Traditional Web Advertising: The Myth a Generation of Web Marketers Was Made Poor Believing In

Posted on July 20, 2009 by Annie

June 25, 2009 – Issue #10

By Bret Holmes
Director of eCommerce
Money Morning

PARIS, France – I’m here attending a company forum about Web marketing (I’ve always wanted to see one of my stories feature a foreign dateline … so I couldn’t resist here), but I haven’t abdicated my duties back in Baltimore. Just the other day, in fact, Annie came to me and asked that I write an article about Web advertising. Her question: “Why aren’t the affiliates selling anything off of the ads they put up on the site?”

Oh, the trials and tribulations of traditional web advertising. When I start to think about the early part of my career, and the ad models that were used – I cringe. So instead of wasting a lot of time wringing our hands as we try to figure out why banner ads, skyscraper ads, and in-story “chunk” ads don’t work – and they don’t – let’s do a real quick overview and then get into some strategies that I know do work.

That brings us to the first rule of online advertising:

Money Morning Web Advertising Maxim No. 1: Unless you are doing hundreds of thousands of unique visitors per day – and at a very low overhead – then an online-ad-placement system is not going to work. Even after doing all the optimization in the world, you will only be able to monetize at a fraction of the sales you would do on a list/content basis.

Why is this so? Ask yourself this question: Would you use a TV ad spot to sell your product or advertise your Web site? If the answer to that question is “no,” then you should not be looking at the online ad medium as a source of sustainable income. Very few Web sites can make online ads work. The Drudge Report barely makes it work. Seeking Alpha hasn’t made it work (and in all honesty, if those folks can’t make it work, and if I know that I can’t make it work, then most people would be better off focusing on monetizing their Web site via other avenues).

With all that said, however, there are reasons to run ads.  Here are a few insights I’ve developed during my years in Web marketing. Most are subject to debate (that’s why I call them “Bret’s Marketing Maxims,” while my colleagues call them “Bret’s Folly“). But I’ve seen what works and what doesn’t and I want to share those findings with you. You should:

  • Use ads, but use them for reasons other than generating a large percentage of your revenue: Money Morning uses ads to help with branding and to reinforce product messages. We place ads for MM products throughout the Web site to bolster our legitimacy and to create a cohesive message by echoing ideas you’ll find in other places on the site. But I wouldn’t dream of relying on those ads for the magnitude of revenue that I need to operate – and grow – the Money Morning Web site.
  • Run ads on your Web site if they help to build up your brand: Some financial Web sites (and I marginally endorse this) will use ads from high-value clients (Rolex, Porsche, Cayman Island Bank accounts, etc…) to make their brand look more appealing and classier (for those of you out there taking notes, this is known in marketing circles as a psychographic association). If you are utilizing this kind of ad model to bolster your own image, then I would recommend doing so on a small level. But don’t expect to generate copious amounts of cash – that’s just not going to happen. The best you can hope to gain from this kind of ad placement is clout with the reader that you are of the same quality as your ads.
  • Be consistent: Run ads that correlate directly to the products that you sell or endorse: Most of our affiliates run some sort of image ad and we endorse this – but only when it aligns with the content that someone is reading (reinforcing the message). Now this may actually hurt the perception you have of the affiliate business model but I don’t want to lie to you and say that your site (with a small amount of traffic) is going to be able to sell large amounts of product based on space image ads. The only thing you can do with online ad space is to maximize its relevance. Companies such as Google Inc.’s (Nasdaq: GOOG) Adwords and Doubleclick Inc., and AOL LLC’s Advertsing.com cannot serve you ads that tie in directly with the content you run (they say they can – but they REALLY can’t). But our affiliate network can. We can give you ads for products that are made by the same people that write the content that someone just read. That level of synergy is powerful. You stand a much better chance of selling something if the ad that is on the page of content correlates directly to the author, the tone, and the product mentioned in the piece of content.
  • Run ads in your e-mails in exchange for lump sums: Email ads have a much better change to convert a sale simply because it is direct marketing. It’s the strongest direct marketing in the world but it will work better than just putting ads on a website.

    Many key theories go into the scenario. First, an e-mail ad is always worth more than a Web site ad – to both parties. That’s because an e-mail ad is a targeted ad – a Web site ad is not. You can easily make good on an e-mail ad by sending it out as much as possible until both parties are happy with the results. And second – the ad is going to a targeted audience of people that you know are interested in the correlated company – a Web site cannot make that guarantee. Plus, a Web site publisher shouldn’t waste his time and weaken his Web site’s brand by trying to sell someone else’s product to people who aren’t part of his e-mail list (especially since that non-list member is probably a newcomer to the Web site). Instead, the publisher should use his resources and the fleeting goodwill that exists between him and a first-time visitor by trying to convert that newcomer to his list.

The key to good advertising and basically to good Web business practices has to be quid pro quo. Both parties have to be happy with the return on investment (ROI) from any venture or initiative they undertake together. Far too many times on the Web we spend money on totally FAILED investments and initiatives. Since there is never a “make good” clause, there is also no repeat business.

One last point. We mentioned the importance of “targeted ads.” It’s a concept that Web world leaders have understood for some time. That’s given us an advantage over the so-called “mainstream” media. But now the more-mainstream media is taking a page out of our playbook in an effort to level the advertising playing field. Just last week, in fact, The Wall Street Journal said that satellite TV provider DirectTV Group Inc. (Nasdaq: DTV) will start offering “targeted” ads in 2011. So these firms clearly understand the table stakes.

  • Would you rather sell a product .01% of the time, or gather an e-mail address 3.0% of the time? A good Web site will convert 1.0% to 3.0% of its daily traffic to a list. Once you have that name on a list, you can market to the person behind that e-mail address much more efficiently than by just swinging for the fences and trying to hit a home run with a space ad. Use the space that you are using for such ads to offer free reports (in return for a person’s e-mail address). With that e-mail address in hand, you can market and sell to that person much more effectively.

There are many schools of thought on the strategies I’ve outlined for you here. I mean it still shocks me that Bloomberg and The Journal run Google Adwords – but then, again, I know why they do it – the ads make money. Those companies make money off of traffic by taking advantage of their strong respective global brands. But I also understand that I see those companies on TV, and on a pretty regular basis, too. I don’t see Money Morning ever being on TV – so I also don’t see us selling or buying advertising space online without having a personal relationship with that company and making sure that company does everything it can to support our brand.

Next week we should be back on a better schedule of more regularity. The Summer months tend to get you on the road or on vaca more than you’d like. If anyone has any subject they would like an opinion on – i’d be happy to oblige.

Until Next time – Upwards on Onwards,

Bret Holmes

[Editors' Note: Bret Holmes is the director of eCommerce marketing for Money Morning. For more information on Money Morning's new affiliate network, contact Holmes at Bholmes@oxfordclub.com, or telephone 410-895-7972. For other information on the affiliate program, check out the Web site at http://www.moneymorningaffiliates.com/.]

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