Are Online Advertisements going to die?

Patrick Dixon is a famous futurist who is basically a technical consultant also. He has focused onto online advertisements on his video uploaded in his youtube home.

The claim that he has put is quite astonishing. He says that online advertisements does not have market and Advertisement as a whole will be jolted by a new phenomenon called web 2.0. The Web 2.0 boom is nothing but the omnipresence of social networking sites in all possible arenas of our society. As it spreads like a virus and ‘infect’s a bunch of people whom a particular customer know of, it will very soon penetrate almost all the Internet users. That implies, each of the Internet users will have two choices – get the information from the official site or from the social networking sites.

To put the same words with the help of an example, let me take ITC Sonar Bangla in Kolkata. It is by far the best hotel in Kolkata, at least for the last few years. Now, a person who’s interested to stay in Kolkata for a week or so, would definitely look for a good hotel in the city. Once he searches for hotels from Kolkata, he’d obviously get a few more links than the official sites of the hotels. Along with them, the social networking sites will prompt a few discussions on the experience in the same hotel. As an user, you would always be attracted to know the experiences of other people. So, a huge banner on top of the official site having a poster of a cricketing icon will not get the hotel much business if the social networking sites discuss customer discomforts at the hotels. As a matter of change, the official sites will only hold information – i.e. the rates, the discounts and the check-in times. On the other hand, the king-maker would be the social networking sites since people will check for the feedback. That’s what at least he predicts.

I personally both agree and disagree with him. The big posters with flash pop-ups will be gone. But more and more of the online advertisement will go to the technology and intelligence of the advertisement. One of the most important value propositions the online advertisement world is offering is the “reminder service” – i.e. remind us of the advertiser each and every time we surf them. And, reminder does matter if you can be at the right place at the right time. That is why search matters. When a person searches for a hotel in Kolkata, it is so important to remind them of the advertiser and to create at least a place in his mind.

Not only that, as the business like hotel and airlines are getting congested with more and more brands, to start up and create a new brand also requires to be at the right place at the right time. To provide quality service is always essential, and would probably be more essential than it was before, but the quality of service hits a plateau very soon. Then the other value propositions come into effect – like the advertisement.

Getting back to the example we started with, let’s imagine the virtual user looking at the bad experiences about tens of ex-customers of the hotel. What happens if he sees a competitor hotel advertisement at the corner of the same virtual discussion board? He will certainly look around at that option, even if it is a much less known Hotel than the ITC and its competitors. If the customer feedback is good enough, he can settle for the less known one rather than joining the league of much overvalued ones. Doesn’t it matter to be at the right place at the right time?

The technology that I want to point out is what we call “contextual advertising”. It has a huge market and will have even bigger one beyond the space of Internet. Interestingly, I believe this concept of contextual advertising strategy is as old as the human civilization itself. I can see all the sadhus, gurus and the religious campaigners gather around the temples as they expect some religious people to come to the area. All the sports equipments are advertised near the stadiums. Still, they seldom can be at the right place at the right time as an advertisement placed by Google once you search for something. That is why “contextual advertisement” is so interesting space to work on in the Internet. I believe, the true strength online advertisement industry is yet to be revealed – it will be there along with the new era of Artificial Intelligence.

Steven Levitt says why fat salary doesn’t work …

Levitt Says (gist)

I think Financial incentives are far overrated. The problem is that the people acclimate with them almost immediately. My friend works at a dogfood manufacturer in Boston. A lot of poor migrants work for the factory, they make very poor wages. As perk, she once organized that all of them would get a turkey for Christmas. The first year they were very happy. They were so elated that the company is providing them with some benefits and the morale went high. The next year they again gave a turkey and nothing really happened. Within a year the workers were decided that it is their God given right to get a turkey from the company. The third year they were furious. They complained that the turkey this year is not as big as the turkey last year. This is true for any kind of financial incentives – as soon as you give it once, people just expect to get it over and over.

I think the real answer is to cajole or trick your employees into thinking that what they are doing is important. That’s far more effective in the long run than giving the money. People who love what they do, think what they do makes the difference, are much better employees. For example, I spent a lot of time in Google. And Google is more cult-like than any other organization is. People who work for Google love Google, they think Google is incredibly important. That’s how Google is able to keep their employees happy.

And I add -

The other side of the coin is equally important. An employee should not commit to a company only by looking at the financial incentives. Because, very soon he’ll get used to it. Employees should look for a place where they can make the difference, or they can add important values to the company. That may not convert to a short term financial gain, but in the long run, it will worth more than mere money.

(Inspired by Steven Levitt’s talk. Steven Levitt is a famous Economist and author of the book Freakonomics.)