Why to avoid advertising as a business model

I just ran across this item below, which ran almost fourteen years ago in my original blog, and think it’s worth re-running today. The characters have all changed, but the issues have not. In fact they are more present and worth debating than ever. — Doc

An Open Letter to Meg Whitman

Meg Whitman
President and CEO
eBay

7 October 2000


Dear Meg,

Since The Cluetrain Manifesto came out (first on the Web, then as a book), I am often asked to name “clueful” companies. Usually I give eBay as a prime example of a market in the true sense of that word: a place where people gather not only to buy and sell, but also to make culture.

Now I read in The Wall Street Journal (“EBay to Launch Promotions to its Users,” October 2, p. B6*) that eBay wants to be a medium as well as a market. Specifically, the company has hired AOL’s sales force to sell advertising on eBay pages. A piece in The Standard (“The Ad Man Cometh for eBay“) says the same thing. Here are the key paragraphs from the Journal piece:

The arrangement with AOL marks eBay’s first major effort to sell its audience to advertisers. Masses of users visit eBay everyday to buy and sell everything from antiques to autographs. EBay, the largest trading community on the Web, is the 15th most-visited Web site and the second most-visited shopping site, according to measurements by Netratings Inc. It attracts upwards of 14 million users a month, traffic that remained largely untapped until now.

“The management team is recognizing that there is a significant opportunity to monetize the site to a greater degree than we have in the past,” says Kevin Pursglove, an eBay spokesman.

This is a move to the dark side, and it’s a mistake. There is a difference between a trading community and an audience. It is a massive difference in kind.

EBay was conceived and has grown entirely as a marketplace, not as a medium. Members visit eBay to buy, to sell, to shop, to compare, to talk, to grow their communities. Not for advertising. Not for “messages,” however “targeted” those messages may be. The the fact that eBay’s consituency is huge (MediaMetrix ranks it as 16th in the U.S., with 12,675,000 unique visitors per month) doesn’t make that contituency an “audience.”

Reconceiving your constituency as an audience requires a change of mentality on your part. You have to start thinking like a medium, with all the delusions that involves. And believe me, the whole media profession is grounded in some very fundamental delusions, all born of a distance from what markets are all about.

I worked in advertising for much of my adult life, and I must tell you a dirty secret problem the whole industry would rather not face: there is no demand for messages.

The advertising business, which includes the commercial media, doesn’t want to face the fact that their “audiences” would never pay for advertising’s goods. Even the term “audience” is a delusional metaphorical conceit. Book a theater to show nothing but advertising and see who shows up, even if it’s free.

The “targets” advertising seeks to “impact” and “penetrate” with “campaigns” that “deliver messages” is tired of being attacked. Their lack of demand for advertising’s ordnance is a brutal reality that the advertising industry cannot bear to confront.

In fact, “absence” doesn’t begin to cover the kind of non-demand we’re talking about here. If demand could be metered, most advertising would peg to the negative.

For evidence, let’s ask the most awful question commercial television could possibly hear: What would happen if MUTE buttons on TV remote controls delivered “we don’t want to hear this” messages directly to the advertisers who pay for commercial television? Advertising as we know it would be dead in a day.

Now let’s go to a tougher question: What would happen if television could facilitate the conversations that constitute real markets? The answer is that television would be a lot more like eBay. Which is why AOL-type advertising on eBay is a retrograde move.

I don’t know Bob Pittman or Steve Case. They seem like nice guys. And they’ve managed to make the Web more like TV than anybody else ever could. Maybe they deserve some kind of congratulations for that. But they’re media guys, and ultimately the Web is less a medium than a place.

Ask yourself this: Would AOL gladly provide its users with a MUTE button? Would it support selective ad-blocking by its customers, who already pay to use the service? No way. AOL may be an online service; but it thinks, walks and talks like a media company — a shipper of messages. The customers it clearly cares most about are its advertisers, not its users.

That “there’s no other way to pay for the content” is meaningless in your case. EBay’s content is the social system we call a marketplace — one that can only be diminished in value by advertising. Or at least advertising as we know it — by which I mean the kind of advertising AOL sells. Creating better ways for buyers and sellers to find each other and do business in eBay’s marketplace is a good thing. In fact, that’s your business. But it isn’t advertising.

No amount of “targetting,” “narrowcasting,” “personalization” or any other technique will make advertising’s messages any more appetiizing to people who just don’t want them, and never have. The online successes of AOL, Yahoo and a very few others are the exception, not the rule. They also have not been proved in the long run. I believe that in time their successes will speak far more eloquently of tolerance than of demand.

Markets — real markets like the ones that thrive at eBay — have been proved for thousands of years, in every culture on Earth. Please remember that. And remember why people fill them. Remember what they truly demand. It isn’t advertising, and it never will be.

EBay’s marketplace isn’t a medium with a 2 in the middle of it. It’s a place where people do busines with each other. Not to each other. Nor is it a performance center. Nobody is there as an “audience” wishing to have somebody “deliver an experience” to them.

People come to eBay for something far more active, involved, participatory and precious than the “aggregated eyeballs” that media machines like AOL and Yahoo lust after. Call it a constituency, a community, a web of trust or just a good place to do business. But please. Don’t call your members an “audience,” Or “traffic.” Or “consumers.” And don’t sit still while others call eBay marketplaces “sticky.” Traffic jams are sticky too, and good for nothing but billboards.

Trust me (or better yet, trust your millions of other members): you’ll make enough money without a retrograde move into the Second Wave world of advertising. The Journal piece sources a Goldman Sachs analyst who says your advertising sales could amount to “as much as 10% of total revenue, expected to top $415 million this year.” Think for a moment of how little this really is, and what you’re really selling — or worse, having AOL’s sales “force” sell — to advertisers. Think about what’s being said, literally, in the very first line of that same piece:

The Internet’s biggest flea market, eBay Inc., has something new for sale: advertisements on eBay.com.

What you’re selling isn’t just advertising. It’s us: our time, our attention, and our trust that you won’t waste either. You have always valued that trust more highly than anything else. That’s because eBay has the soul of a marketplace. Not a medium. That fact — and our trust in it — is worth a helluva lot more than whatever you’ll get from the companies who pay you for the privilege of aiming “messages” at us.

Appreciatively,

Doc Searls

3 comments

  1. Martin Marshall’s avatar

    Spot on Doc.
    My heart was first sunk by a piece i read about Manchester United’s mechandising opportunities, it talked about loyal football supporters as “customers” not fans, and worse still, “the club” as a “franchise”…i nearly choked.
    Martin

  2. Thomas Zinsavage’s avatar

    I agree. I also want to point out many forget the basic principles here in business also. People getting to know like and trust you is a huge part of this as well. Without those three things business wont last long or make it very far. Trust will bring people back continuously and pretty much everytime.

  3. Khach san da lat’s avatar

    What you’re selling isn’t just advertising. It’s us: our time, our attention, and our trust that you won’t waste either.

Comments are now closed.