Chasing ghosts

Tim Armstrong says Verizon has bought Yahoo with a view to competing with Google and Facebook in the advertising market. The explanation only shows how wrong a telecom company can be in thinking that by purchasing a couple of has-beens and then thinking it can use their scale to compete in one of the most sophisticated and fast-changing sectors.

Somebody needs to tell the former Google director how much the advertising business has changed since he left the company and that the chances of building something out of these remains of the last century are zero.

Online advertising has never been a tougher nut to crack: people are tired of old, intrusive formats and bothersome banners. During Armstrong’s time at Google, the business was simply about offering agencies a few properties where they could insert the banners of their ignorant clients so that their ignorant users could see than, and one in every million could click on it.

Today, advertisers are terrified of an increasingly saturated and incomprehensible ecosystem filled with more and more intermediaries and that soaks up their budgets amid fraudulent clicks performed by robots or through insertions in low-quality pages.

As more and more users resort to adblockers, some advertising networks are resorting to showing ads on pages with poor reputations, in many cases set up solely to show these advertisements and filled with content taken from other pages. As Google’s algorithms try to bury these pages, their creators redouble their efforts, making advertising less impactful and forcing advertisers to spend more money to get the same result (or to think they are through erroneous metrics obtained through fraudulent traffic brokers), generating a second-class internet in the process.

Anybody who wants to compete in the online advertising market has to accept a few key rules.

• If you advertising business consists of torturing readers with crazy formats, your days are numbered. Only advertising that isn’t bothersome will survive.
• Trying to stop people from installing ad-blockers is a waste of time. Rather than trying to block the blockers, calling them thieves, it is better to try to understand why they are doing it in the first place, and to understand what we are doing wrong.
• The only solution is to invest in a quality impact. Machine learning and artificial intelligence provide the clues as to what users really want, rather than the “if he looked for a hotel in Berlin two weeks ago, let’s hit him with banners of hotels in Berlin” approach. You need to provide people with real solutions, and without bothering them.
• Not everything we do online is about buying something. Therefore, an important part of advertising should be about brand awareness.
• The more sophisticated your segmentation the better. If the user hands over data, believing that this will provide him or her with a useful advertisement, that it isn’t intrusive, then perhaps he or she will provide more data.

The companies making money today in advertising are not “anybody with a property that a lot of users pass through” and much less those who believe that “users are their property”. Instead, they are those investing in algorithms and innovation to prevent click fraud, bots and click-farms. Google has an entire department dedicated to this and is betting its future on machine learning, while Facebook is also pursuing a non-intrusive advertising strategy based on segments their advertisers really want to reach. Sadly, these are not strategies everybody can follow. The only solution for smaller players is to offer quality content and wait until your users understand that you’re not going to hassle them, that you will respect their advertising formats, or that you will incorporate into your content through branded content based on common sense.

Tim Armstrong can say what he likes: all that the Verizon-AOL-Yahoo conglomerate will achieve is a slice of the garbage universe filled with garbage pages with garbage traffic that a few unwary advertisers will pay garbage prices for. If he really wants to compete with Google and Facebook, he’ll need to stop smoking whatever it is he’s smoking. The sum of two former Google executives, Tim Armstrong and Marissa Mayer (although Mayer will be on her way soon with a $50 million check in her pocket) isn’t enough to create another Google. Verizon lacks the ability to adapt to the increasingly tough requirements of the new advertising ecosystem, and its operator mentality will prevent it from doing so.

Never in the history of the world has a telecom company ever been successful in the content market. At best, the biggest cellphone operator in the United States will spend some time desperately trying to inject AOL and Yahoo content into its users smartphones, seasoning it with advertising and pretending that advertisers are reaching their users, when the truth is that most people will never even open that content. The advertising business Verizon should be going after is no longer where the company thinks it is, and its strategies are about as efficient as chasing ghosts was in an earlier age. Refusing to learn the lessons of the past has never been a good idea.

(En espa?ol, aquí)