DinosaurI’ll be honest, it has been a while since I studied dinosaurs. But if memory serves, they pretty much ruled the world for about 160 million years. Seriously, for a good long time it was not that great being a mammal. Then, about 65 million years ago, something happened and almost all dinosaurs and a boatload of other animals became extinct. This event is referred to as the “Cretaceous–Tertiary extinction event.” (At this point you can either be impressed with my paleontological knowledge or realize that I just looked up the term on Wikipedia.)

Theories differ as to what caused the event, but it’s clear that one really good thing came out of it: us. When all the big things died, it gave all the little things a much needed chance to get a foothold and start their own journey towards world domination. So what does this have to do with social media marketing? Everything.

The forms of “new media” and “new media marketing” with which this blog concerns itself are still exactly that: new. The vast majority of marketing and advertising dollars is still spent on mainstream, mass-media marketing. Even online marketing spending is still heavily weighted towards pay-per click, in-stream, and other traditional marketing methods shoved carelessly onto the digital world. “New media marketing,” is a small mammal in a world still run by dinosaurs. But that’s changing. We can see it happening all around us, and the topic has been discussed on this blog and others before. I write today specifically because I found two separate reports which, while not the harbinger of the traditional marketing apocalypse, certainly signal a shift in power that is already taking place.

Let’s begin with traditional off-line advertising:

In the results of an Association of National Advertisers and Forrester Research study released today:

  • 62% of marketers say traditional television advertising has become less effective in the past two years.
  • More than 50% of advertisers said that when half of all TV households use DVRs, they will cut spending on TV advertising by 12%.
  • 87% of respondents said they intend to spend more ad dollars on the Internet this year.

These stats are amazing. Over 60% of marketers are now admitting what we have all been feeling for some time: TV commercials just aren’t working like they used to. If half the advertisers say they will cut TV ad spending by 12% when DVR penetration reaches half of all households, then that’s somewhere upwards of 4 billion advertising dollars that will be looking for a new home. Couple that with the number of marketers who will be spending more ad dollars on the internet this year, and it becomes clear where those homeless billions are going to go when the time comes.

Now let’s look at online advertising.

This is the part where traditional online advertisers say, “Hey, what makes you think any of that money is going to be spent on new media campaigns?” It’s true that pay-per-click style advertising is still the largest subset of the online marketing industry. But, I would claim that these PPCers and pre-rollers and post-rollers are just as susceptible to the coming extinction as the dinosaurs of traditional marketing. All these PPC banner ads and rich media ads are simply the digital incarnation of the traditional marketing models of interruption and top-down thinking. I think people make the wrong distinction when they think that traditional marketing will die while internet marketing will thrive. That is drawing the line in the wrong place. It is traditional marketing models that will die, and new models that will thrive. A rich-media in-stream ad before an online video is not “new media marketing” simply because it is attached to online video. It’s still an interrupting nuisance that just shouts a message at me rather than conversing with me.

It is not just theoretical or ideological problems that these PPC marketing strategies must face, however. There are hard numbers that show one inherent problem with such marketing. That problem is click fraud, and ClickForensics has some new data out showing an increase in the already woefully-high click fraud numbers.

ClickForensics Graphs

Look at these stats taken directly from the report:

  • The overall industry average click fraud rate rose to 16.6 percent for Q4 2007. That’s up from the 14.2 percent click fraud rate for the same quarter in 2006 and 16.2 percent for Q3 2007.
  • The average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 28.3 percent in Q4 2007. That’s up from the 19.2 percent average click fraud rate for the same quarter in 2006 and 28.1 percent for Q3 2007.
  • The 2007 industry average click fraud rate grew by 15 percent over the industry average click fraud rate for 2006.

I think click fraud is just the precursor to larger problems that will plague these forms of interruption-based online advertising over the coming years. The more I read, the more I study, and the more work I do with social and viral marketing, the more I deepen my conviction that the approach to marketing must change in order to reach consumers. You can no longer demand their attention, you must earn it. And if you have to earn their attention, then you have to engage them more than most marketers are used to. Marketing is becoming a conversation, not a sermon, and the rise of social media marketing is upon us.

For more on this topic, make sure to subscribe to our feed. Next week I will be publishing a follow up post entitled “The Rule of Reciprocity” that will discuss the importance of the “conversation” that must start taking place in order for marketers to continue to engage consumers.

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Written by Matt Peters
Matt is the Co-Founder and CEO of Pandemic Labs, and enjoys thinking about, writing about, and talking about social media marketing whenever someone will let him.