May the best giants adapt

I may be alone in thinking that Microsoft’s offers for Yahoo were all mistakes. All were too much to pay for a company that would be hollow on Day Two. But don’t get the idea that I care all that much. I don’t.

On the Gillmor Gang (where I am also a participant at the moment) Dan Farber just called online advertising “the most efficient way to make money in the world right now”. That might be true. But advertising itself is a bubble in the long run, because it’s guesswork even at its best, and making it better and better only improves a system that has been flawed fundamentally from the start, because it proceeds only from the sell side, and still involves enormous waste (of server cycles, of bandwidth, of pixels, rods, cones and patience).

Advertising is a big churning system by which sellers hunt down buyers, rather than the reverse. It pollutes the media environment and theatens to corrupt the producers it pays.

I could go on. Or I could just point to Bill Hicks’ wisdom on the matter. Bill goes way over the top in that routine, but he’s talking to your soul, not to your wallet. It’s important to pull them apart once in awhile.

Yes, I know some advertising is good. A lot of it, in fact. But I’m not talking about that advertising. I’m talking about the 99+ percent of it that’s wasted.

I’m sure few at Google, Microsoft, Yahoo or Facebook (or TechCrunch, or pretty much anywhere that makes money from advertising) agrees with much if anything of I just said. And I’d rather not argue it, because I don’t have evidence to prove my points. There still is no system by which demand takes the lead in driving (and not just finding) supply. But I believe that’ll happen eventually. And when it does, advertising will fall. Advertising is not a tree that grows to the sky, no matter how fast the Google redwood is gaining altitude.

But… I might be wrong. I dunno. It happens.

Mike Arrington just said on the Gang that he is “outraged” by something I said. I forget what it was. Some of the above, I guess.

Anyway, I don’t know what will happen to Yahoo or Microsoft. I am sure Google will still grow like crazy as long as advertising money flows from other media to the Web. But that’s not the whole story. What Google’s doing with Web services, with Android, with the Summer of Code, with Earth, Maps, Talk, Gmail, Docs… are mostly Net-friendly, cross-platform (including Linux) innovative and positive. They’re far from perfect, but not as far as Microsoft and Yahoo. That’s an advantage, if you’re into vendor sports. Which I’m not. (Well, a little, but not much.)

Who’s buying whom, who’s committing suicide by saying yes or no to acquisition offers, or the rest of the Stuff that’s front and center right now, kinda bores me. I care far more about the independence and empowerment of individual users, and of independent developers working to make a world where free markets are not “your choice of walled garden”. We don’t have that world yet. One walled gardener succeeding or failing to buy another doesn’t move us any closer.

What gets us closer will come from the edge. It’ll move under the feet of clashing giants.

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13 Responses to May the best giants adapt

  1. You are so right. Advertising is a big churning system by which sellers hunt down buyers, rather than the reverse. John Wanamaker said it first, and it hasn’t really changed, because we SHOULD be trying to help the buyers find the sellers.

    Advertising isn’t evolving. The media is changing. Advertising was highly contextualized and segmented in direct mail years ago. Only the outlet has changed.

  2. ouija repair says:

    A post as general as this is bound to generate conversation, though I understand why you don’t want to argue it further, given the breadth. Still, I’m a little confused. There is a system by which demand takes the lead in driving supply, which I think falls under the category of economics, not advertising alone.

    True, most advertising still plays by old rules, meaning the customer is the “target,” and any weapon is on the table, including brain scans in neuromarketing and widely abused privacy issues, especially on the web, a hen house where ad practitioners are pushing hard for self-regulation. Marketers want the stacked deck back, which they had before we could skip commercials and find our entertainment ad-free.

    The relationship between consumer and marketer has been adversarial for decades, which is a shame. Consumers know when we’re just a “target.” Sadly, we may not know when we are psychologically shepherded into defining our identities with a brand. That’s a bull’s eye.

    But now consumers have so many more tools to find and vet a product or service — customer reviews, forums, word-of-mouth. No amount of hype will build a sustaining brand unless there is the quality and demonstrated interest in the customer to back up the claim (except for monopolies, of course.)

    Advertising as we knew it might be on the way out, and most would say “good riddance.” But marketers have the right (the righteous might say the duty) to tell their story. No one is more qualified, and frankly, as a consumer, I want to know what a company thinks of itself and its offering.

    Marketers have always told their story. It’s just that without consumers as editors, that story has too often been fantasy or fairy tale. Now, if a marketer has a good story, it’s a great time to tell it.

    In short, the technology is promising so long as the content adapts, and we, as consumers, have the ability and inclination to control what goes in our heads.

    Lastly, it’s a shame Bill Hicks is no longer with us.

  3. Eric says:

    Yes, but . . . much of the economy runs on artificial demand, demand that has been created by advertisers. If it were left to consumers, much of that would drop off and just disappear.

  4. Mike Warot says:

    There is a basic demand for things that have a positive return on investment. These will be sold regardless of the presence of “advertising” because the demand is 100% real, assuming the producers and consumers can find out about each other. Good marketing reduces that friction and makes it easier to find things you actually could use to make money, save time, etc.

  5. ouija repair says:

    BusinessWeek has a story today on “reputation Management” outfits, re the battle for what goes in our heads. It’s a little depressing to me.

  6. nordsieck says:

    Is this a typo?

    “They’re far from perfect, but not as far as Microsoft and Google.” Google –> Yahoo

  7. Guy Parkinson says:

    I recall listening to the first chunk of that Gang podcast and realizing that when you, Doc, raised the idea of the impending irrelevance of advertising that you were articulating an idea I had been trying to form for some time. The basics of the argument just seem obvious to me, so I was surprised at the degree of outrage the other participants expressed when you raised the point. As a developer, I dig clever technology and, above all, platforms that satisfy some desire for users; there is something just tragic in the assumption that advertising is the only plausible income strategy for social software. So, thanks…

  8. Doc Searls says:

    Guy, was that the one where Mike Arrington said he was “outraged” by my assertion that advertising was a bubble and in some ways a dead end?

    I any case, I do agree that “there is something just tragic in the assumption that advertising is the only plausible income strategy” for *anything*, including social software. Great line.

  9. Guy Parkinson says:

    Yes, I recall you mentioned the idea of the inefficiency of advertising a couple of times to general guffaws and jeers — and I recall the ‘outrage’ remark, so: yes. Anyway, I have been ruminating on this idea since then and it stands up well to new input, indeed, it frequently makes more sense of it.

    Observing the endless debate over the survival (and/or) revenue model for Facebook/Twitter/etc when it is clear that these ‘utilities’ have attracted enormous and dedicated communities (with populations comparing to cities and countries, and representing demographics to make advertisers drool), it seems obvious, hence surprisingly subversive, that the users of these utilities have no apparent need for advertising, and that this simple fact is the enduring problem with the business-model assumptions of most commentors on the subject.

    So, yes and hallelujah, in the emerging inversion of communication, ‘advertising’ should see mortality writ large, as supply and demand no longer need mediators; indeed, demand (that is, the ‘community’) no longer needs mediators or arbitrators from the ‘supply’ side at all…

    Well, sorry, carried away there, but thanks for getting me started. Incidentally, I work in advertising, and I’m the guy who keeps saying “We should really be thinking about this…”.
    (I apologize for the long delay in this response (I had to actually google this post to find it again… )).

  10. Pingback: » The Death of Advertising Push Versus Pull

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