The parallels of Web 2.0 and real life
Do you ever consider what makes Web 2.0-minded systems like MySpace, YouTube, Wikipedia, and LinkedIn so popular?
The obvious answer is because the users control their own experience and influence that of others. When you join these online communities you are able to present a compartmentalized version of who you are and network with everyone else in the system.
Kind of like real life, wouldn’t you say?
This is just how the real world works. We are all in a system (society) with rules and guidelines, or protocols to which we adhere to create a persona of our selves that we share with others and network. Naturally, any system that can mimic this sort of creativity and liberty in our online experience is going to win over some users.
When you look around you, one thing you see everywhere is advertising and it is usually loud, big, and bold. Take a drive down the highway to a metropolitan area and tell me what you see. Billboards, billboards, billboards. You see ads on bus stops and on buildings. You hear ads on radio, TV, and let’s not forget magazines. The point is, ads are everywhere and they are typically geared towards a particular audience that is likely to be viewing them.
The same goes for online advertising, but with the Internet, advertising can be taken a step further. There is a level of precision and reporting that go along with online advertising. So why, according to The Wall Street Journal, was only 5% of money spent on advertising done online?
I think it might have something to do with price. A quick analysis of advertising with The Wall Street Journal shows that a full page color ad for the US circulation would cost about $254,000. With 1.7M readers the advertiser is paying $0.15 an “impression”. Step down to a 1/7 page ad the advertiser cost would be about $28,400, or $0.016 per impression. A typical banner ad on the Web costs advertisers now about $20 CPM (cost per thousand impressions). This equates to about $0.02 per impression.
This is a very rough calculation but you get the point. The cost for advertising on the Web can be and typically is significantly less expensive which I think is the reason why 95% more money is spent in off-line advertising. This will change in time, and probably not too far off. There are companies out there getting a jump on this and with behavioral advertising hitting the scene, the cost for online advertising will rise steadily and quickly, possibly some day surpassing print and television advertising.
