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Pockets of Profit

Look carefully when scouting marketing opportunities on the Web, and you just might strike gold.

If I had a small advertising budget–in the thousands rather than millions–like most small or even medium size businesses, where should I put my money?” It’s a question that’s often asked, but on this occasion it was met with a variety of answers: “Blogs!” “RSS!” “Web site search.” “Online, in any case.”

This advice came from a round table of advertising people, actually; we were having dinner at an IT conference. I wasn’t exactly a fly on the wall (I sat at their dinner table by chance) and they weren’t engaged in dishing out their firms’ trade secrets. However, there were candid observations, which I plied with questions, as they plied themselves with martinis.

Thinking back on the conversation, it struck me that 10 years ago these same people might not have mentioned the Internet, much less online advertising. These days they were talking about online ads gaining on print and broadcast. “Almost $15 billion this year!” went one claim. The big news in their world is the shift in focus from traditional media to online.

“People are losing confidence in the effectiveness of old media.”

“Bah, they’re just adapting to the public’s use of the Internet.”

“Well, of course, I still put most of my money with print and broadcast, but I know their coverage is declining…and the online coverage is increasing.”

Among themselves, these advertising people repeated words like watershed and turning point when they talked about the changes in advertising wrought by the Internet. Some figures–such as Internet ad spending in Britain exceeding television spending in 2004–bear this out. I’m no fan of ad-biz, but I’m interested because this undoubtedly signals a cultural watershed, a big shift in how people spend their time. For these folks though, it’s a business proposition.

“Every businessperson has just gotta know, the Internet is changing the rules of advertising.” Though hardly a revelation, what seemed to ripple through this group was the impact of the changes. As one of them put it, “More and more people are finding their shopping niches on the Internet. They can get odd things from odd places and have them sent to their home. I’m gearing more and more of my advertising to find these people.” The enthusiasm around the table was palpable. Their creative juices are flowing, because Internet advertising is not only growing; it’s new and it’s different.

For one thing, it can be interactive. As one of the folks at the table put it, “As of this year, thanks to the Supreme Court, wine can be sold in any state over the Internet. In this one thing you can see all the forces we’re talking about: Niche sellers, new distribution patterns, worldwide participation, unlimited appeal to individual tastes, knowledge based purchasing, search environments…”

“Whoa,” I said, “Forgive me for being dense but you’re running over concepts like mountaintops, what for instance, do you mean by ‘knowledge based purchasing’?”

“The best kind! Complex products and people who want to know something about them before buying. Wine is a perfect example. Between ‘I don’t know what I like’ and ‘What’s the best vintage year for Chateauneuf du Pape,’ there are a lot of people who educate themselves while they pick out a wine. We can do that interactively on the Internet at least as well as asking the most informed sommelier (and a lot less snooty). And WE get to throw pitches while people learn. It’s perfect!”

“Nothing else does that,” chimed in another.

“Does what?” I asked.

“Nowhere else can advertising lead so immediately to a sales transaction–or even distribution, if you’re talking software or media content such as music.”

The others nodded sagely and looked at me like I was found running naked in some remote valley of Mongolia. Not wanting to undo that perception just then, I asked, “What do you mean by a search environment?”

“It’s called search marketing. What do you think makes Google so rich?”

One of the people leaned in my direction and said, “With want ads, the printed kind, people scan through them to find something they want, right? How much time have you spent scanning ads or flipping pages of magazines and newspapers looking for something specific? Nothing to it on the Web–it’s a search, a Google, a Yahoo, an MSN, a site search, whatever. And we piggyback on that search, or I should say the search engine company does the piggybacking. They sell ad space on the search results pages. We have whole campaigns based on that and they’re becoming very sophisticated, very tailored to the user.”

“Yeah, personalized advertising, we’re just learning how to do that. If you have a database of information about your customers…we can do wonders.”

Picking up this thread, another said, “We can do a whole multimedia show around you–or at least around your tastes. Call it Webertainment, or a Webertorial.”

This gushy statement drew a retort: “You can tell the creative types. The sizzle is always ahead of the steak. We need broadband, lots of it, and not this half-baked broadband a lot of people in the U.S. are getting.”

“Sounds to me like you want to drive the budgets for online advertising right into the stratosphere, just like TV.” I said this because, in fact, their ideas headed in the direction of complexity and more expense.

There was a pause. “Look,” I said, “I’m thinking of businesses with small advertising budgets.”

“You mean like around a million?”

“Not exactly. You make it sound like Internet advertising is only for big players. That’s not true, is it?”

The oldest member of the group, a grizzled veteran of perhaps 40, took the conversation in hand.

She said, “Broadcast is expensive, especially television. I think we can get just about the same show as a well-produced 30 second spot for half the cost on the Internet. But that’s not the point. In most other media you pay for big numbers. On the Internet you can buy ad space, or whatever, with much narrower targets. It should be perfect for small businesses. Take an industry blog, for example. Blogs are an incredibly expanding area. If you make buys in a small number of the best blogs in a given industry, you’ll get a very targeted audience, and it’s cheap. The Internet has lots of opportunities like that.”

“Yeah, RSS, local search, community Web sites…lots of places.” It was an enthusiastic chorus.

Many voices, not always on the same tune, but it seemed to me that they did agree that Internet advertising is important, growing, and a good value for smaller companies with limited budgets and a desire to go beyond their basic Web site presence.

Nelson King writes Pursuits bimonthly for ComputerUser

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