I had a new editorial published today on Adotas.com. It’s a somewhat sarcastic look at the limited self-serve options that are available to small businesses if they want to break out of little Google text ads and start using banner ads that actually show their products in living color.
It was a struggle keeping the editorial down to about 900 words, so I’ll elaborate a bit further.
In the article, I suggest a few reasons that it’s challenging to offer self-serve banner advertising to SMBs:
- They have low budgets, which reduces the amount of potential profit for ad networks, publishers, and everyone else in the ad stack.
- It’s hard for SMBs to create display ads (that’s where Canned Banners comes in).
- Flash ads are often problematic, so it’s near impossible for ad networks to deal with bugs from thousands upon thousands of SMB banner ads.
Here are some other reasons (related to the three above) that I think there isn’t more going on in the realm of SMB self-serve advertising:
- Venture/angel funding—A large portion of ad networks and solution providers are venture-backed. This implies that their investors will want them to follow a business model that will earn a sufficient return on invested capital. Generating such returns is tough in the high-volume / low-margin SMB market, so these venture-backed firms tend to chase the big money: agencies, brand advertisers, and such. Does this mean that you can’t make a profit in the SMB world? Of course not. Think of the untold billions that Google has raked in from mom-and-pops running text-based search campaigns. But until the “big money” dries up, don’t expect too many venture-backed firms to start chasing after the little guy’s wallet.
- An inefficient market for ad inventory—Why is it that anyone with a few dollars in the bank can go online and within a few minutes buy 0.22 shares of Google stock? That’s because the market for buying and selling stocks is highly efficient and liquid. Trades are automated, prices are publicly available and updated in real time, and deals happen in fractions of a second. This is not true of the market for banner ad space. If you want your ads to be seen by the right people in the right places at the right times, don’t be surprised if you end up having to run a dozen separate campaigns on different platforms. More and more ad inventory is being bought and sold in spot markets, but a lot of it is still bought and sold very inefficiently, where you have to fill out sales inquiry forms, pick up the phone and talk to someone, or meet minimum budget requirements. And the inventory that’s bought and sold on spot markets isn’t necessarily accessible to SMBs. And what is accessible may be remnant inventory or other low-quality crap.
- The ad industry is too tech-happy—There seems to be a fairly dominant segment in the industry that thinks that math, technology, and data will finally “solve” advertising once and for all (Why does it work? How does it work? How can I get people interested in my products? Such questions have been pondered for eons…). Naturally math, data, and technology are a huge piece of online advertising innovation, but this over-emphasis strikes me as quixotic and naïve…sort of a search for the “Philosopher’s Stone” of online advertising that will enable those who unlock it to direct the wills of powerless consumers. What does this have to do with SMBs? Well, in order to develop effective, usable solutions for SMBs, you have to think like them. And SMBs don’t give a rat’s ass about “audience buying,” “data mining,” or “creative optimization.” SMBs just want something that’s easy, affordable, and effective. Whether it’s achieved with supercomputers or windshield flyers doesn’t really matter. But until the online ad industry starts talking to SMBs in a language they understand, banner advertising is going to remain an out-of-reach, complex-seeming ad strategy, which it isn’t.