SF for a reason.
Sure there are inefficiencies in advertising. There is in all industries. However, I did agree that it is a broken model. It is simply evolving. Online advertising is less that 15 years old. It simply has a long way to go, but has become a large and important industry in the US. However, David’s theory is based on the assumption that all the companies and people involved in advertising add little or no value. This is simply not true.
Image the same scenario in the grocery industry. What if we gave all the money spent sourcing and distributing food to the consumer. Have fun shopping, because there would be no stores. Imagine going from farm to farm picking up one or two items at a time. Wow, now that is inefficient.
The IAB just issued an compelling report in the advertising supported ecosystem of the web and it’s economic value.
http://www.iab.net/insights_research/530422/economicvalue
Jonas. You are right. Going to a farm to get our food is inefficient just like Coca Cola coming to my house to tell me about their new soda is inefficient. Middle men evolve to create efficiencies.
But technology can change that. With services like http://www.alice.com, you may start getting your detergent directly from P&G. More conveniently, less expensively. If a frictionless model can be created without a middleman, then their ability to create efficiencies is no longer needed. Same hold true for advertising. If advertisers can reach an aggregated self collected mass of consumers, why not ‘go direct’?
Of course Alice.com ’s revenue model is ad supported. They are still a middleman, may a more efficient one, we will see.
Here’s a quote from a TechCrunch article
“So how does the site make money? Advertising. Alice.com collects money from manufacturers which post ads on the site and also offers alternative ways to advertise via free samples and coupons. It should be interesting to see if advertising alone is a viable business model for Alice.”
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