Many people simply assume that the Internet and online advertising is simply a failed venture that cannot ever work. However, nobody is asking the more important questions: why has Internet advertising failed? Can any successful advertising model be implemented that will support online entertainment? What is the future of this market? I'd like to take a brief look at these questions and offer my input regarding the current online advertising crisis which is burning through networks like a wildfire.
What the Hell is Going on Now?
As previously mentioned, the online banner advertising market is crumbling before webmasters' very eyes. Two years ago, independent sites could easily command up to $10-15 CPM (that's $10-15 per every 1,000 ads served) for banner ad campaigns. The Internet was a fresh and exciting place, and many industry analysts were proclaiming it to be the "new television" of entertainment. Gigantic websites devoted to streaming media, audio, and all forms of interactive entertainment sprung up, funded by traditional brick-and-mortar companies who were all too eager to immerse their feet into the Internet's seemingly limitless pools of potential. This was the age of the dot-com extravaganza, where any Joe Average could raise millions of dollars by simply throwing the prefix "e" before his company's name. No gameplan was needed, no estimate of profitability was required, and many companies didn't even feel the pressing urge to offer a practical product or service that anybody would use. Simply put, the Internet was the darling of the business industry. It could do no wrong and was hailed as the entertainment medium of the future. Every dot-com started with the primary goal to IPO and instantly skyrocket to financial success. For a year or so, it seemed as if this business model was a sterling success and would propel every dot-com to instant stardom. The number of industry analysts who predicted the industry's demise could be counted on one limbless arm.
Despite all these intensely positive predictions and glorious outlooks to the future, something suddenly went wrong. Investors began demanding to know where all their money was going and when they'd get to see their cash return. Suddenly the business plan of having no business plan began to taste sour. Companies refused to sink further funding into an industry which was essentially founded on smoke and mirrors. The lure of having your name attached to a dot-com began to seem less and less appealing, and investors began to pull out at unbelievable speeds. As a result, the Internet industry shriveled to where it is right now: no more concentrated backbones of strong funding and capital, no more steady sources of advertising revenue, and an even weaker business model than ever before. How did this industry fail so spectacularly?
Why Are We Here?
Simply put, the current advertising model does not work.
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