Why Are So Many Companies Screwing Up the Ad Revenue Model?

Allen Stern at Center Networks caused a bit of a stir with his post "Do You Compensate Content Creators?" last night and into today. Allen's take on the ad-supported revenue model is that those who read/enjoy/learn from content should demonstrate their appreciation by clicking an ad, since that's how people get paid.

I don't agree, and said so in the comments, but I wasn't able to articulate what I felt was inherently wrong with the online ad model. Commenter Antje Wilsch had no such problems, however, and pointed out that newspapers and magazines have survived all this time because the ad model is so completely different than it is online. With print, you can change the layout and move ads without throwing the reader off, and there are several sneaky tricks (like the un-numbered pages around a "continued" article that force you to flip through the ad pages) that just don't translate well to web content. Antje has a great point, and I agree with her completely, but that's not the only reason Web 2.0 is having such a rough time with ads.

The biggest problem with Web 2.0 advertising models are the ads themselves. Very few sites are able to leverage the right types of ads with the right placement of ads with the right format of ads to actually make money for the site as well as help the advertisers get brand awareness, and the advertisers are just as much at fault in assuming that a click-thru equals a potential sale. Immediacy has never been the point of ads (well, except for those fast-food commercials on late at night).

Vimeo is the perfect example of completely missing a potential ad windfall. As I noted today on The Industry Standard, Vimeo has alienated a segment of their community by announcing that the site will no longer accept uploads that are screencasts of gameplay. One of the reasons cited was the enormous file sizes that take up room and slow the transcoder. Six hundred comments later, Vimeo still doesn't get it, and looking at the ad for Carmex next to the comments had me banging my head on my laptop. Vimeo had a golden opportunity and completely botched it. Instead of deleting the game content, move it to its own subdomain and separate it from the rest of the content. Now you have a rabid gamer community with a perfectly set-up vertical ad market. Sure, the videos hog a lot of server space, but gamers also buy things. They buy games and peripherals and books about gaming, and I'd hazard a guess that a subset also buys sci-fi DVDs and game/comic/sci-fi related toys like those nifty little 3-D models of your World of Warcraft character. Not Carmex. But instead of figuring out how that content could be monetized, Vimeo decided that removing it from the site was a better plan. And instead of making lemonade (and selling it at $5 a cup) with the lemons, it's just tossing them right in the trash.

How many other sites are doing the same thing? How many ads do you see on Facebook for other Facebook apps? Or on Web 2.0 sites for Web 2.0 apps? No one is looking at what the viewer would actually be interested in. And the low-rent annoying mosquito ads and hopping monkey ads used as filler to try to pad the low CPM rate just a little more, as well as the overabundance of low-CPM ads trying to make up revenue in volume causes more and more people to turn on ad blocking and ignore the ads.