The new dot com bubble is here: it’s called online advertising
The new dot com bubble is here: it’s called online advertising
In 2018 $273bn was spent on digital ads globally. We delve into the world of clicks, banners and keywords to find out if any of it is real. What do we really know about the effectiveness of digital advertising?
ometime in June 2003, Mel Karmazin, the president of Viacom, one of the largest media conglomerates in the world, walked into the Google offices in Mountain View, California. Google was a hip, young tech company that made money – actual money! – off the internet. Karmazin was there to find out how.
Larry Page and Eric Schmidt, Google’s founder and its CEO respectively, were already seated in the conference room when co-founder Sergey Brin came in, out of breath. He was wearing shorts. And roller skates.
The Google guys told Karmazin that the search engine’s earnings came from selling advertisements. Companies could buy paid links to websites that would appear at the top of users’ search results. And Google worked as a middleman, connecting websites with ad space to advertisers eager to get their banners seen.
Schmidt continued: “Our business is highly measurable. We know that if you spend X dollars on ads, you’ll get Y dollars in revenues.” At Google, Schmidt maintained, you pay only for what works.
Karmazin was horrified. He was an old fashioned advertising man, and where he came from, a Super Bowl ad cost three million dollars. Why? Because that’s how much it cost. What does it yield? Who knows.
“I’m selling $25bn of advertising a year,” Karmazin said. “Why would I want anyone to know what works and what doesn’t?”
Leaning on the table, hands folded, he gazed at his hosts and told them: “You’re fucking with the magic.”
Is Google hacking your brain?
For more than a century, advertising was an art, not a science. Hard data didn’t exist. An advertising guru of the Don Draper type proclaimed: “What you call love was invented by guys like me to sell nylons” – and advertisers could only hope it was true. You put your commercials on the air, you put your brand in the paper, and you started praying. Would anyone see the ad? Would anyone act on it? Nobody knew.
