Stupid Academia Watch: An Online Ad Implosion? Pshaw!!

What the heck are they teaching at Wharton these days? We sure better hope a recent guest column on TechCrunch by Eric Clemons is not a representative example.

In the piece titled “Why Advertising is Failing on the Internet,” Clemons—a professor of operations and information management at the Wharton School of the University of Pennsylvania—claims that online advertising, the best mass value-for-value transaction in human history, is doomed.

As proof of his assertion, Clemons pointed to a column by Silicon Valley tech reporter Sarah Lacy in which she wrote that some Internet Advertising Bureau big shots are saying whole Internet-ad supported outfits could go belly up in the current climate. She also cited one researcher, IDC, which predicts online advertising will drop 5% in the first quarter of this year and may fall further in the second.

Thing is, no one has ever said individual Internet advertising companies aren’t subject to economic conditions and IDC seems to be the only firm predicting a decline.

eMarketer, which reaches its projections by aggregating results from a slew of sources, recently predicted online ad spending to grow 8.9% in 2009, a far cry from the double-digit growth the channel has seen over recent years, but still respectable given the circumstances.

To bolster its conclusion, eMarketer cited no less than 12 sources, all of which predicted online-ad growth in 2009, from Myers Publishing LLC’s low of 2.7% to JupiterResearch’s high of 14.8%.

Incidentally, eMarketer on Monday halved its 2009 prediction, but still projects online advertising to grow 4.5%.

Clemons also cites the failure of so many print publications as a failure of advertising. Nonsense. What we’re witnessing is a massive, painful shift in media consumption and ad buying. And the shift is happening because online advertising is measurable, can be targeted—as long as the privacy zealots don’t get their wishes—and is working quite well for marketers who know how to use it.

My wife is a media buyer and planner for Rivet Global, a unit of DraftFCB. When I asked her if online advertising is working she was incredulous: “Are you kidding? Like gangbusters!”

So it would seem Clemons’ premises are flawed.

And judging by his article, so is his understanding of advertising.

According to Clemons, display advertising—where the marketer pays for an attempt to get someone’s attention while they’re doing something else—is doomed online because people don’t trust it and don’t need it

“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,” he wrote. “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.”

Clemons’ argument assumes we’re all aware of the availability of every single product and service that we could want or need. It is utter nonsense. Among advertising’s many functions is to make people aware of products or services they will want but didn’t know existed.

And in what is arguably the biggest whopper in Clemons’ piece, he called paid search a form of misdirection, as if sponsored links are somehow dishonest and people are too stupid to recognize the link they most want to click in a page of search engine results.

Search guru Danny Sullivan picks apart Clemons’ misdirection assertion quite well here so I’ll leave it be.

Meanwhile, Clemons also makes the assertion that people will pay for content online. “Presently I willingly pay for the Financial Times, The Economist, and Foreign Affairs, I value the content, and, indeed, I feel I need it; I will continue to pay for them online,” he wrote.

Never mind that citing one’s own habits is evidence of nothing, Clemons never addresses how the publications he pays for will get new subscribers without advertising.

Clemons is right about one thing: Some people will pay for some content. But not much and it’s mostly porn.

As this article on Slate http://www.slate.com/id/2211486/pagenum/all/ points out, many quality publications have been forced to give up on charging for content.

The Internet without a robust ad-supported media would be a dreary place.

Moreover, why pay cash for something when an advertiser is willing to sponsor it and possibly make the consumer aware of something they wanted, but that they didn’t know existed?

And just because people won’t pay enough cash for content online to support its creators doesn’t mean it isn’t worthwhile. Penton Media would have to charge an astronomical amount of money to subscribers of this newsletter and the other one I produce—Magilla Marketing—in order for them to be profitable.

But they’re trade newsletters. Their audiences are small. If I’m doing my job right, the newsletters’ readers are highly qualified prospects who can be worth six and seven figures to advertisers if they use the space they purchase to draw those readers into decent lead-generation programs.

If I’m not mistaken, Magilla Marketing has had the same lead advertiser for its entire existence. E-mail service provider Silverpop is most certainly not buying the space as a favor.

If the world’s oldest profession is prostitution, the world’s second oldest profession is advertising.

Online advertising is working. It isn’t going anywhere.