Kiss My Ads:
Advertising, as a primary revenue source, is history.

By Rob Frankel -- Ziff-Davis Internet Business Magazine, May, 1998

OK, I know this is no way to start off a relationship, but an item just came across my desk and I couldn't help writing about it. I could have clunked out some trippingly, cheery tripe about how wondrous This Thing Called Web is. But this was just too juicy to pass up.

Before I get too far, you should know I'm basically an ad guy. I do advertising and marketing for clients every day. And roughly 99 out of 100 clients that waltz through our doors asks me the same Larry, Curly and Moe of every new business meeting:

"Should I build a Website?" "What will it cost?" And the ever-famous, "How do I make money with it?"

It's too boring to go into what the answers to Numbers One and Two are. But see Number Three hanging off the end of that last paragraph? The part about making money? Well, that's our vicitim of the day. That's the guy into whose heart our Grand Master of Online Oddities, Steve Case, drove a stake when he announced that America On Line was raising fees for unlimited access accounts.

The rate increase itself was no big deal. What got me was why he was raising the rates. According to Steve, "members are using the service three times as much as they did a year ago, [which] means that our costs have risen dramatically. A big chunk of these cost increases is being covered by companies who are advertising and doing business online."

Hmm. Care to guess what's next?

"[W]hile those nonsubscription revenues are growing quickly,...they aren't yet keeping pace with the phenomenal increases in usage...," he whines, "...Therefore, we must find new ways to cover this significant increase in costs..." yadayada. Hey, that might be good enough for Ozzie and Harriet, but you and I know what he's really saying: Advertising ain't cutting it.

Do you care about AOL raising rates? Do I care about AOL raising rates? Does anyone? Not really. But you bet I care why they're raising them. This is the death knell of the over-hyped, under-performing advertising-as-a-primary-means-of-generating-income thing.

Ever since I clicked my first banner, I've been telling anyone willing to listen to drop the advertising model like a hot brick. After all, if AOL has a zillion subscribers and our man Steve can't make it work, do you really think your site can do any better? You're much better off sticking to your core business and booting banners into the back seat with the crumpled Burger King wrappers.

Wait. You hear that? If you close your eyes and listen real hard, you can hear the sound of angry media planners, furiously clacking out e-mails about the "promise of the web" and how if we all hold hands and chant, an advertising-based site can really make a profit.

Yeah. Sure. And picture phones will be in every household by 1968.

Look, I've got no gripes against ad sites. But I'm a profit-oriented ad guy. I still tell my clients to install banners on the off-chance that some yokel will actually pay for them. I mean, if someone is willing to fork over bucks for banners, you'd have to be a dope not to take it. But not as a primary means of generating revenue.

The fact is that when it comes to making profits, you can get there quicker by selling stuff than you can advertising it. That's why so many people jump into the web in the first place: if it only costs a few shekels to start up, it only takes a few sales-and a lot less traffic-to break even.

Well, sort of. But you get the point.

Remember when everyone at the cocktail party held their "hits per day numbers" higher than their martini glasses? Well, those days are over, scout. These days it's about content and transactions. Commerce and cash. That's where the smart money is. Just ask Steve.