The Laws of Marketing Physics Apply Online Too

The Web has clearly generated a massive amount of marketing revenue, but it's direct marketing revenue for the most part, not advertising.

By Tony Uphoff
03/08/2010 -10:42 AM

[EDITOR'S NOTE: This posting was originally published on Tony Uphoff's blog, which can be found here.]

Fifteen years after the Web became a commercial platform, we are all still waiting for the Internet to become an advertising medium. Wait you say, the web is a huge advertising medium. Look at Google! Yes, the Web has clearly generated a massive amount of marketing revenue. But it's direct marketing revenue for the most part. Not advertising. The Web has yet to fulfill it's promise as an advertising medium for multiple reasons.

The power of Google and other search engines, created an era of search myopia that caused publishers to develop content, user experiences and business model strategies, focused on search optmization. Not actually on developing audiences and demographics. This became a death spiral for many, that actually drove the power even further into the hands of Google and other search companies.
No common currency was developed that allowed online inventory to be bought as advertising or marketing. Television, print and other mass reach mediums have accepted currencies; Nielsen television ratings, audit statements and reader research, that create efficient markets for advertising buyer and seller to do business. The Internet has no such
currency and as a result media companies struggle to define the value of their audiences and ad agencies have no efficient way to evaluate and buy online advertising. The result is the Internet has become a direct marketing platform. You could argue that having a search engine as the dominant destination on the web over the last 10 years is the
equivalent of television guide listings being the dominant program on television. It doesn't make sense.
The other issue that has held back online advertising is that the defining "laws of physics" in marketing : Reach & Frequency are currently impossible to determine, track and evaluate for online. This exacerbates the problem for advertisers. How can you possibly do effective advertising if you can't really understand the reach to your core audience and then increase the frequency to drive awarness, retention, evaluation and action?

So where are the research companies? Why isn't Nielsen, ComScore or some other company going after this issue and creating the research tools, models and acceptable currency that will allow the effective buying and selling as well as reach and frequency planning for online advertising? Great question. To date, they've made a lot of noise but have done little in terms of advancing solutions to these issues. A recent post from the head of Nielsen, however, suggests there may be some emerging intelligence in this much needed area. Worthy of a read at the least. Look forward to hearing others' thoughts on this.

Tony Uphoff is CEO of TechWeb. TechWeb is one of the United Business Media companies. He is an innovative media executive with a unique track record of building, growing and leading b-to-b media businesses in highly competitive markets. This post, and more like it, also appear on Tony's blog: Uphoff On Media.