Creating false scarcity in advertising

It’s absolutely absurd that The Wall Street Journal is reporting that major sites are running out of ad inventory. There is no end of inventory — that is to say, people interacting with content of all sorts and all subjects — in blogs and elsewhere on the web. This is exactly why those big sites should be setting up networks among them to support them — not buying them but finding the quality and trusted sites and including them in ad networks. This is always why it’s important for media companies and us in this new world to educate advertisers that being on the front page of a big site is no longer smart advertising. No one, especially advertisers, should want to recreate TV’s inefficient and overpriced upfront online.

Says the Journal:

As marketers shift dollars from TV and print media to the Internet, more Web sites are hanging “sold out” signs on their most coveted pages and dramatically raising ad rates.

The front pages of Yahoo Inc., Time Warner Inc.’s AOL and Microsoft Corp.’s MSN are sold out on big display ads for months in advance, ad buyers say. Web sites offering car-buying tips are booked so far in advance — up to 18 months in some cases — that they are selling ads for next year in a process similar to the way network TV spots are sold….

MSN says it currently charges between several hundred thousand dollars and $1 million for a prime, 24-hour ad spot on its home page. That’s up from about $25,000 to $50,000 four years ago.

“It’s starting to get into Super Bowl territory,” says Sean Finnegan, U.S. Director of OMD Digital, a unit of Omnicom Group Inc. that buys ads for clients such as Dell Inc. and Johnson & Johnson.

By contrast, the average price of a 30-second TV ad for last February’s Super Bowl was $2.4 million, while a full-page color ad in People magazine costs $228,275. A 30-second spot on this week’s episode of ABC’s “Desperate Housewives,” which had 26.5 million viewers, cost $574,504, according to Nielsen Monitor-Plus….

Still, the rising tide of ad dollars is lifting some smaller boats. The shortage of premium spots is driving advertisers toward smaller targeted Web sites that capture niche audiences and even into what is known as “remnant inventory,” or otherwise unwanted spots across a wide array of Web sites.

Watch that tide shift further.

Google, by the way, is way ahead of them, not seeing scarcity as a sales opportunity but as a problem to solve by reaching deeper into the web. That’s the right way.

Google is something of an exception because it has a different model from the big portals. Where other portals rely more on certain highly viewed pages, Google links its ads to keywords in Web searches and other online content; the ads are displayed when consumers view related content. Google doesn’t have a static amount of places to put ads. Rather, advertisers bid in an auction to have their ads displayed when consumers view relevant content and generally pay only when a consumer clicks on the ad. Such ads can appear on sites ranging from AOL to a one-person Web log.

“It’s agnostic toward inventory,” says Tim Armstrong, Google’s vice president of advertising sales. “It could be a home page, it could be page 4,326. Our inventory basically grows along with the Web.”