The year 2000 doesn’t seem like that long ago because, well, it wasn’t that long ago! Despite how recent this period is, the technological shifts between 2000 and 2010 changed the whole game for buyers and sellers alike. With so many new inventions and constantly changing buyer behaviour, this decade is one of the most interesting in the history of advertising.
It’s time to take a step back (though not too far back!) and figure out how digital ads went from brand-spankin’ new to overtaking traditional methods like TV in a few short years.
(P.S – We have an entire series on the history of advertising! You can check out the links at the bottom of this post!)
Setting the Stage: Digital Marketing, circa 2000
Let’s talk about the year 2000, shall we? Back then, Google looked something like this:
Clearly, Alexa wasn’t hanging around at that point. Neither was Facebook or Twitter. Heck, MySpace wasn’t even around yet! The only thing that even resembled the social media we know today looked something like this:
You wouldn’t be checking it on your cell phone, either. Even if you had a top-of-the-line mobile at the time, you’d still only be packing technology that looked like this:
Source: PC World
This technology is already pretty outdated, but it made serious waves at the time. Although super-slow dial-up reigned supreme, Internet usage continued to rise in the year 2000; Statistics Canada reported that 51% of all households had at least one member who was a regular internet user, a sharp jump from 42% the year prior.
Watch Out! Here Comes the Dot Com Bust
Despite this increase in usage, advertisers in the year 2000 were more careful than they had been in the formative years of the internet. In the mid to late 1990s, investors had overbid on the internet’s potential. By the start of the new millennium, it had become apparent that sites couldn’t deliver on their high promises of profitability. This became known as the “dot com bust”, and it raised questions about the internet’s future – especially its ability to raise advertising capital.
Among the products that failed to live up to the hype were online banner ads. The first ever banner ad had a click-through rate of 44%, but that sank to 0.1% only a few years later. Google’s first advertisements ran on a similar model, and all but failed to garner clicks.
For pioneering digital advertising agencies, like DoubleClick Inc., it was time to innovate or shut down. They needed to find new ways to reach internet users.
The options they came up with would revolutionize digital advertising. Among the most popular were:
- Pay per click. This model for advertising payment was created in 1998, and popularized when Google adopted it in 2002. It addressed advertisers’ concerns that people weren’t actually seeing or interacting with online ads. It continues to be one of the most popular models for online advertising.
- Pop up ads. Annoying, yes, but the abrasive pop-up quelled advertisers’ fears that banner ads were being ignored.
- Better targeting. DoubleClick Inc. understood that targeting and cost per interaction, rather than reach and cost per impressions, would differentiate internet marketing from its offline competitors (psst, keep an eye on this one – it’s going to be important once the social media age hits).
Social Media Enters the Scene
It quickly became apparent that the World Wide Web would be more than just a collection of sites broadcasting ideas. It would be a communication tool – and a darned good one at that!
In the late 1990s, personal email providers like Hotmail and Yahoo! caught on like wildfire. By 2000, MSN Messenger was revolutionizing how people connected. It didn’t take long for developers to catch on and design better and better platforms for people to meet, chat, and keep in touch.
Enter social media!
Getting a bunch of people to use services like MySpace or Facebook was one thing, but monetizing them was another. After all, the sites were free to use but cost money to maintain.
To make up the difference, advertising was a natural fit.
It worked like this: Users created profiles on the platforms. On these profiles, they shared personal information (their age, their location, their interests etc.). This meant that advertisers could target specific groups of people using the platforms’ data. Only want to show your ad to people in suburban New Jersey who like Britney Spears? Social media can help you do that. This was a huge competitive advantage in the online marketplace.
Of course, digital ad creation and targeting technology were still in their infancy, so these ads looked very different than they do today. Here’s how some of the earliest units on Facebook looked, according to reporting by Mashable:
Facebook was broaching new territory and its creators weren’t overly familiar with the advertising world. Still, big advertisers, like Mastercard, bought in early. They saw the growing role Facebook, then just for college students, was playing in the social lives of its young user-base. The unprecedented access to a new generation of buyers and the promise of targeting technology was exciting. It still is!
Digicams and Webcams Give Rise to User-Generated Content
The technology revolution of the late 1990s and early 2000s wasn’t limited to desktop computers and innovative websites. Digital cameras were also on the rise, and people were increasingly looking for ways to transfer digital files. Remember this bad boy?
Cell phones and webcams also captured an increasing number of shareable moments. The first camera phone debuted in November 2000, and by the mid-2000s most high-end phones were equipped with photo-taking technology. Webcams, primarily used for 1-on-1 chats online, were also used to take pictures or record video straight to the computer.
In fact, one of the first viral videos was filmed on a webcam during this period. Remember this one?
The goofy lip-syncing video, entitled Numa Numa, garnered an estimated 700 million views.
The message was clear – people liked watching other people’s homemade videos, and they wanted an easy way to share their own.
YouTube Changes the Game for Video Advertising
Enter YouTube. The goal of the platform was simple: It was a simple website where users could upload videos to share them with others online.
Here’s how YouTube looked when it first launched in 2005:
Source: Gossip Genie
Despite its simple objective, this was a bold undertaking. Videos took up a lot of bandwidth, something which didn’t come cheap. How would YouTube pay to host so many the massive files?
Like Facebook, YouTube’s creators and investors knew if they could attract a large number of users, advertisers would follow. The
Six months after the December 2005 launch, YouTube counted 10 million video streams per day. Google took note and bought the site for $1.65 billion in October 2006.
Yes, you read that right. Billion.
Why was YouTube worth so much money so quickly?
Because it threatened traditional entertainment avenues, and would therefore shake up the entire advertising world… which it did and make a huge impact on the history of advertising as we know it.
Television ads have been a powerhouse since their inception, and YouTube disrupted a long-held system. YouTube was free to use, easy to search and allowed anyone to upload content, so viewers flocked to the site. On top of this promise, creators could become “discovered” organically through YouTube (Justin Bieber, anyone?).
It was easy for Google to see the dollar signs: If people could stream entertainment online, they figured a good chunk of the advertising money once spent on television would now be spent on YouTube and other digital channels (psst…they were right). Google launched InVideo ads and the YouTube Partner Program in December 2007. By 2009, pre-roll advertising and promoted videos became available. At the end of the decade, brands had started experimenting with creating their own “viral” content to try and fit in with the internet era.
Digital Marketing and the History of Advertising as of 2010 (uh oh, we’re about to hit the 20-teen years!)
The rise of social media and YouTube led to a new era of brand-sponsored content creation, from videos to blogs (like this one!) to interactive tools and music playlists.
Advertisers were now using social media, YouTube, and email marketing to build a following. In the years to follow, they would experiment with content and try to find the right balance of entertaining, informative, and promotional. Websites, like Facebook and Google, would become increasingly savvy about analytics, advertising, and algorithms. Then we add smartphones, Snapchat, and SEO shifts…
Basically – it gets intense really quickly. I’m super excited to write the next segment of our history of advertising series. We’ll chronicle all the post-2010 changes (sup, SnapChat?) and dig into the historical reasons digital advertising works so well today.
(Psst…if there’s anything you want us to cover in our history of advertising blogs don’t hesitate to let us know!)
Loving the History of Advertising series? To take a look at our previous ventures into the history of advertising, check these out!
The History of Advertising series: