Click Through Rates (CTRs) have been falling consistently over the past 3 years. Much of this is due to the decline in effectiveness of the Banner Ad. Despite recent reports that there is good news for media owners and advertisers (actually mostly agencies) I don't think anyone should be a Hootin' and a Hollerin'. For a recent report from eMarketer on the subject go here. Indeed as Rich Barton stated at the PCW conference last week "don't spend money on advertising because it lets companies get lazy about product". The basic model for advertising continues to evolve but fundamentally the old fixed Ad model is less and less effective.
So when Rich said don't spend money on advertising he was not saying don't spend money to promote your product just don't expect to cover your product's inadequacies through a brand building exercise. You will get trapped and there is almost no way you can spend yourself out of that battle.
In my personal view getting a mix of Ad spend and product right is absolutely essential. Anyone who tries to decide whether to spend money on advertising or product should be taken out at dawn and shot. Product every time. However what about rewarding channels for helping you to acquire customers? Yes - so what I am saying is that we should be moving more to a CPA model. A truer pay per play model.
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