2010: Advertising's Bumpy Transition by Seth Godin on Trust-Based Marketing

0:00This is Optimal Work Daily, advertising's bumpy transition, and why it matters to you, by Seth Goden of Seth's dot blog. Advertising has been around so long they measure the prices in Roman numerals. CPM is a mark of how much it costs to run an ad that appears in front of a thousand people. M is for thousand. Until recently, a full page ad in a national magazine that reached 2 million people could easily cost $80,000. That's $40 CPM times $2000,000. I started my career buying ads for $50,000 a pop and then made the transition to selling expensive online promotions to big brands. The opportunity was clear. Find an audience, make a significant profit selling ads. When the web was young, marketers like Yahoo said to PNG and Ford, by our banner ads, they cost about the same as a magazine ad but people can click on them as a bonus. And so, banner ads at the beginning were incredibly lucrative, easy to make, sell them

1:00for a lot. Today, banner ads might sell for a tenth of that, or if we count ads on Facebook and the like, as little as 1% of the cost of a magazine ad on a per person basis. But of course, it's not a fair comparison for a bunch of reasons. One, magazine ad pricing counts the entire circulation of a magazine even though very few people read every single page of the magazine. Web ads, on the other hand, measure how many people look at that precise page. Two, a web ad salesperson can say, well, even if one in 1,000 people click on a web ad, it's still better than how many people click on a magazine ad. The problem with this is that while clicks are a proof that something happened, they're rare indeed. Magazines don't offer advertisers clicks, but they do offer them hope, something advertisers love to buy. Three, magazines have always embraced mass. Advertisers pay extra for big circulation magazines even though that means less focus. Even a magazine that's focused on a given topic, surfing, say, or gardening, can't distinguish

2:04whether the ad is being seen by a man or a woman or by someone who just bought a new car. The web offers all that and much more, but advertisers are radically undervaluing this focus because they grew up in a world of mass. It's fine to have a very fine focus, but if you're selling to people with blurry vision, it doesn't help much. And four, lastly, magazines ads were largely sold, not bought. Condonast and other big companies happily wind and dined ad executives for years to earn the huge buys, more than 700 pages in the new vogue that appeared in their magazines. Websites, on the other hand, are inherently digital and would like to be bought, not sold, which gives advertisers an enormous amount of choice and leverage. The short version is that magazines ads were expensive because they were scarce, they worked, maybe, and they were sold hard. Web ads have long been dramatically undervalued as measured media by people who don't want to measure, as focused media by people who want mass.

3:07Magazine ads were great, a perfect industry, one that's being replaced by something impossible, something that doesn't work for all parties yet. The result is that tonnage, huge ad inventories, inventory in the billions of impressions are at the heart of much of what is currently paying the bills in web advertising, which pushes advertisers to show you more pages, interrupt you when they can, and try to keep you inside their site, clicking around. Most people are never going to click on an ad, even an ad that they will ultimately remember. Google's ad words is one exception to the tonnage rule, and if it's not pushed to scale too much, opens the door for advertisers to start measuring the value of what they get when they buy a direct response web ad. Buy an ad for a dollar or click, and if you make $2 in profit, buy more ads. But this only moves the measurement argument forward, as these ads are only attractive to advertisers who measure their results. Most ads don't work because we click on them though, they work because we remember them, or because they change our perception or tell us a story.

4:10While advertisers start to value the focused, memorable, impactful opportunity they have in buying the right ads in the right place for the right audience, web users are going to be stuck seeing irrelevant ads on sites that don't respect their time and attention as much as they should. We have salespeople and investors and agencies and buyers that come from a world of mass and scarcity, and the opportunities of focus and connection and abundance are taking a while to sink in. As advertising is paying for a big portion of the consumer web, it's being built to please advertisers. Right now though, what advertisers are used to buying isn't what the web is good at building. There's huge progress being made in perceptions, but there's a ways to go, which is why we are ad supported isn't as obvious a strategy as it should be. You just listen to the post titled Advertising's Bumpy Transition and Why It Matters To You by Seth Goden of Seths.blog.

5:12And thank you to Seth, who is a super popular writer with 19 best-selling books. He's also the creator of Alt MBA, which is an online leadership and management workshop. Alt MBA uses digital tools to engage with small groups of 120 students in an intense four week process. It's been going on since 2015 and has now transformed the lives of more than 4,500 people in more than 70 countries. And a little bit more about Seth, he has been writing daily on his blog for over a decade now, and more than 60,000 people have taken his online courses. He's also got five TED Talks, and his site is definitely worth checking out so much to offer there. You can find of course his massive blog, but also podcasts, books, speaking, and so much more right there on his site. Again, that's Seths.blog. But that wraps up our episode today. Hope you enjoyed it, and that you're having a great day, and I will see you right back here tomorrow, and that is where your optimal life awaits.