1. Advertisers can see if it worked. In traditional advertising you accept that a lot of your money will be "wasted" on people who will never buy your product or service. In online advertising you can track a customer from first viewing an ad to purchase. This gives advertisers a lot of leverage in price negotiations -- "your site only has a 0.05% conversion rate, why should I pay that much?"
2. Inventory is growing faster than demand for inventory. In advertising terms "Inventory" means "I have a place to show your ad". Well every new web page can contain inventory. Given how fast the supply of webpages is growing, compared to the total pool of customers and businesses ... well let's just say that the supply-demand curve on this does not favour the sellers of inventory.
I am of course fascinated by this problem and my startup (currently in stupid unfunded single-founder mode) aims to resolve this exact economic problem with a different model.
1. Advertisers can see if it worked. In traditional advertising you accept that a lot of your money will be "wasted" on people who will never buy your product or service. In online advertising you can track a customer from first viewing an ad to purchase. This gives advertisers a lot of leverage in price negotiations -- "your site only has a 0.05% conversion rate, why should I pay that much?"
2. Inventory is growing faster than demand for inventory. In advertising terms "Inventory" means "I have a place to show your ad". Well every new web page can contain inventory. Given how fast the supply of webpages is growing, compared to the total pool of customers and businesses ... well let's just say that the supply-demand curve on this does not favour the sellers of inventory.
I am of course fascinated by this problem and my startup (currently in stupid unfunded single-founder mode) aims to resolve this exact economic problem with a different model.