Online Advertising is Not an Intent Generation Channel

Facebook_meltChris Dixon posted yesterday about Facebook and the ad channel they are trying to create
with the Like buttons. He thinks they are building for top of the funnel Brand
advertisers. The day of the big FB “Like” announcement I tweeted that Facebook was going to use these buttons to go head-to-head with
Google on direct-advertising. It will be interesting to see how this plays out but
in light of Chris raising the subject I wanted to expand on my thoughts around the opportunity.

Branding and impression do not matter anymore online. These
concepts were long ago destroyed — first by Search (free impressions) and then by Social
Media (shared & trusted dissection of brand promises). Online advertising is the greatest demand-capture channel that will ever be known to man but it is simply not an
intent generation channel. Demand-gen advertisers are better off sticking to TV
where the CPMs are comparable and where demand capture can flow down into more measurable cost effective capture channels (as evidenced by the fact that the top Google trends on any given day are typcially TV related).

What works great on the web is Marketing – identifying and
fulfilling needs. Search has always been overlooked for top of funnel
influence in need identity. Search is present at each stage of user
consideration. Yahoo had a seminal study about this about 4 years ago exposing the search funnel from brand awareness through the consideration stages down to purchase for women’s jeans. So Search is probably
worth way more than it’s already returning – but you will not see comScore reporting
on this.

Chris mentioned in his post that Google doesn't disclose revenue share with pubs which is true. However, what Google has disclosed about AdSense counters his claim that they keep the vast majority of the profits. In
Q1 2010 Google paid out $1.45B to publishers on revenues of $1.65B. It’s also
interesting to understand the dynamic of Search driving AdSense impression that results in the creation of MFA (made for AdSense) sites. So even with Google’s bevy of advertisers
and giant publisher footprint the channel size appears to be $6-8B. I can’t see FB
being able to match the low margins or the impression amplifier. Even if they can,
this is still a far cry away from the $27B company Google is today.

Chris also mentions Amazon in his post. It’s relevant to recall that a fundamental driver of Amazon early growth was their affiliate network – that was most ostensibly a display ad unit. There is plenty of intent on the web that isn’t
being harvested, especially on publisher sites.
If Facebook is going to really
become a threat to Google their only play is demand capture. Every day it spends focusing efforts on demand-gen is just another day Google get’s stronger. 



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One response to “Online Advertising is Not an Intent Generation Channel”

  1. colin Avatar

    I completely agree the sentence-“What works great on the web is Marketing – identifying and fulfilling needs.”


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