IM-Mobile

Mobile advertising continues its relentless growth, while Internet revenues are falling. As with print advertisers, especially newspapers, that continue losing revenue to online placement, the community of mobile advertisers, mobile ad networks and mobile publishers is dominating worldwide advertising. So much for mobile.

But this post goes beyond mobile ads. It’s about the necessity of  any advertising.  Periodically, we should expose our minds to opposing opinions and views that contradict–and even imperil–our business models.

Such is the case with Eric Clemons at The Wharton School of the University of Pennsylvania. Clemons just posted an article (available in PDF form) on TechCrunch. His predictions about the demise of PC-based Internet advertising and his comments on social media and mobile ad personalization are controversial with a grain of truth and 100 grains of speculation and flabbergast.

Clemons generally opposes advertising “pushed” to potential customers who haven’t requested the ads. He believes that Internet and other advertising is similar to email spam and non-participatory, shatters the Internet experience and will ultimately fail. In Clemons view, pushing ad messages to people not seeking them is a grave sin.

“It’s not that we no longer need information to initiate or to complete a transaction; rather, we will no longer need advertising to obtain that information.  We will see the information we want, when we want it, from sources that we trust more than paid advertising.  We will find out what we need to know, when we want to make a commercial transaction of any kind…Instead, we will use information that we trust, obtained at the time that we want to see it.”

Paid search comes closest to meeting Web user’s expectations, per Clemons,  but Google and other search advertisers dominate, leaving little monetization to sustain other websites. Although I’ve criticized Google for its information and advertising dominance in a parody blog post, (“health care clicks”), Clemons’ comments exceed all logic and reason.

He claims that consumers don’t trust any form of advertising, including company blogs. They only trust online customer reviews and friends’ opinions. He also complains about network television’s “synchronized” scheduling of broadcast ads, because consumers don’t watch to view media advertising.

“…network executives and their ad agencies have noted that we are not watching traditional ads, and they attribute this to the fact that we have moved beyond newspapers, televised network news, and broadcast movies, to video games, iPods, and the internet…The problem is not the medium, the problem is the message, and the fact that it is not trusted, not wanted, and not needed.” I gather than Clemmons also believes the same about ads on TechCrunch, the site sponsoring his soapbox speech. So much for biting the hands that feed you.

Clemons further argues that consumers seek Internet sites for product and service information, but the sites he quotes contain ads some of which are not related to site content. He never explains how consumers would find new products and services on the Internet without advertising. Consumers should rely on recommendations from social media sites and friends.

He faintly praises Amazon and Zappos.com that stock products not easily found elsewhere. So I gather ads on these websites are o.k. to find obscure books and oversized shoes. The rest of the Internet with ads, however, are anathema.

Alternatives to advertising, suggested by Clemons, are business models that have failed to garner public acceptance. For example, Clemmons pushes paid subscriptions to Gartner research, highly specialized information for marketers, but he leaves open how newspapers and other print and online publications can monetize their sites.

Paying to use virtual communities and social sites, such as Second Life, World of Warcraft, FaceBook, MySpace, LinkedIn and YouTube sans advertising is o.k. for Clemmons, although he comments that “not all” of these sites have found a way to “charge for participation.” In fact, few have. WOW charges and LInkedIn offers paid access for higher levels of access to member information and contact.

Alternative monetization

Misdirection, a la Google, where consumers’ desired companies for products and services underbid on keywords, while “full pocket” advertisers use pricier keywords to divert searches to their sites, is another Clemons sin. While one may argue that Google outprices advertisers unwilling or unable to pay premium prices for hot keyword phrases, supply and demand rule for Internet advertising as with other products and services.

(Clemons fails to acknowledge many of the free services offered by Google, Yahoo and others: free email accounts, Google docs, etc.)

Forget Google. Clemons pushes evaluation and assessment sites, such as ratebeers.com, hotels.com and TripAdvisor.com. Indeed, he virtually drools over the integrity of these sites:

“Since Hotels.com did not attempt to influence or censor TripAdvisor content the website was (and is) trusted and helped put recommendations from Hotels.com at a level of trust comparable to those from an experienced travel agent.” Really? The beneficence of the sites overwhelms me.

“I would like to be able to ask for the hotel where my friends stay when they are in Chicago.  This invades no one’s privacy, avoids the annoyance of pushing ads at me when I am not searching for something to buy, and provides more relevant results than paid search usually can deliver.”

Really? FaceBook and other social media sites already present ads culled from personal information of their users. Google’s new “interest” search service will do the same. Is it possible that Google, FaceBook and other companies could deliver information and content equal to or even better than friends?

Contextual Mobile ads

Aha, you say, we finally hit mobile advertising. Clemons faintly praises companies in this space:

“Imagine a hypothetical all-knowing information-based firm that (i) knows your location because you have registered to have the information from your in-phone GPS shared with your friends and (ii) knows that you like Thai restaurants because it monitors the content of your email and your online restaurant searches and (iii) knows that you are hungry because you just said so in a text message or Twitter post you sent from your phone.  What a great time for them to text you an advertisement for a nearby Thai restaurant, sent directly to your phone.  But why would you trust this? ” Yes, Sir Clemons, why?

True, some mobile phone apps allow mobile users to opt-in to sharing location information. Most often, however, carriers only offer user locations via GPS or triangulation for “emergencies.” The situation is ripe for abuse.

As you continue reading Clemons’ comments, his naivete exudes further, like sap from a maple tree:

“Of course no one knows yet, but if I had to guess, based on my experience, I would offer the following guesses for successfully monetizing the net in the future:” And he’s a professor and researcher at The Wharton School?

Selling virtual things

“People will pay for superior, timely, original content and for superior online experiences.” Really? With all the content available on the Web, who will pay?  Clemons is willing to pay for The Economist and other pubs and “cheerfully” pay for WOW. But the vast majority of Internet users like all the free content and migrate elsewhere when asked to pay for information.

Selling Access

Clemons’ writing dips to its lowest levels toward the end of his post:

“Misdirection will fail totally and completely.  I use a Mac, but I have abandoned Safari for Firefox.  I have an iPhone and an iPod but I have never used the little white earbuds, preferring instead to purchase a pair of Shure E500 phones that I think sound vastly superior. Similarly, I would be equally happy to purchase a search service that worked for me, rather than accept a free one that works both against me and against the firms I patronize.  In contrast, while people will continue to value community content and social search, these will be difficult to monetize.  Finally, contextual mobile ads will, likewise be difficult to monetize.” No comment.

Of course, there’s SMS text advertising (sorry, messaging):

“I can imagine SMS ads initially succeeding if they provide discounts, but ultimately this leads to little more than a bidding war for traffic and benefits no one other than the firm that provides the text messaging services.  I can think of a few commercial SMS services that will benefit everyone, such as letting the most loyal guests of a restaurant know when it is still possible to get a reservation if they act immediately, eliminating the inefficiency of empty tables, but the restaurant will do this itself, using its email or cell phone contact lists.  I don’t see this as advertising…”

How naive. Clemons doesn’t want intermediaries to influence him, but how would mobile ad networks and carriers operate unless they charged for access? Does he believe SMS text messaages arrive via tin cans and string?

Clemons concludes:

“The internet is about freedom, and I suspect that a truly free population will not be held captive and forced to watch ads.  We always knew that freedom comes at a price; perhaps the price of internet freedom and the failure of ads will be paying a fair price for the content and the experience and the recommendations that we value.”