The Death of Advertising and the Future of Advertising

The debate happening regarding ad blocking both at a desktop and mobile web browser level has been an important one with respect to the future of internet publishing. In reality, while the number of internet users who use an ad blocker will be relatively small, the debate signals a much larger dissatisfaction with the user experience people are confronted with when ads are intrusive, annoying, and offer little to no value. It is this fundamental point which will have to undergo a change if publishers want to add more value to their users, or risk the potential growth of ad blockers into more of the mainstream.

While I make the point the volume of people who will install an ad blocker is likely relatively low, you can argue those who will install one are actually a more desirable audience. For one, our research indicates the extremely valuable 18-35 yr old demographic ranks highest in our surveys of those who use an ad blocker. In the US particularly, 4 in 10 millennials admit to blocking internet advertising. Anyone in marketing will tell you this age bracket is highly sought after by marketers. In follow-up interviews I’ve had with this demographic, one of the driving motivations for use of an ad blocker is so they can block ads on YouTube. Watching videos on YouTube is a hefty part of millennials’ weekly activity and many indicated to me their desire to skip ads and get right to the video was centered on their feeling ads were a waste of time. They were going to YouTube to see a short video and did not feel a 5 or 15-second ad before a video was an efficient use of their time. I also asked millennials how they found out they could block ads on the web and the most common answer was from a friend. It seems ad blockers are going viral with many US millennials and it is unlikely this trend loses steam any time soon.

The other relevant point is it seems the heaviest consumers of news and the internet in general are losing patience with web ads. This again is an audience, due to the amount of time spent on the internet reading news, looking at reviews, and generally spending a great deal of time on the web, that are quite valuable to advertisers. This group seems to be increasingly vocal about their disdain for the negative impact and overall speed decline of many websites due to obtrusive advertising. The challenge for advertisers is not that the vast majority of internet users will use ad blockers. It is that their most valuable online audiences appear to be trending in that direction.

It seems inevitable at this point something needs to change. This hostility toward advertising by online audiences valuable to marketers has been a long time coming. Many research studies concluded many years ago that internet users were quickly conditioned to ignore ads that resided on the top or side of a website. Publishers and advertisers responded by adding ads to the middle of content or by having an add pop-up or take over a screen — intentionally disrupting the reader’s ability to consume the content. What we have learned is, while many consumers will tolerate this experience, the most valuable ones to advertisers will not. In either case, the advertiser loses.

Is Native Ads or Sponsored Content the Answer?

If we acknowledge the nature of ads on websites need to change, the question will then be how. The most common answer is native advertising or sponsored content. Native advertising is when an ad becomes embedded into the content itself. For example, a Buzzfeed article called “15 things 1980’s College Students Did that Would Baffle Kids Today” is an example of a native ad. The article is entertaining, relatable, and very similar to something you would see on Buzzfeed. It just happens to be posted by Intel who is, in this case, a brand publisher at Buzzfeed. At the end of the listicle (list article) is a short promotion from Intel about Intel products. Nothing obvious yet a subtle reminder of Intel and the products they make. Intel has associated themselves with a technology-related article. This type of native advertising works extremely well.

If you listen to talk radio, or any number of podcasts, you’ll often hear the show hosts read an advertisement, often sharing firsthand experience with the product — close to being an endorsement. This is another example of native advertising that works in an audio and video medium much more effectively than typical ad rolls or commercials.

Another example of native advertising is the creative way many television shows are working ads into their shows. This is going far beyond product placement. An example I think works well is in a favorite show of mine called Treehouse Masters. This show is about a guy who runs a custom treehouse-making business. The show chronicles treehouses he makes for clients. Because it caters to do-it-yourselfers, there are a number of practical and quality native ads embedded. One may be a particular type of wood or decking he uses and he explains the benefits of the products. Another example is when he does a particular fix of a roof and explains how making practical fixes to common roofing issues can help your roof last longer and limit the need to use your insurance. In this spot, someone from Allstate or Farmers Insurance may actually show up and help make the point about good practices in keeping insurance costs down.

In all these examples, the native ad is directly related to the content, is promoting a quality product (thus making endorsing it easier), and is clearly relevant to the type of audience the content attracted.

What TV, radio, and even a site like Buzzfeed do well is understand their audience. They have a pretty good idea of their demographic. Publishers who have good demographic data stand a better chance of getting high quality advertisers promoting high quality products. What native ads do is allow the marketing material to flow into the content in a relatable way. When I see native ads done right, I can see the benefits of the product and how I can or should use it.

There is a transition taking place. The current state of online ads is not sustainable for many publishers. Creativity is how the industry will pull through this. Not by interrupting reader’s online experience with generally useless ads. The first step is for the online ad networks and publishers selling ads to realize there is a problem. At the very least, the focus being given to ad blocking will help draw attention to the problem so we can all work on fixing it.

Published by

Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

38 thoughts on “The Death of Advertising and the Future of Advertising”

  1. Nice level headed article. But how many on the advertising side of the issue see the problem as theirs to fix? So far they see the customer and the ad blocker as the problem.

