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May 07, 2007
Blog Post

Do Web 2.0 Ads Really Work? New Study Data Results Are Disappointing

SUMMARY: No summary available.
By Anne Holland, President

I'm in New York City today to give a speech about Web 2.0 at Sherpa's annual Selling Online Subscriptions Summit. (See below for link to transcripts & slides.) So, as you can imagine Web 2.0 has been weighing on my mind a lot.

12% of Web traffic now supposedly goes to so-called Web 2.0 sites, such as MySpace, and Flickr, not to mention 17 million blogs. I guess you could say Web 2.0 is the reality TV of the Internet.

Which, of course, makes it enormously appealing to would-be advertisers. Or so platform owners such as Google hope. In fact, a Google exec proclaimed last month that "tens of billions in offline ad dollars" were going to shunt over to the Web as soon as YouTube made ads within videos easy for media buyers.

At last, an Internet format that old-school Madison Avenue TV commercial types can embrace.

But will it work? The funny thing is, for the past 10 years selling ads on user-generated content (UCG) was really tough. Before Tim O'Reilly came up with the snappy Web 2.0 nomenclature, online bulletin boards, discussion groups, personal profile databases, personal Web page networks and, yes, millions of blogs all existed. But they didn't get much press, and it was nearly impossible to sell ads on them.

OK, part of the difference now is more video. But, that said, video has been available as an online ad format (AKA rich media) for ages.

The other part of the difference is pure, unadulterated hype. When New York agency types heard that the founder of Wikipedia was going to be in town this week for a breakfast, the deluge of registrations was so vast that event organizers had to switch locations twice.

Web 2.0 is cool, cool, cool, and everyone wants to tell their clients they are doing something in it.

But, 'Where's the data?' you ask. Well, luckily, BlueLithium Labs came out with a new study last week with some well-researched and useful data. I'm including a hotlink to that study below. Three highlights:

o Ads on non-2.0 sites (classic editorial content sites) convert 31% better than ads run against user-generated content.
o Ads on top-brand non-2.0 sites (defined as comScore's top 250) convert 175% better than user-generated content sites.
o However, 2.0 media is so *cheap* (as of now anyway) that it's still worth testing. The minute the price goes up, buyer beware.

This is actually no big shock (except perhaps to Madison Avenue.) Human beings are all about *THEMSELVES*. Web 2.0 is incredibly appealing content because it's all about you. Ads are generally not all about you. They are about the advertiser.

Super-targeted niche ads -- especially those served by contextual systems such as the ones ITtoolbox recommends in their white paper (see link below) -- can work really well in this case.

But if you're a Madison Avenue media buyer, you are not remotely
interested in super-niche media buys. Even if the 2.0 media is cheaper per thousand, the admin, tracking, and creative costs of running dozens or hundreds of niche ads will far outweigh the savings.

In other words, if you are tasked with reaching 10 million consumers by Wednesday, which will you do -- run 1,000 different super-niche campaigns or run 10 general ads on broad-reach media?

Which is why you can be sure we'll be seeing lots of less-then-targeted TV ads on YouTube someday soon. And when the ads invariably don't pull as many clicks as expected, Madison Avenue will shake their heads and say, "I told you the Internet wasn't as good as it seemed."

OK, call me cynical. Here are the links to that data for you:

BlueLithium's new white paper on UCG advertising data:

(Open access)

ITtoolbox thinkpiece on B-to-B UCG advertising:

(Registration required)

MarketingSherpa's Viral Hall of Fame 2007 - many entries used Web
2.0 promotional methods:

(Open access)

Transcript & Powerpoints from Sherpa's Selling Online Subscriptions
Summit 2007 (including my Web 2.0 speech):

See Also:

Comments about this Blog Entry

May 07, 2007 - Dan Morrison of ITtoolbox says:
Anne, Thank you for sharing this information and linking to our white paper on the benefits of advertising in online communities. I think it is important to add a couple key points to your opinion shared in this posting and the results of the Blue Lithium study. First, there are vast differences in the purpose and function of various community driven sites--they are not all equal or even comparable. Some, such as the larger ones you referenced including MySpace and Flickr are about people and self expression. Others, such as ITtoolbox, Wikipedia, Sermo, and TripAdvisor exist to produce topical and reusable content by tapping into the collective knowledge of an experienced audience. These communities are about productivity, learning, and decision-support. By integrating high performance display and lead generation campaigns into our community that our customers have run on both ITtoolbox and purely editorial sites, we have proven that the Internet's most premium rate advertising can perform just as well or even better in these communities compared to editorial content. The key is for community site operators to work with advertisers to unlock some of the unique advantages of user-generated content. These include the ability to hyper-target both by topic and demographic attributes, reaching users actively seeking information to address an issue that an advertiser's product is related to. A second key point is that while we have been at this at ITtoolbox for nine years now, most social media sites are still early in their evolution. It seems likely that once the more general purpose communities have had some time to experiment and optimize, they too will find ways to improve ad performance by leveraging unique attributes of user-generated content. Remember, many people wrote off online advertising altogether just five years ago. Eventually site operators proved the Internet provides one of the most effective and measurable ad mediums in history. I won't be surprised if the younger, general social media sites are able to do the same thing in a short period of time. They have knowledge and momentum to draw from that site operators did not have five years ago. Thanks again for providing a timely and thoughtful look at advertising in social media. Dan Morrison CEO ITtoolbox

May 07, 2007 - Joe Buhler of Level 9 says:
Not really surprising that ads on UGC sites would convert less. After all, one of the main reasons that web 2.0 is being embraced by an increasing number of web users is that they are tired of the old ad game especially as practiced by Madison Avenue. It's about the conversation replacing the old one way communication still widely practiced and supported by the legacy agencies and about the customer gaining control.

May 22, 2007 - of HyperDisk Marketing, Inc. says:
I have been telling clients and attendees at seminars that they need to progress slowly and with skepticism in regards to Web 2.0 precisely because of what you detail here. I was telling simply as a matter of good marketing sense. At last there is data to support the skepticism. This is not to say there isn't value in Web 2.0 but rather it needs much more critical analysis than it has been receiving. I see a lot of what is out there as the second coming of the dot com bubble.

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