Desktop: Internet Advertising and Innovation

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Illustration by James Hughes

The brave new world of internet advertising could use a hearty dose of innovative thinking.

By Andrei Herasimchuk

Just a year ago, online advertising seemed—to me, at least—an interesting but abstract concern for most web designers. In 2009, amid a maelstrom of layoffs and losses here in Silicon Valley and around the world, any solution to help designers and programmers find funds during the recession has become a top priority.

Without a doubt, designers and programmers can no longer work separately; they must put their heads together to create profitable solutions. Online advertising is due for a revolution. Presently, there are two primary types of online advertising: keyword buys and brand advertising. The first is uniquely a product of the internet and has no real offline counterpart. Tied to major search engines, keyword buys are the ads that appear alongside the results of a Google or Yahoo! search, and the search engines have full control over all the variables: where to display the ads and how much to charge. Brand advertising, most commonly experienced as banner ads, is the virtual equivalent of the more traditional television, radio, and print ads: Their price is based on the traffic stats—or the figure formerly known as circulation—of a given site.

Keyword advertising is here to stay; the challenge for 2009 and beyond will be how to make brand advertising more profitable. Currently, two approaches to this problem are floating around the industry, and both involve tracking the behavior of online users more closely. The first emphasizes making brand advertising more interactive, and the second calls for a major shift in tracking how people use the internet.

Max Levchin, the founder and former chief technology officer of PayPal, and now currently CEO of Slide.com, which publishes social network apps, is a proponent of creating more real-world interaction through advertising. He points out that in this dour economic climate, ad buyers will gravitate toward keyword buys instead of brand advertising, because they allow advertisers to have control over their target audience and the ability to make the kinds of adjustments that give them the most value for their dollar. Levchin describes Yahoo! and Google’s algorithms for selling ads as almost flawless, an opinion backed up by the fact that Google is now the biggest and most profitable vendor of online ad space.

But not all hope is lost for traditional brand advertising, such as the ads employed by the likes of Apple, Gap, and AT&T on media websites like CNN.com and Time.com. Levchin suggests that those companies think more like the search engines when tracking the success of their ads—which, in turn, means more opportunities for designers. “All it might take is for a few design firms to hire a technologist here or there in their studio. Not heavy-duty en­gineers. Just a few people with some basic level of web technology competency. With a small investment, they can create all sorts of effective brand campaigns that take advantage of the internet,” he says. As an example, he suggests that a retailer like the Gap could track its customers by placing codes onto downloadable coupons correlated to different web campaigns, and then track which sites sent the most customer traffic.

David Hornik, a venture capitalist, is convinced that brand advertising will remain a vital part of online marketing, and he suggests that the future of online success rests not with advertising designers, but with programmers who can track a user’s regular online journey. “Right now on the web, there’s no good way to know who you’re spending your advertising money on,” Hornik says, pointing to a need in the market for a web equivalent of television’s Nielsen ratings. “Whomever creates the technology that ties together how people use the web—the collection of sites they visit in their daily routines and what they use in the course of their digital lives—will be able to take web advertising to the next stage.”

When I asked about the obvious implications in regard to privacy, Hornik said, “That genie is out of the bottle. Obviously, privacy is important. But there is no going back now.” Though he admits that the changing nature of privacy on the web will be a critical element of any such new technology, he thinks a respect for privacy will be secondary to the need of advertisers to understand and to track their audiences. Obviously, Hornik concludes, the creator of the next-generation Nielsen ratings for the web will be a huge winner. He then winks, his expression suggesting that he may be investing in possible candidates.

So where to go from here? Designers who understand online trends, and who can work with programmers and marketers, are most likely to profit. Function, not just style, will dominate advertisers’ needs. Ultimately, firms that create effective campaigns to help their clients wisely spend the remainder of their 2009 advertising budgets are the ones that will survive this economic cycle.

Andrei Herasimchuk was responsible for designing and creating the common interface for what is now known as the Adobe Creative Suite. Today, he is one of the principals and co-owners of Involution Studios, a design firm in Silicon Valley, California.

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