    You talk about TV, radio, and print publishers knowing their audiences well. Part of the problem, maybe even a large part of the problem, especially the ad platform serving the ads, the advertiser doesn’t always know their audience. They see advertising as a numbers game. They may not know their target buyer and because of that their preference is to hit as many people as possible. “I know half of my advertising doesn’t work, I just don’t know which half”. I see this, with a few ridiculous exceptions, as a large part of the problem.

    I remember producing a small concert once and looking into radio advertising. The radio stations went to great lengths to help me figure out where their audience and my audience overlapped the most. I knew my concert was rather esoteric and that spending the money on a morning show would likely be a waste of money. How much of online advertising does that? Likely a very small percentage.

    As you relate here in the article, when the ad systems start to be as discerning about buying and selling ads as traditional media has developed, we’ll start to see a solution. I just don’t see that happening anytime soon. It takes more effort than the internet requires.

    But that is not the whole problem. Even on the CNN app, where I bet they handle all their own advertising, they insist on animated apps while I am trying to read an article. This is quite disturbing and intrusive. Not mildly so. This is starting to make me resent one of my favourite news apps.

    Joe

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  2. Also, web ads are much more intrusive than radio/TV ads which most of us already hate:
    – when on our phones, we’re actively engaged, not half-watching while reading/cooking/cleaning like with TV/radio, so ads really get in our face.
    – personally, I can’t even schedule my pee breaks around those ads, because if I’m watching tripe on Youtube or playing some dumb ad-funded free game, I’m probably already in the bathroom.

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  3. As a member of the “no one gives a crap about” demographic of old farts, I have recently starting using ghostery. It is so simple to use (compared with AdBlock and ublock) that I think blocking can only increase.

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  4. Native ads as we know it are not cost effective at scale, more accurate programmatic ads in a better format is the future, user will have to either accept it or pay for the content in the future.

    a perfect example of extremely accurate programmatic Ads is the new YouTube shopping Ads which will be extremely expensive.

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  5. A few additional thoughts:
    1) “While I make the point the volume of people who will install an ad blocker is likely relatively low” — True, but keep in mind that many of those people manage all the devices in their household and maybe some of other family members.
    2) Ad-bloated webpages are slow to load and waste people’s time. That means that consumers with higher disposal incomes are probably among the first to spend money on blockers or alternative entertainment to get their time back.

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  6. Ben, it’s too early to doom traditional advertising. There are technical means to embed the ads in the content in a way that much much harder to block, and web content could shift to centralized apps ,like you probably know.

    And if ads will shift to the buzzfeed model, content will too , and it’s far from certain it’s a good thing.

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  7. As someone who used to work in tech media, I can tell you that many big publishers are going to have a hard time in the banner ad free Internet. Native advertising and sponsored content require a totally different approach and strategy with the client. It’s no longer possible to just show page view statistics and a pricing list like with banner ads because native ads and sponsored content are almost always custom in some way. Nailing down the details and creating the custom content takes considerably more time than putting up the stock banner ad and I witnessed first hand that publishers (at least mine) aren’t interested in spending the extra time.

    What I am seeing is that instead of focusing on next generation marketing, many publishers are trying to milk every penny out of their current banner ad model. In other words, they have no problem making ads bigger and flashier in order to charge their clients more, which is not sustainable in long-term as it will eventually drive more people to use adblock.

    I predict that we’ll see consolidation in the publishing space during the next decade. Especially small publishers may have a hard time turning their business model around because native ads and sponsored content also require more resources from clients, which will obviously focus on the big sites and publishers that can provide the ROI they are looking for. Future marketing is no longer just about the size of the budget – the scale is shifting towards manpower.

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    1. Kristian, your post and Ben’s comments makes me ponder that much of the problem with the new online format is that a lot of the publishers, especially the smaller online publishers, are ceding control of their publication to those who aren’t interested in them or their readers.

      Back in the day when publishers only had print media, how many could even think about starting up without an ad sales department? With all these new ad platform tech companies, they can now not have as many resources allocated to advertising, if anyone at all other than the web master to make sure the appropriate space is allocated. There is little is any attention required, given, much less any editorial control over what ads are appropriate.

      How many online publications can even give you information about their readers? To be sure Google even wants to take that “onerous” chore out of their hands. They will decide who your readers are and serve supposedly appropriate targeted ads.

      If these online companies are that willing to cede so much of their souls, they deserve to be ad blocked. That is not a company in control of their destiny. They’d be better off publishing someplace like Medium or Svbtle.

      Joe

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  8. Naaah son, native advertising is nothing more than exploitative/value-added innovation, which is then completely undercut by your conclusion that ” Creativity is how the industry will pull through this.” which would be exploratory innovation.

    Native advertising still relies on the same unsustainable dynamic with audiences. It’s like figuring out how to get oil out of tar sands, instead of trying to invent cold fusion.

    I vote cold fusion.

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