Marketing Strategy

Online Advertising: The Evolution Continues

By Rob Adler June 24, 2010 Posted In: Marketing Strategy Comments: 2


I was struck last week by several headlines about the continuing growth of online advertising, but none more than this one: “Online Poised to Supplant Newspapers As World’s No. 2 Ad Medium.”

Of course, anyone alive and paying attention this last decade shouldn’t be that surprised by the headline. Unless they're surprised that newspapers are still #2 – they seem so yesterday. But as I considered that the online world is now 15 years old, and that search, the largest and most significant growth driver of online ad spend, is now 10 years old, it did push me to think about what this news might signify about the online advertising industry’s evolution.

You see, new media platforms (like online advertising, or television before it) behave a lot like other new platforms or technologies (for example, the PC) in how they grow and evolve. Take the world of the relational database. When Oracle first developed and began marketing its database technology, it was a major leap in the creation of a major new technology platform. And once it became established, several trends followed (collectively, let's refer to these as Stage 2 trends):

  • Service firms sprung up everywhere, helping companies implement this new technology effectively. They commanded huge premiums, billing out their consultants at hundreds of dollars per hour. VARs and other technology resellers soon had a burgeoning new service offering to integrate in with their more hardware-centric services.
  • Trade organizations and conferences designed to educate, train, and foster communication within this new and growing community of database developers were born. Oracle sponsored many of these conferences and user groups, and soon the industry outgrew even Oracle and thrived on its own.
  • Computer engineering programs at the high school, undergraduate, and graduate program level began to teach and train up-and-coming technologists around this seminal new technology.

Today, companies large and small are well on their way to harnessing this new technology, and small and medium-sized businesses who previously would never have considered a technology as sophisticated as an Oracle database are now routinely hiring programmers to help them build applications leveraging tools and technologies introduced by a wide array of companies that enabled and empowered this democratization of the “database platform.”

The new platform evolved through a third stage whereby the database went from being high-end and exclusive to ubiquitous. Simple enabling tools and the realization that the platform was a core technology and mission-critical made this all possible – and you don't hear as much from the VARs, nor does Oracle dictate or dominate the community.

I think online marketing, and search in particular, is following a very similar evolutionary path. There can be no doubt, with online now ranking #2 for all ad media, that the web is truly a substantive advertising platform, and I don’t know who might argue that the Google SERP isn’t a platform in and of itself – with nearly $25 billion of spend on PPC and the billions in investment and other spending that companies make to appear in organic results.

Evolution of Search Marketing

So after the introduction of the search platform, what would we expect for Stage 2?

  • Service firms – Check! Firms like iProspect and iCrossing and Razorfish have all come into prominence by helping large brands exploit the new media platform.
  • Trade organizations – SEMPO, check! Educational forums (like PPC Summit), check! Trade shows: SES, SMX, PubCon, AdCon, check, check, check, and check!
  • Higher ed coursework and training – Even within a tradition-bound institution like Harvard Business School, a search through the case study library against "online marketing" results in more than 150 cases touching on the topic. Check! I’ve heard advisors counsel recent graduates interested in business and marketing with a one-word answer reminiscent of that given to Dustin Hoffman’s character post-graduation in The Graduate – with “internet marketing” replacing “plastics.” (OK, I know, it's two words, not one. Forgive me.)

And now as I look at the growth of companies like WordStream, I see the classic “Stage 3” phase of a new platform – tools and technologies that enable small and medium-sized businesses to level the playing field and compete against the larger companies and their high-priced service agency providers.

Stage 3 of these new platforms is always about democratization, about a new platform crossing over the chasm from a highly concentrated amount of big-spending exploiters and wildcat prospectors to a much larger number of everyday folk joining the evolution. And thanks to simple tools, along with a decade or so of people learning the ropes, a growing number of businesses are able to effectively compete and advertise within this new media platform. To the extent that these providers enable more effective adoption of other versions of the platform (e.g., Bing), we might see a slight weakening of Google's complete dominance of the platform.

Once these tools gain greater penetration, and our workforce is filled with more and more human talent capable of taking advantage of them, online will move to the #1 spot in terms of total advertising spend.

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Thursday June 24, 2010

Anonymous (not verified) Said:

dood. razorfish was around in 1996..

Thursday June 24, 2010

George411 (not verified) Said:

I think the hight of "e-consultancy" was early in the decade (2000) with the Fast Five, which included Viant, iXL, Scient, USWeb/CKS, and Razor.

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