Chris Dixon’s blog has lately emerged as one of the best blogs we read. Lately Chris’ posts has been a lot about early stage funding - something we think a lot about. More recently Chris has been talking about business models, and more specifically advertising based business models.
This post discusses that advertising money is spent where people spend their time. Reach a huge audience and sell your advertising spots expensively. The biggest events gets the most expensive advertising spots: CPM for the Superbowl is closing on $35, a 50% - 100% premium depending on how you measure.
So is not yet the case with the web. As Chris is saying in one paragraph, Google and Facebook are comparatively same sized, but Google brings down the house with +50x Facebooks revenues. The gap is even more clear if you start looking at the time spent on the site: Facebook users spend 3x as much time on the site as Google users do on Google. (alexa.com)
The key sentence in that paragraph is: “the Proctor and Gamble’s of the world will eventually find an effective way to shift the bulk of their ad spending online.”
It’s bound to happen. The medium is still so young. The Internet is today where the TV medium was in the 60’s.
If you look at online advertising today, the most obvious comparison is print media. Banners and Google ads are just print ads with medium reference (the link). In the 60’s TV advertising resembled Radio advertising - talking and not showing. Today TV advertising is more sophisticated: Entourage being my favorite with very sophisticated product placements: iPhone, Blackberry, BMW, Zoo York, etc. You don’t even think of it as advertising any more. Great ads even go viral online on youtube. Imagine that - people seeking out to watch your ads.
So it’s obvious - in order to rake in the big bucks online, advertising agencies need to understand their medium. And that’s what we’re working with at Burt, most recently by launching Rich, a tool to help Creatives understand which ads are successful and why. And we’re working on two other products promising to give creative agencies the tools to squeeze out everything our medium has to offer.
So while others are busy talking, we’re busy building.