I saw a recent article about carriers in Europe planning to block ads, which has prompted me to write this blog post. I’ve been thinking about advertising for quite a few years now, and I want to get this down.

The players

To start, I want to be clear about who the players are when I’m talking about them:

Advertisers

Advertisers are people/business with a product to sell.

They may also want to build up brand awareness, in order to induce future sales.

Ad Networks

These are the Googles of the world, but also some Mad Men-style advertising companies. There are the companies that can get and advertiser’s ad published in multiple sites by publishers.

Publishers

Publishers produce the thing where the ad will be viewed. It could be a billboard, newspaper, magazine, blog, web site, game, app, TV show, cinema, etc.

Viewers

I use the term “viewers” as a catch-all to mean viewers, readers, listeners, etc. It’s us, normal people, the people economists refer to as “consumers” but whom I normally refer to as “people.”

What about me?

I’m just a guy. I have no background in advertising.

I have been an advertiser; I’ve made products that I wanted to sell, and had brands I wanted people to know about. So I’ve advertised. And I can honestly say, I’m not that good at it.

I have never worked for an ad network, and I’ve never really dealt with one.

I’ve had the opportunity to be a publisher, but I chose not to be one. I’ve made apps, and one of the ways to get paid for your app is by publishing ads. However, this business model didn’t really fit with any of the apps that I’ve made, so I’ve never chosen to go this route.

And all my life, I’ve been surrounded by ads: on TV, in newspapers and magazines, on the web, in apps, along the side of roads as I drive alone, on the sides of buildings as I walk past; everywhere, always, advertisers have wanted me to look at their ads.

As part of deciding whether or not to include ads in my apps, I spent a lot of time thinking about ads and how they work. I came up with my own taxonomy of the various types of ads there are, and what they’re useful for.

Who tells who what?

WhoSaysWhat

The Truth

Viewers don’t want to see ads!

Note that the publishers never say to the viewers, “Come and view our ads!” and the viewers never say to the publishers, “I really want to see the ads you’re showing!”

The most common kind of extension installed in web browsers is an ad blocker.

Content ain’t king

Although all publishers say that they just want viewers to see their content, when push comes to shove, many publishers really just want them to see the ads. They will cover the content with pop-overs or full-screen ads or force viewers to sit through an unwanted ad to get to the content.

Most ads don’t work

Normally the word “most” means “more than 50%.” We need a new word that means “the overwhelming majority.”[1] Because ad click-through rates—the industry’s preferred metric for measuring whether an on-line ad has “worked”—are nowhere near 50%. They’re not near 5%, nor even 1%. In the USA, according to Rich Media Gallery, the rate is 0.081%! That’s less than 1 click for every 1,200 ads.

This article talks about so-called “native advertising”—ads that look like content—and says that “they work” because viewers see them. But that’s not what ads are for; ads are there to get people to buy things. What they mean by “they work” is that the publisher gets paid, not that more people buy the advertised product.

It’s not my job to make your business model work

Ben Thomson[2] has recently been making the argument (which is fairly common around the internet) that using ad-blockers is morally wrong, and that “the appropriate way to avoid advertisements is to not visit the sites that host them.”

I disagree. I think that, given the discussions in Who tells who what? above, viewers are quite entitled to take publishers at their word, and focus their attention only on the content.

Another common argument goes that, the only way publishers can monetise[3] their site/channel/newspaper/magazine/whatever through advertising.

My response is, it’s not my job, nor anyone else’s[4], to make your business model work.

Where this is all heading

I wish I knew!

You might have the impression from the above that I’m against advertising altogether. I’m not.

I’ve been an advertiser; I know what it’s like to have a product, and you want people to know about your product because it could really make their lives better, or solve a problem for them. I know what it’s like to want people to know who you are, and what your product is, so that, next time they’re looking to buy something similar, they’ll think of you. Advertising solves these problems.

They’re legitimate and reasonable desires for any business. And it’s legitimate and reasonable to go to professionals and have do this for you, just as businesses go to accountants and lawyers (and other outsourcers) to do their jobs, so the business can focus on its own products and competencies.

All of this, though, is solving a problem for the advertiser; it’s not solving a problem that the potential buyers of this product have. Sure, if they knew about it, they could buy it and be better off, but most of them are happy enough not knowing about the business or its products. So they’re not asking to be better informed. They don’t want to see these ads!

But I do think the industry—the ad networks and the publishers—are doing a really poor job.

Ad networks need to help businesses decide what kind of advertising they should do: if they’re looking for sales, focus on what I call “Yellow Pages”-type ads; to build brands, do more “Coca-Cola”-style ads.

What I think will happen

We’re already seeing some of this. People are moving away from ad-infested content. We see this with TV, where there was movement to TIVO and other DVRs, and now the move to internet-based TV, and the rise of non-ad-supported TV from Netflix, HBO and others. Newspapers and magazines, both printed and on-line, are losing readers.

When it comes to shopping, people in “buying mode” are moving to apps, especially comparison apps for each segment (e.g. Amazon, Booking.com app, etc) where you can compare and, importantly, actually buy your choice directly and immediately. I think businesses with products to sell would be well advised to ensure that their product(s) are available for comparison and purchase in the appropriate apps for their industry. Having your own app to sell your product is probably not as important as being in the apps that people are using when they’re looking for your kind of product.

For businesses that want to “build brand recognition” (which, despite its slightly wanky connotations, is actually a useful way to increase sales), I suspect that product placement will become an important part of brand advertising. Celebrity endorsement—celebrities actually being seen to actually use the product/service in public, genuinely and repeatedly—will be another form of this.

Augmented Reality products seem like a technical solution that can provide this, and will probably be sold to advertisers as a solution, but—like all forms of this kind of advertising—people don’t actually want to see these ads, so they’ll probably look for ways to block them (or choose not to use the AR products).

An interesting alternative has been taken by Red Bull with their content creation arm, Red Bull Media House), which produces content aimed at a specific demographic, in which their product features prominently.



  1. Maybe there’s a German word we can borrow?  ↩

  2. I haven’t been able to find an appropriate link for this on Ben’s site, Stratechery, as most of the discussion has been in his subscriber-only emails, and on his podcast, Exponent, both of which I can thoroughly recommend.  ↩

  3. I hate the word “monetise!” (And, in case you’re wondering why I didn’t spell it “monetize,” it’s because I’m not American.)  ↩

  4. Except yours  ↩

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