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> New Rules for the New Advertising Economy
New Rules for the
New Advertising Economy
By Chris Anderson
June 10, 2002
Over the past year, a small company called X10
has practically become a household name, despite
the fact that it sells little the average household
would want.No need to explain how it did this,
or what it's pushing; you already know.Its ubiquitous
pop-under ads have made X10.com one of the most
visited sites on the Web. And in the banality
of billions of slightly suggestive webcam pitches
lies the future of advertising - a radically different
model that will challenge many of the presumptions
about online media.
Thanks to a savage online-advertising downturn,
a few choice deals won X10 blanket coverage.It
managed to do what was once unimaginable - it
bought the Internet.You can run, but you can't
hide from those cheesy spycam offers.
It also spawned copycats, from Orbitz and Netflix
to several online casino operators.These companies
pay as little as $1 million a month to reach about
5 million unique users.(Even more impressive,
most pay only after their ads succeed, measured
by clickthroughs or even sales.When a company
pays for advertising after a sale is made, marketing
ceases to become a cost center.It's a commission.)Compared
with television, this amounts to three times the
reach per dollar.For the advertisers, at least,
Web marketing works great these days.
But there's more to the X10 approach than a smart
media buy. The company's ads are especially intrusive,
which is precisely what it takes to get noticed
online. X10's ads open in a separate window, requiring
you to take note at least long enough to close
them.Other advertisers prefer big, elaborately
animated interstitials, hijacking your browser
between pages. Some even crawl over content, forcing
you to simply wait helplessly for the nightmare
In other words, it's not unlike the average TV
viewing experience (TiVo users and other time
shifters aside).Many commercials are well done;
some are even entertaining.But whether good or
bad, they work because you're pretty much forced
to watch them.Compare that with the latest pop-up
ad window, which uses Flash technology and faster
connections to be more like video every day.In
exchange for hijacking your screen, it tries to
entertain - or at least engage.
However, there's a big difference between the
two media. Television viewers have no expectation
of being able to control the pace of their experience.
They will put up with what amounts to 16 minutes
of interstitials for each hour of content. Web
users will not.
As a result, Web advertisers and content sites
are increasingly forced to ration their most effective
ads - limiting them to, say, two pop-unders per
user per day, or one outrageous content-crawler
- lest they alienate viewers entirely. Though
it may seem like a small thing, this could change
the face of Web media. The new equation for success
in online advertising is simple: Effective advertising
must be intrusive. But intrusive ads must be used
sparingly to avoid ruining the medium. From this
axiom comes a host of surprising implications
- the new rules for the new advertising economy.
1) Shallow is good. The key
metric in Web advertising is unique users, not
minutes per site. "You want users to come to your
site every day - and then go away," says Roy de
Souza, CEO of Zedo, a leading ad-serving network.
Web publishers should hit each new user with a
big, lucrative ad on arrival, but after that pageviews
probably cost more to create and deliver than
they can earn in banners. Front pages rock; inside
pages stink. From this core observation, other
2) Forget stickiness. Web sites
once bragged about their lingering users. Now
a site is better operated like a fast-food joint:
no loitering. Loyalty is still good, but only
when it means being a brief part of a daily routine.
Think cats, not dogs.
3) Real time is risky. What
could be worse than a stock-quote site, which
users check and recheck constantly? Better to
focus on less-ephemeral content that rewards a
single visit - sports scores, weather, or newspaper
4) Communities are overrated.
Do you really want to encourage hours of chat
in your expensive online salon? Same goes for
webmail. Free Internet service providers, such
as NetZero, are already limiting users to just
two hours a day - when the law of diminishing
returns kicks in hard.
5) Chase dilettantes, not obsessives.
Just ask the game sites. Gamers spend hours reading
hints and cheats; from an ad perspective, that
makes them parasites. A passing interest in, say,
movie listings is, economically speaking, a lot
Such rules are hard to swallow for the majority
of sites today; many are hoping that the ad market
will recover quickly enough so they can stick
with the model they know, which includes the venerable
banner. But viewer attention is waning by the
day. Online advertising is already changing to
reflect this; media winners will be those that
Thanks for the tip, X10 - we almost forgive you.