Flags, Banners and the New Networks

Fred Wilson says Google’s $3.1B purchase of Doubleclick signals the return of banner advertising.

He’s absolutely correct that banner ads have much more branding value than text ads.  The question for website developers is what will advertisers pay for that value.  Billboards along real highways command top dollar- particularly in the growing number of cities that have tried to limit or eradicate them.  I know of people who live very well off of a couple of billboards- the three-sided one at the intersection of the Southwest Freeway and 610 in Houston being perhaps the most valuable billboard in the country.

But advertisers have traditionally wanted to quantify the success of banner ads by tracking not only impressions (the number of “drivers” who pass by the billboard), but also click-throughs (the number of people who “call the number” on the billboard).  This serves to shift the risk of a bad billboard and/or a bad product from the advertiser to the the billboard owner.  Good for them, but bad for us. 

So like real world real estate, it became all about location.

CNN and Yahoo may be the Southwest Freeways and 610s of the internet.  But what about the back roads and side streets?  Will banners get sold and placed there at an acceptable rate?  It all depends on how the advertisers view the traffic that drives those roads.  And whether they agree with Fred that the branding benefits change the mathematical expectations.  My hunch is that like everything else, a small percentage of the sites will make a large percentage of the money.  That’s life, both in the world and on the internet.  So I don’t think the return of the banner ad is going to be the panacea for Web 2.0.

But I do think banner advertising is due for a resurgence, if for no other reason than Google’s war chest and its desire to own the internet and all the data on it.  There are two proven ways to make money on the internet: content and advertising.  Ironically, the one that the hardest to make – the content – is almost universally free.  That leaves advertising.

The internet has become the new CBS, ABC and NBC.  You don’t pay for the content in cash.  You pay by watching the ads.

And on the internet, there’s no TIVO.

Yet.

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