Long time lurker here, finally got an account to comment on this item.<p>I agree with Andrew's take on the new advertising paradigms, but I can't agree with his premise that display advertising on the Internet does not work. It works, and not only that, in some cases it works brilliantly. Not to say that it works for every audience (like HNers), or every product for that matter.<p>His point about low CTR is accurate but not entirely relevant. The user who asked in the comments "What is the CTR of the magazine ads?" hit the nail on the head. It's not always about CTR, but also brand impressions, reach and frequency.<p>Case in point: I did a campaign for a new brand in another country, which included display advertising. CTR was low, and initial conversions were low too. But over time, many would search for the brand after the visit, returning to the page and they converted! In so many other campaigns I would combine display with social media, email marketing and other stuff and get great results. Yes, I said email marketing. That still works too, and with some audiences, it is literally reeling them in. (No, I'm not talking about spam).<p>In short, Andrew is writing with an either/or mentality with advertising, when one needs to be thinking of and'ing: of all the tools available, which ones are going to work best together? Take a layered approach. Display advertising may be a hammer, but not every problem is a screw.
While I agree with the author's conclusion that better integrated "ad" units like StubleUpon's Paid Discovery, and Twitter's Promoted Tweets will become both more prevalent and affective, his premise that contextual ads don't work is just false. He's also also wrong in thinking that these more integrated ads are entirely new concepts, divergent from old media such as television, cinema, magazines, and periodicals.<p>The truth is that integrated advertising on these new social web services is just catching up to what has long been standard in traditional media. For example, in TV and cinema, product placements by brands have been an effective alternative or supplement to standard commercials. In the same way, magazine and periodicals have long accepted "advertorials" by staff writers that passively mention/promote specific brands/views along with their traditional page layout ads.<p>While he's correct to think that these more integrated types of ads will be more affective on the web as they're more "consistent with the way their services natively work," it's something that traditional media advertisers have known for a long time.
I think the more obvious and less 'revolutionary' way of stating his point is that ads that focused on awareness (i.e. i wasn't looking for information about this but you are telling me anyways) are dying in the face of ads that focus on conversion (i.e. I was looking for this and your ad helped me find it and buy it).<p>This isn't a radical change or even the end of advertising, its just more efficient.
There seem to be two points to this article; (1) CTR is a terrible metric for ad effectiveness, and (2) the web is an extremely rich medium for displaying ads, and there's still potential that has yet to be discovered. I'm not sure why the author combined those points in a single thought, but they're both valid, and (I think) very true.