Re: [projectvrm] Theory of peak advertising

[Don Marti < >]

I don't know about those venture dollars, but ever
since I read _Antifragile_ by Nassim Nicholas Taleb,
I feel like a chump for not having figured out a
way to bet against the ad bubble. (Especially since
VCs don't understand advertising--they still think
that it's something that data can make more efficient:
http://venturebeat.com/2013/09/28/why-we-need-a-don-draper-mentality-to-redistribute-the-200b-tv-ad-industry-from-broadcast-to-the-web/
) Ideas?

Anyway, Peak Ads.  All good, as long as you're only
considering what Doc calls direct marketing.  Peak Ads
describes email spam perfectly.  Email spammers
can send more spam than you can possibly read.
You have an incentive to block it.  Email spam is
an inexpensive, common, and almost totally ignored
medium -- it's already peaked.

As web ads get to be more and more like email spam,
they're peaking, too.  Right so far.

Magazine ads, though, don't peak.  Why?  Because they
rely for effectiveness on the amount the advertiser
spends, as perceived by the reader.  Signaling.

More ads make a magazine more valuable.  Instead of
a death spiral like spam or web adtech, there's a
value-building cycle.  A new magazine can rise if an
ad there sends a strong signal.  (IMHO, good content
has a multiplier effect on that reader-perceived
ad spend.) More ads mean more money for content,
more content means more readers, ad rates go up, and
everyone's a winner.  Readers get better articles and
photos for the same cover price, advertisers get a
signaling "bonus" from the quality of the magazine,
and the writers, photographers, and editors get paid.

Yes, the total attention that readers can pay is
limited, but the tendency is to try to attract it with
ever-stronger signaling, which means an incentive to
give readers better and better ad-supported content.
I'll take it.

The question is how to make web advertising work
more like magazine ads, which have never peaked, and
less like junk faxes, telemarketing, and email spam,
which spiraled into near-worthlessness.



begin Katherine Warman Kern quotation of Sat, Oct 12, 2013 at 07:21:50AM 
-0400:
> 
> Here's a idea for an additional chapter - "advertising isn't really 
> financing the Internet"
> 
> I wonder if anyone has looked at some basis for an annual depreciation of 
> cumulative venture dollars invested in Internet ad startups compared to the 
> annual ad revenues.
> 
> 
> Katherine Warman Kern
> www.comradity.com
> @comradity
> 203-918-2617
> 
> On Oct 12, 2013, at 1:32 AM, Doc Searls 
> <
 >
>  wrote:
> 
> > <http://peakads.org/images/Peak_Ads.pdf>
> > 
> > ... is a "Working Paper by Tim Hwang and Adi Kamdar of the Nesson Center 
> > for Internet Geophysics VERSION ONE - October 9, 2013." 
> > 
> > My only regret, reading the piece, is that Tim & Adi apparently had not 
> > read The Intention Economy, in which one of the chapters is called The 
> > Advertising Bubble, and makes essentially the same case.
> > 
> > For those not getting the tongue in cheek in the title, Tim is the father 
> > of the Awesome Foundation, ROFLCON and much more — and a very smart, 
> > funny and creative dude. Charlie Nesson is the alpha founder of the 
> > Berkman Center and a Harvard Law Professor of high repute, both in spite 
> > and because of his oddities (e.g. fondness for Internet gambling and 
> > Jamaica permissiveness around drugs). Nobody is more out-there and 
> > grounded than these two guys, who are also at least two generations 
> > apart. Love 'em both.
> > 
> > Enjoy.
> > 
> > Doc

-- 
Don Marti                      +1-510-332-1587 (mobile)
http://zgp.org/~dmarti/        Alameda, California, USA