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Online Advertising is too Stupid

August 14th, 2007

I was introduced to the online radio Pandora this afternoon. Pandora is the human interface into the “Music Genome Project”, a 5 year project that had human music experts classify every single piece of music created (except for latin & classical) since 1900 with various characteristics. Specifically: arrangement, beat, form, harmony, lyrics, melody, orchestration, rhythm, syncopation, tempo, vamping and voice (source). The Pandora way it works is remarkably simple. You start your own radio station by seeding it with a song. Pandora then analyzes all the genome aspects of that songs and finds songs with similar aspects to play. Even straight off the bat I found the selection to be absolutely amazing. Each song you hear you also have a chance of ‘training’ Pandora by giving it either a thumbs up or down. I threw 7 very varied and rather random songs at Pandora and was absolutely shocked by the quality of the selection.

Now here’s my question — to me music seems so much more complex than online ads. Lets think about this for a minute… lets say on average 50 billion ads are shown a day. That means that this year alone we’ve shown about 17 trillian ad-impressions. Lets be somewhat pessimistic and say an average click-rate of around .1%, or 17.8 billion clicks. How is it possible that we as an industry haven’t been capable of showing users more relevant ads?

One of the interesting things of course is that Pandora requires on a “seed” and then subsequent feedback from a user. Is the future world one where you start your day with a search on Google, which then gets treated as a ‘seed’ for your days ad-stream until you search for something different? Can we ever convince consumers that with only a little bit of their help we can greatly improve their online experience by showing them ads that align with their interests?

As an added note, I must say Pandora does a terrific job of integrating advertising with the site. Check out this “Bose Ad” that I received midway through my stream:

bose.JPG

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Posted by Mike Filed in online advertising, pandora
4 Comments »

  • http://offtheisland.com Cam

    First time on Pandora!? You work too much dude.

  • Mike

    That’s very true, I feel very behind :)

  • http://advertising.hittpublishingdirect.com/ Justin Hitt

    We don’t have more relevant ad-context-matching because many involved in advertising only see a campaign from a single prospective.

    I’ve been working with clients to look at advertising on-line as a navigational tool, like direct response advertising is off-line. An ads purpose goes from “look at me” to “use me to get what you want.”

    An advertising network I manage maintains a strong 0.5% to 1.0% CTR — but that means turning away many advertising dollars. A client’s network pushing 25 million impressions a day with only a 0.01% to 0.02% CTR — they accept anyone who will ante up.

    (As an advertiser, I want the CTR! As a publisher, I want the CPM money without the CPA risk!)

    Publishers can get more relevant ads by focusing their sites and being more selective with advertisers to choose them around customers interests. This means being a guardian of the visitors experience, rather than the upfront gain of accepting who ever can pay.

    With higher CTR, you’ll find you can make the same money with fewer resources than a high impression network. Plus, users won’t consider your ads as advertising because they will better serve their interests.

    Best,

    Justin

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