Another confusopoly, the very agent of confusion used by other confusopolies, is being affected by the Internet:

What Wanamaker [the inventor of modern mass-market advertising] could not have foreseen, however, was the internet. A bevy of entrepreneurial firms—from Google, the world’s most valuable online advertising agency disguised as a web-search engine, to tiny Silicon Valley upstarts, many of them only months old—are now selling advertisers new tools to reduce waste. These come in many exotic forms, but they have one thing in common: a desire to replace the old approach to advertising, in which advertisers pay for the privilege of “exposing” a theoretical audience to their message, with one in which advertisers pay only for real and measurable actions by consumers, such as clicking on a web link, sharing a video, placing a call, printing a coupon or buying something.

Internet advertising: The ultimate marketing machine Jul 6th 2006, From The Economist print edition

For example, Google made $6.1 billion last year on online contextual advertising, which pays google only when the ad reader clicks on the ad.

There is still one whole type of advertising that mostly hasn’t changed over: political campaign ads.

*Since we are entering into the TV season, it’s important to recognize that nobody in New York product advertising pays by commission anymore– that racket only exists in DC. From CTG:

Commission-based advertising provides the wrong kind of incentives, where frequency trumps quality. "If media is your biggest line item and you’re trying to save money on media, doesn’t it make sense that if somebody actually paid attention to the commercial the first time and liked it and was involved in it and actually absorbed the information the first time, then you can run less media?" asks Hillsman, who has been a thorn in the side of the consulting establishment for years. "You don’t have to get these frequency levels of eight or nine or ten with a good commercial. " This makes sense, but not for consultants working on commission, wanting huge ad expenditures to pad their bottom line.

*Look, the fact is that most of these people doing television ads have very little schooling and training in the business of marketing and advertising. The ones that did, were all squeezed out in the 1980’s as the professional class (The Permanent Campaign) of media consultants rose out of the ranks of communication and political campaign departments (and even field, haha). But it’s where alot of the money is in political campaigns.

CTG & the Adwatch by Jerome Armstrong, MyDD, Wed Sep 06, 2006

Hillsman is the fellow who did Ned Lamont’s ads in the Connecticut primary where Lamont beat Lieberman, despite being outspent 2 to 1. That seems like another datapoint for the Economist‘s thesis. And it seems the group-forming Reed’s Law nature of the Internet could have an effect on politics, as well as economics.

Ignoring the group-forming nature of the Internet does seem to be a business risk.

-jsq