Online Ad Rates Accelerate the Advertising Death Spiral

I’m not making this up — brands really are eschewing paid media advertising and are instead creating their own media 2.0 platforms for connecting with consumers directly. And the web makes it possible, because anyone can create media AND because spiraling online ad pricing are driving brands to more quickly abandon the paid media ad model (from thestreet):

Believe it or not, Google and Yahoo! don’t always benefit when companies advertise online.

Increasingly, huge advertisers ranging from Dunkin’ Donuts to Anheuser-Busch are trying to lure consumers directly to their own sites with content and promotions — potentially bypassing the largest search engine and top Web portal. Both companies are eager to capture more spending from brand advertisers.

Though Google and Yahoo! are too huge to ignore entirely, the incentives for marketers to try and lure consumers on their own are increasing. Space on the top Web sites is becoming increasingly scarce, and rates for banner ads and video content are rising.

Examples of the direct marketing 2.0 approach:

Dunkin Donut’s D Stop
McDonald’s Global Casting
Pepsi Worlds’ Sports

Meanwhile, media execs remain clueless about this sea change:

FEE-BASED MEDIA SERVICES OF ALL kinds will increasingly give way to ad-supported models in the next few years, according to media execs on a panel discussion titled “Defining the Next Generation of Mobile Consumers,” part of the Mobile Entertainment Symposium hosted by Banc of America and Interep at the Grand Hyatt in New York City.

Remember that you heard it here (if not here first) — advertising is in a death spiral. I can’t predict how long it will take, but the evidence is mounting daily.

If you’ve got content or a web service, better hope someone will pay for it directly, because the days of the convoluted advertising subsidy business are numbered.