This brief piece by Adam Elend has some interesting things to say about advertising:

Online advertisement is more about the extent to which your ad is integrated into the behavior or context of what the user is doing online (which is why search advertising is so effective).

Google's insane performance ($2.25B quarterly revenues, $1B earnings) is largely driven by contextual ad performance, which bears out Adam's statement.

So what does this mean for the future of branding and sponsorship advertising online? It seems that it's a really inefficient way to spend money. But then, what use does a Coke or Pepsi have for pay-per-click ads? If a company doesn't fit into the context of what a user is doing online (i.e. by serving contextual ads), how can it spend money effectively to be integrated into customer behavior?

How about serving as social currency? The notion of ads as entertainment isn't new, but it dawned on me after reading Adam's post that I have warm fuzzies for VW after their recent hilarious series of ads that feature their "German" engineers.

After spending a few weeks trading lines from the commercials with Geneve and a couple other friends, I passed the commercials on to my buddy Jon, who hadn't seen them. He replied:

The VW commercials are hilarious. New metric for good advertising = whether it ends up on YouTube.

In other words, good advertising helps create connections between people because it is a form of social currency, and because it enables people to share a fun experience. Both of these make people feel better about your company, because your ads have helped them kick ass in their social circle.

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