2007: Advertising on digital media grew by 155% to $1.2 billion but consumer interest in these sites dipped by 14%.
2008: Google's $1.65 bn purchase of YouTube wasn't giving returns.
I possibly have an explanation
Marketers historically are known to follow a simple rule of "critical mass". When this critical mass started listening to radio, marketers made a set of tools to catch their consumer on those air waves. As we ushered into the era of television, marketers came up with more media rich ad campaigns that included voice and reach of radio, and the media richness of TV. Slowly this naked promotion of brands on media used by consumer became a hindrance. Consumers started feeling irritated, cheated and simply switched off their senses when the carpet bombing of advertisements was being pounded on them. The same "learning" effect of brands that made marketers advertise more and more worked against them since consumer learning of brands has its limitations. On an average a person watches 300 different commercials in a day. How is it possible for him or her to remember and recollect these brands? What consumer learned was that watching these ads was a "waste". He learned to "switch them off". To help the marketer came the era of internet, which reached its critical mass faster than radio or TV. Suddenly everyone talked of innovation, dotcoms, millionaires coming out of garages and boom! The bubble burst. This bubble was partly fueled by the marketer. Website owners had a simple logic. More traffic meant more ads, which meant more money, and this did not work. Brands could not leverage the insane traffic on websites. Despite the big burst the marketer was still adamant. To put things in perspective, in 2007 the advertising on digital media grew by 155 per cent to $1.2 billion (approximately) and consumer interest in these sites went down by 14 per cent. Any sane person would tell you that something is amiss. In January, 2008 Google announced that its $1.65 billion purchase of YouTube and $900 million committed to ads on Myspace wasn't giving returns. The cause of these problems was simple. The marketers first attempt at advertising on internet was the rather unpopular "banner ad". Unfortunately for them, people have better things to do than to click on these ads. The marketer lost. despite innovative technology there was no innovation in marketing. The traditional marketer still talked of the number of impressions, cost per click and reach. But, then came the smart marketer. The story of smart marketer revolved around loyalty, culture and community. He talked, interacted and spent time on letting the consumer speak about his side of life. Our life is centered around brands but the difference is that when the brand owners brag about it, it just gets irritating. Consumers have stories to tell and brands form an integral part of these stories. These stories are what we relate to and the smart marketer invested on forums that allowed conversations. 21st century is about society, community and stories. Digital advertising needs to focus on the social aspects of consumption. The critical mass rules is no longer valid since bragging about your brand on any such forum is turning ineffective. Consumers have learned to "switch off". Brands do not need to be simply digital, they need to be socially digital.