Susan Mernit’s Blog
My friend Susan Mernit, whom I respect, expressed her perspective on what it would take for online advertising to eclipse magazine advertising.
Unfortunately, her argument is based on two key points: 1) demographic data is necessary for precise targeting, and 2) demographic data is necessary to establish ROI.
Clearly, demographic data is valuable to advertisers. Such data provides a basis for understanding ones existing customers, and sourcing (i.e., lead generation) additional potential customers.
However, with the rise of search engine marketing (SEM), it has already been shown (to the tune of ~$2-$2.5B in CY2003) that a user’s “intent” is more than sufficient for targeting. Hundreds of thousands of businesses large and small have continually spent more per click to capture user intent over the last few years, all of them implicitly understanding that they are segmenting online users into potential customers through the user’s expression of intent through search keywords.
And guess what? These businesses are more than capable of understanding the ROI on their advertising spend; simply, the margin on sales to the converted subset of these leads, minus costs. In fact, internal calculations at Overture shows some businesses generating ROI approaching 8000% (yes, eight thousand percent). Much like phone books of old, online search is minting millionares left and right, comprised not only of those running the search co’s, but those building their businesses through them. All without knowing age, gender, surveying, etc.
All of which is NOT to say that demographic data isn’t valuable. In fact, a far more powerful advertising model, one that mixes intent, contextual setting, demographic, pyschographic (et al) targeting will emerge in the future (with pet projects already in the works at Tacoda, Overture and others).
But such complexity isn’t necessary for online advertising to surpass magazines… all that is necessary is for SEM and similar solutions to be packaged appropriately for your average SMB.