Is Digital Advertising Dead?

Angela Hausman, PhD

Apple started it (as with many other consumer innovations). iOS9 lets users install ad blockers on mobile devices for the first time. Ad blockers remove digital advertising from web pages and apps, something most users find annoying, at best, and sinister, at worst. Here’s more (from The Atlantic) on why consumers drove ad blockers to the top of the iTunes download list:

[ad blockers] force publishers to abandon enormous, memory-hogging ads on their web pages, which tax processing power and battery capacity on smartphones. And they also could dissuade companies from installing third-party tracking scripts, which erode people’s privacy and security, on their sites.

Over the last 6 years, the rush of advertising dollars into digital advertising looks like Niagara Falls. According to Dispatch Times, a major advertising bump comes in the form of display ads:

Display-related advertising revenues in the first half [of 2015] totaled $ US 6.8 billion, a 5 percent uptick from USD 6.5 billion in the first half of 2014, and accounted for 25 percent of digital advertising revenue overall.

Digital advertising woes

But, all forms of digital advertising increased pretty precipitously over the last few years. You’d have to be living under a rock to not recognize the performance and user experience negatives from digital advertising.

Increasing digital advertising leads to 2 related problems:

Digital advertising frustration from users

Ineffectiveness of digital advertising

Digital advertising frustration

Scott Cunningham, VP at the IAB (Interactive Advertising Board) said they “messed up” in creating loose guidelines for online advertising. In a recent broadcast by Marketplace (NPR), they summed up the problems users face.

In their rush to make money off hot digital real estate, advertisers have crammed web pages, mobile web pages and even apps full of ads. The ads slow down pages, suck up mobile bandwidth, redirect you all over the web, gather data without your knowledge, start playing sounds at inopportune moments, and even become vectors for malware and viruses.

More seriously, digital advertising sometimes evades or negates Terms of Service privacy protections promised by web and app administrators, especially when they sell users’ data to other businesses who don’t pretend to be ethical. In using predictive analytics to deliver ads optimized for success with an individual user, advertisers and ad platforms go from creepy to scary.

Digital advertising is even creepier and scarier when kids are involved. The Journal of Advertising study found kids don’t distinguish between online ads and content. The study reported that most of the 112 4th graders didn’t realize the “Be a Popstar” game presented by Honeycombs cereal, not a pop start, and wasn’t designed to make them a celebrity, but to sell them the cereal.

Ineffective digital advertising

I’ve argued before on this blog that digital advertising isn’t the right tool to replace declining success from broadcast and print media. Mostly because digital advertising doesn’t work. When you think about broadcast and print media, ads supported a benefit to consumers by reducing the cost of the content they wanted. With digital advertising, it just isn’t that clean because content benefits not only readers/ viewers, but the organizations hosting the content.

As a business, your primary reason for creating valuable content should be that it puts your business in front of consumers who need what you sell. Content improves your SEO (driving more organic traffic to your site) and SMM (social media marketing) drives more referral traffic through social media. Shares, likes, and links all work synergistically to bring more traffic to your site and increase perceptions of your brand.

You’re not creating content simply for the benefit of users, so why should you make them pay by flooding them with advertising.

But, instead of reducing advertising in favor of other forms of digital marketing, advertisers are finding new ways to blast users with their message. Virtual reality and augmented reality, for instance, represent new channels for digital advertising.

And, increasingly, we’re finding digital advertising doesn’t work.

Here’s something posted recently by The Guardian:

It’s a hard call to make, with disincentives for the first to make it, but there’s a growing acknowledgement that digital publishers and advertisers have failed to deliver on the promise that digital advertising held.

The ability to identify individual users and target appropriate ads at them in environments that make them conducive to purchasing a product would have seemed like a pipe dream to legacy print publishers, who after all had no way of gathering the data that made that possible.

Of course, The Guardian isn’t the first on only major player calling for the end of digital advertising because it lacks effectiveness. Internet users know where you’re putting ads in search results and on websites and they simply ignore them. Consider this:

However, recently the rise of ‘banner blindness’ has struck the internet as explained by Jakob Nielsen: “people won’t see ads at all, ads might as well not exist as far as users are concerned.” The stats certainly back this up as although the typical internet user is served 1,707 banner ads per month, click-through rates are as low as 0.1%.

Alternatives to digital advertising

Native advertising

Basically, native advertising is content marketing — writing content that promotes your brand and doing it in a way that amplifies your brand without paid advertising.

Most, if not all of what I write details how to make money using native advertising. Subscribe and master this not as an alternative to save money, but as an alternative to build the reputation of your brand — without advertising.

Alternative business models

For instance, I’m working with a client, hexsee and their business model doesn’t use the first ad. Instead, they sell anonymous data generated when users surf the web. While businesses don’t get personal information allowing them to market directly to YOU, they get valuable information about trends in product popularity, insights about consumer needs (especially unmet needs) based on comments, and the kind of analytics provided by Google Analytics, but encompassing the entire customer journey.

Subscriptions

More businesses shift to a subscription model to bring in income rather than advertising. Some find subscriptions much more lucrative than the advertising they used to rely on. The New York Times posted much higher profits after shifting to a subscription model, for example.

Subscription models work for mobile apps and games, too. On average, 5-10% of users upgrade to a paid version of an app to avoid the annoyance of advertising.

Selling

Many business models rely on sales instead of advertising. In-app purchase revenue far exceeds revenue from advertising models for many brands. Brands might sell product through their sites, such as the new Facebook Stores, or offer ancillary purchases such as in Farmville and other popular games.

Professionals, such as writers, speakers, and the like, often find their guest posts, comments on social media, or blogging efforts support their marketing efforts far more than advertising might.

(97)