Why Online Advertising is Nerfed by Google

For quite a few years we have heard about how online marketing is the future.

It gives value to the end consumer by being more relevant and the advertiser can be more targeted in who they want to reach. But right now it’s just not working, and it isn’t the technology that’s the problem.

Buy a plane ticket to Amsterdam and I can guarantee that your internet experience is going to be peppered with ads for KLM for the next couple of days. Book a hotel in London and the same is happening again, my browser is filled to the brim with ads for booking.com and Expedia, with special offers on the hotel I just booked the day before.

It certainly is contextualised, but it doesn’t offer me value. After booking a flight to Amsterdam, adverts for hotels, shows and restaurants in Amsterdam would offer me value.

The problem is the pricing model of Google Adwords and lack of imagination among the advertisers. Google Adwords are auctioned off to the highest bidder. You wish to reach those contemplating a trip to Amsterdam you name the search terms of the people you wish to reach, the price you’re willing to pay and an algorithm at Google picks the lucky winner. I would seem that relevant advertising for the end user is not a factor in this algorithm.

So when I book a ticket to Amsterdam, KLM has defined everyone searching for both ”flights” and ”Amsterdam” and is going to win the bid in the battle for my attention. An amazing restaurant or an art exhibition relevant to an article I commented on in Arstechnica does not have the budget to win such a bidding war.

If online advertising wishes to stay ”friendly” with its audience it needs to fix this.

It needs to be proactive by assuming my next need and give seeding to the advertiser catering to this need.

This could be done by mapping average chains of purchase habits (e.g. people who buy plane tickets usually need hotels)

Pick up social data (four of my Facebook friends bought a ticket to Amsterdam and then bought tickets to a football game)

Or it could match profiles with previous customers and their chain of events (There is a lot of people going to this conference in Haag in this period who also follows Arstechnica, Wired and Fast Company)

Is there an opportunity here for a keen young Norwegian startup?

Photo credit: Paul Townsend