· Tech watch

Online Advertising : The Current Status

##A Multifaceted War
Online advertising has become — for lack of a better solution — the main source of income for many content producers. In the absence of any regulations, online advertising increasingly oversteps the blurred lines of privacy, at the expense of users who then express their feeling of being abused through massive resort to ad blockers(1)According to a survey by PageFair, these ad blockers would be installed on the computers of 35 % of European Internet users and 41 % of 16-29 year olds. UCBrowser and Maxthon, who claim more than 600 million users in Asia, are also partnering with ad blocking solutions.. A true ad blocking market is emerging, consisting of technical solutions and secret agreements, in browsers as well as on smartphones(2)The ad blocker of iOS 9, for example, relies on a business model in which advertisers must pay to have their ads displayed.. Faced with this phenomenon, some online editors no longer hesitate to block access to their content to users running ad blockers, which sends a very negative signal to their audience.

This war is extremely costly and is the result of a gamble on alternative sources of income (based on advertising) rather than promoting the real added value of content. Many players are actually giving in to “everything-for-free” mentality, mass-producing content with low informational value and maximizing advertising revenues through real clickbait with no editorial line. Empires are built, going as far as acquiring websites to spread advertising trojans, to the detriment of historical readers, who are rarely fooled by this.

These quantity-based approaches devalue content and reduce its advertising value. Editors who used to ensure their profitability with just a few ads now find themselves with a knife at their throats, and they are forced to resort to technical hacks (thwarting ad blockers) or editorial meddling (inserting native advertising or advertorials among their engaging content) to keep the money coming in.

To make things clear, this solution has become so unacceptable that even the online advertising industry, represented by the IAB(3)The Internet Advertising Bureau is the leading association for online advertising professionals, bringing together many players in the advertising ecosystem : creative agencies, media sales agencies, partners, hosting service providers. Generally the IAB massively promotes online advertising by funding studies on its effectiveness. This acknowledgement of failure is a real earthquake in the industry., confirms it :

We messed up. As technologists, tasked with delivering content and services to users, we lost track of the user experience.

Scott Cunningham in Getting LEAN with Digital Ad UX

##Challenging Alternatives
Developing a paid content offering is an ambitious project and many such initiatives never achieve profitability because most Internet users like to consume free content but rarely purchase any.

However, if the message gets across, there are solutions allowing Internet users to voluntarily fund content production through donations Flattr, Google Contributor. Yet they would not be possible to use on a large scale due to the sheer number of agencies to pay. Another avenue is being explored by French platform La Presse Libre : bringing together multiple content producers on a single platform (with donation- or subscription-based funding) and then reallocating funds, for example in proportion to the number of visits. This type of system is also difficult to set up because it requires common metrics, consistent information systems and an enormous amount of trust.

In contrast to this unity approach, some players are showing alternative avenues by developing offerings with a value that is more intelligible to users : editorial independence (e.g., French online journal Mediapart, entirely subscription-funded), an enhanced reading experience (e.g., LaPresse.ca native app), summarized and curated information… What they all have in common is that they emphasize what has been overlooked — i.e., the fact that investigative journalism, content writing and access to information all have a cost, on the Internet as elsewhere — and they all very rarely offer free access to their content, except for promotional purposes.

##Leveraging Audiences
If, on the one hand, content producers are unable to promote their content for lack of sufficient audience and, on the other hand, some platforms have an audience but hardly any content to offer, then why wouldn’t the latter offer their services ? This leads to the emergence of new solutions allowing editors to integrate their content on platforms enhanced by their audience, but in return content producers become reliant on a new channel. This relationship model brings new challenges :

  • content is visually sober, which improves readability but weakens brand identity and loyalty ;
  • audiences are potentially very wide, but editors have very little impact on targeting and on their ability to reach their targets (this is the same marketplace approach as with Google Adwords) ;
  • Monetization is simplified, but in exchange editors generally have no control over advertising contracts.

Facebook (Instant Articles) and Apple (News) were the first to embark on this type of offer, closely followed by Twitter (Moments) and Snapchat (Discover), but with the lack of transparency on these platforms, nothing suggests that content producers will be able to actually control their targeting. Facebook, for one, no longer shows all of your friends posts in your news feed.

Will you trust it for your articles ?
##Google AMP : Change the Packaging, Keep the Content
In contrast to the aforementioned players, Google’s positioning is different. It is no secret that the search engine giant primarily specializes in content indexing, so it comes as no surprise that they would launch an initiative such as Accelerated Mobile Pages(AMP). Google AMP uses a custom version of HTML and makes it possible to bundle lightweight content together with advertising (via Google) and the related analytics. Google provides the market with a new format and will be scrutinizing whether it is adopted as the “standard” that is finally capable of solving the equation { readability × monetization × control }.

Obviously, Google’s interest is to increasingly centralize information by displaying results directly rather than redirecting readers to the content producer’s website. Another benefit is that with its rational approach to advertising, Google can engage in dialogue with major ad blocker software companies and promote the concept of acceptable ads.

On a technical level, the approach is straightforward. Most CMSs can generate syndication feeds. There would simply be an additional feed that would include tracking and advertising campaigns. WordPress is already liaising with Google on that topic.

From a business perspective, however, this approach is more than likely to worry professionals who would find themselves deprived of the control they now have over agencies. In this context, it is hardly surprising that they swiftly gathered around a mea culpa posture and that they prefer reaching consensual agreements based on best practices.

##Unexplored Avenues, a Lesson for the Future
So what does the future hold for content monetization ? No one really knows for sure. What is certain is that the harmful potential of ad blockers is driving the industry down a blind alley, forcing it to rethink business models towards more reader-friendly practices, such as L.E.A.N.(4)L.E.A.N. — for “Light, Encrypted, Ad choice supported, Non-invasive ads” — is a new best practice put forward by the IAB..

Many alternatives to the traditional advertising model are being contemplated, considering for example that the reader’s attention must be entirely focused on evaluating the quality of the content they are reading, but that in the meantime their device is idle. This means that human attention span can be traded for computing power, e.g. to generate cryptocurrencies for the content producer. But for now, security is mostly insufficient and large-scale deployment would be very complex.

The moral to remember is this : advertising is a concept that arises entirely from the refusal to consider that content has a cost. We are reaching the limits of this system, and one day we will also reach the limits of other so-called free systems such as social networks.

If you can, always prefer business models based on the added value of your content rather than offering it at a low cost or for free : you are sending the wrong signal and it is hard to move away from this model afterward.


##To Learn More…

A few links suggested by readers :

Notes   [ + ]

1. According to a survey by PageFair, these ad blockers would be installed on the computers of 35 % of European Internet users and 41 % of 16-29 year olds. UCBrowser and Maxthon, who claim more than 600 million users in Asia, are also partnering with ad blocking solutions.
2. The ad blocker of iOS 9, for example, relies on a business model in which advertisers must pay to have their ads displayed.
3. The Internet Advertising Bureau is the leading association for online advertising professionals, bringing together many players in the advertising ecosystem : creative agencies, media sales agencies, partners, hosting service providers. Generally the IAB massively promotes online advertising by funding studies on its effectiveness. This acknowledgement of failure is a real earthquake in the industry.
4. L.E.A.N. — for “Light, Encrypted, Ad choice supported, Non-invasive ads” — is a new best practice put forward by the IAB.

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