The demise of Advertising is near.

Monetization is necessary for all businesses, and is becoming a sticky issue for Web 2.0 companies. Advertising revenue seems like one of the most likely strategies for many of the companies who are competing in a “Free” space. However, according to Eric Clemons, all media advertising revenue is failing, and the Internet effectively shatters any hope those advertisers would have of resurrecting it. He discusses these ideas in the TechCrunch article, “Why Advertising is Failing on the Internet.”
http://www.techcrunch.com/2009/03/22/why-advertising-is-failing-on-the-internet/

He states three reasons for this failure. The first two are ongoing plagues, but haven’t begun to do real damage to ad revenues: 1) “Consumers do not trust advertising”, 2) “Consumers do not want to view advertising.” It is the third reason, which has changed since the popularity of the internet, that really crushes advertisers: 3) “Consumers do not need advertising.”

Professor Clemons states, “will no longer need advertising to obtain …information. We will see the information we want, when we want it, from sources that we trust more than paid advertising. We will find out what we need to know, when we want to make a commercial transaction of any kind.”

We have heard a great deal about how Facebook has been experimenting with ways to earn money though targeted advertising, including programs like Beacon. People are uncomfortable with this, but it seems like Facebook is directly addressing the items that Professor Clemons is concerned about.

You can trust the advertising if it comes from a “friend.” If you are notified through Facebook that a friend has purchased a dress at Ann Taylor Loft, for instance, you know that your friend made an informed buying decision to do so. Therefore, you can trust that, if you go to Anne Taylor Loft, the dress will feel nice, be a nice color, and fit well (at least it will fit someone like your friend well).

You want to see the advertising if you are already on your friend’s Facebook page, because you are interested in your friend. This is not an in-your-face popup, not even a targeted ad, it is actual information about your friend.

Finally, you can go wherever you want to for more information. You can go to your friend, to the Ann Taylor Loft website, or to the ATL store. You decide what information you want and go get it when you want it.

The hurdles, though, are that people feel like they are being “used” to advertise for these companies. Are there better ways to appeal to consumers?