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Is advertising information you don’t need?

The optimists say that the economics of publishing content online won’t always be bad. There won’t always be an oversupply of skilled content producers and a corresponding lack of enough online advertising income to support their work. We’re told that display advertising will become more interactive, and thus will attract more users, and that this will generate income.

We’re told that Madison Avenue’s salespeople don’t yet understand online as a medium yet, and new companies will figure out ways to make ads more effective and, therefore, more profitable. Young, computer-savvy ad salespeople like Darren Herman of Varick Media Management (shown above), are unlocking the potential of sophisticated ad measurement.

Meanwhile, large companies still don’t know how to brand their products and services with online ads as effectively as they’ve used glossy publications and large billboards for branding, but that will change. John Battelle sums it up nicely:

Close your eyes and imagine leafing through your favorite magazineVogue, perhaps. A two-page spread halts your progress—the image of a beautiful, sophisticated woman standing in the doorway of a crumbling Havana doorway, with an elegant brand “Lancome” etched in the lower right corner. Or perhaps it’s a spread in Fortune, an arresting montage of imagery featuring a Jaguar automobile, a model you’ve never seen before.

Now, open your eyes, and imagine the same experience online.

Having a hard time? You’re not alone.

It makes sense that marketers will figure how to use the ‘Net to build brands more effectively. Along the way, creating online content will therefore become more profitable.

But it seems unlikely in the next five years that ad revenue will grow fast enough to support all of the people who want to produce content online. Or even a 10 percent of the people who want to produce content online.

Why?

Advertising, like content, is also information that people don’t want . Eric Clemons summarizes this argument:

People don’t trust ads. People don’t want ads. People don’t need ads. And, finally, there is no shortage of places to put ads, which means that competition among them will be brutal and prices will be driven lower and lower, for everyone but Google

In other words, while online advertising will get smarter, it will probably never in the next five years be profitable enough to support the restoration of any of the 17,000 journalist positions that disappeared in the U.S. in the past two years.

What about new gizmos? Unlike David Carr and others, I don’t see Apple’s promised e-reader device or future versions of Amazon’s Kindle as a savior for content publishers. If the new devices are popular, it will mean that Apple and Amazon controls distribution, price, packaging, and experience;mdash;not so much saving content publications as taking them over. Steven Brill’s outfit Journalism Online estimates that the typical cut, or commission, that Apple and Amazon would take for publishing content by, say, The Times, at 70 percent to Apple and Amazon, the rest to everyone else. Not good.

So what’s a journalist, or content creator in general, to do?

1) Try to work for companies that pass the Graham test for winning models: Deliver superior, fresh, not-easily-copied content in a superior online experience that wasn’t easily available a couple of years before.

2) Assume those companies will rarely be today’s big publishers, who are reluctant to adopt a new temperament of endless experimentation and to divert resources away to new platforms.

3) Improve your odds of being paid by those companies for your work by building up your own brand and audience.

[image of dherman76 courtesy of his Flickr page]

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