Brian Fuller’s blog on the state of media and communications

The pause that distresses

Posted on | February 1, 2008 | No Comments

Before today, when Microsoft announced its unsolicited $44 billion offer for Yahoo, something was in the air. Advertising online was pausing, especially in the video space, where there isn’t enough inventory to sell ads against. While it could be tied to the impending (or is it here?) “recession” in North America, it’s also linked to advertiser dissatisfaction with the medium so far. In short, the long-promised metrics haven’t been delivered.

That’s what people expect, right? You go online because (a) people are going online and (b) technology will tell you exactly who they are and how much they’re engaging with your brand. Well, to date, the dog hasn’t hunted, and there’s a growing backlash against advertising (see Facebook Beacon debacle) intrusion in social-networking. Even before some of the controversy, advertisers weren’t jumping naked into the pool. A Yankee Group report found that in 2006, advertisers spent $276.40 for every television viewer in the United States over the age of six years. Online? $88.70. Advertisers spend $1 online for every $10 they pour into traditional media.

It’s not going away, for sure. Advertisers are still finding their way. In fact, Electronic Arts is going to make a new installment of its popular “Battlefield” series of war games a free download. They’ll forgo charging $50 for the new release and make money off in-game advertising.

So at least two things come to mind. With online advertising pausing, Microsoft-Yahoo is not just about advertising (think software legacy). The other thing is that traditional publishers shouldn’t expect their lost advertising lovers to rush back into their waiting arms. Whatever’s happening in marketing is being affected in part by an enormous pressure on budgets across the board, brought to you by your 3 billion low-cost friends in China, India and elsewhere. The best marketer in the world can’t work magic if the boss says he’s “right-sizing” the company to compete in the 21st century.

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