Online advertising is broken

Posted by Irfon Watkins on January 22nd, 2014 at 11:41 am

Online advertising is a growth industry, with a bright and very profitable future ahead of it, right? On the surface, yes, it has never been more successful. According to the Interactive Advertising Bureau’s latest study, online ad revenue enjoyed double-digit growth this year, with the first half of 2013 worth $20.1 billion alone, an 18 percent increase on the same period in 2012.

However, while the picture appears rosy and robust on the surface, it’s a clever piece of wallpapering that is doing a great job of hiding some fairly fundamental cracks in online advertising. For example, recent research has shown that more than half (54 percent) of online ads are not seen by the intended recipients.

No matter how much money is sloshing around the industry, the fundamental truth is that unless you are targeting your ads at the right people – i.e. those that want to, or are likely to, buy your products – then your ad is worthless. This is why I think the current online advertising model is fundamentally flawed and broken.

Pre-roll inventory may be sold out and ad revenue may be soaring, but it is a fool’s paradise. It won’t be long before this current bubble bursts. The problem is our industry is built on static, out-of-date models that mean while delivery of adverts has rarely been easier, they are now rarely fit for their purpose.

Advertising has failed to evolve alongside the medium it purports to support and the consumer behavior it seeks to influence. Publishers are being forced to adopt interruptive ad formats due to a complete lack of an effective, sustainable alternative. The value exchange for consumers is declining and advertisers are failing to see significant return.

In my mind, there’s only one model that will prove sustainable to both publishers and advertisers – one that is useful to consumers. Advertising becomes useful when it is based on what consumers are watching, rather than trying to second guess what they might like to see based on their historical viewing habits. By focusing on delivering contextually relevant advertising experiences, advertisers and publishers are extending the value of the content experience, rather than interfering with it.

Content owners and advertisers need new, relevant, sustainable models to deliver the online advertising experience that both consumers and publishers deserve. Ads need to be contextually relevant, not personal, as demonstrated by our recent campaign for a major British supermarket chain which ran across tech sites Techradar and T3 to help drive tablet sales. It delivered average clickthrough rates of 3.4%.

Ads need to reflect what the consumer is watching or reading, not served up solely based on a best-guess scenario which is informed by prior browsing behavior. Ultimately, they just need to be useful to both the consumer and the brand.

Leave a comment