We Need an Ad-tervention, and We Need it Now

The economy of the Internet has been built on the foundation of advertisements. Unless an online service involves pulling out a credit card to make a transaction, it is directly or indirectly supported by ads. This is especially true for the gravy train of free content that we have come to expect from the internet — whether it’s Facebook, Twitter, our favorite news outlets, sports sites, or mommy blogs — any free content that we consume is paid for by advertisers. Unfortunately for all of us, this train is about to be derailed.

The problem is that we have been collectively driven to the point where we have come to hate ads. Every corner of the internet seems hell-bent on shoving ads down our throat like bland broccoli no matter how much we kick, cry or protest. Every 15 second video of an adorable dog playing with an adorable baby forces us to first watch a 30 second pre-roll ad about a seemingly revolutionary diaper. Most web pages have turned into jigsaw puzzles where the primary challenge is finding the piece containing actual content within a collage of advertisements disguised as content.

As a result, the ad-supported model of the Internet faces the very real danger of collapsing. If that sounds like a good thing, then take a moment to recall the frustration that you feel every time you click through to a New York Times, Pando, or ESPN Insider article that teases you with a paragraph and demands that you pay a subscription in order to keep reading. Now imagine every single site you visit behind a similar paywall — nickel and diming you with subscriptions for every piece of content that you need for your next presentation, research paper, or to get you through to 5 pm on a Monday. Doesn’t seem like a world we want to live in, does it?

The Ideal Cycle

Though the digital advertising ecosystem might appear complex, underneath the layers of abstractions, aggregations, and redirections it’s actually a pretty simple model that boils down to the interactions among three entities: the consumer (you), the publisher, and the advertiser. This interaction should ideally form a harmonious cycle:

1. The Consumer: The consumer wants to, well, consume content — articles, videos, photos, their Facebook/Instagram/Snapchat/Reddit feed, (and even the occasional Vine) on the omnipresent Internet.
2. The Publisher: Content publishers create content for the consumer, and needs a way to monetize so they can keep producing more content and hopefully make a bit of money.
3. The Advertiser: Enter the advertiser, who buys space on the publisher’s pages to promote their products to the consumer, and hence helps the publisher monetize their content.

This creates a positive feedback loop where each entity gets fair value from the ecosystem, and in the process helps the ecosystem grow. Pretty simple and elegant, right?

The Negative Feedback Cycle

Unfortunately, the digital advertising ecosystem today is a far cry from this simple, functional cycle. The current ecosystem has devolved into a negative feedback loop among the consumer, publisher, and advertiser, and this vicious cycle is increasingly hurting each of them while benefiting none. Each of these entities is trying to optimize their portion of the ecosystem for short-term gains but in the process is hurting the other two entities, who then take counter-measures, further perpetuating the negative feedback loop.

The core of the problem can be traced to the consumer’s intent. When people are consuming content, their intent is to consume content and not learn about or buy potentially unrelated products. This makes it difficult to drive a user away from the action of consuming content to the action of consuming or clicking on an ad. This lack of context and purchase intent is the origin of the negative cycle we see today:

1. Consumers: In order for a digital ad to have an impact, at least one of two things needs to happen: first, the user needs to notice and consume the message that the ad is delivering and second, the user should interact with the ad (a click, a video view or something similar.) Some campaigns are successful enough if the user notices the ad, while others measure success by the rate of interaction. But in either case, the most basic goal of an ad is to get noticed by the consumer and to hold their attention long enough for them to absorb the message contained within the ad.

However, once the consumer recognizes the pattern that an ad appears in, they automatically train themselves to ignore the ad to the point where they don’t even have to look at it to know that it’s an ad, hence probably not something worth focusing on. This is ‘banner blindness’, named after the classic display banner ad. Though banners are still the most common ad format online, only 14% of consumers notice them and 85% of clicks come from just 8% of consumers. Statistically, a consumer is more likely to become a Navy SEAL or birth twins than click on a banner ad.

2. Advertisers: Once an ad format starts performing poorly, the advertiser looks for solutions that will get the user to notice and interact with the ad. Unfortunately, these solutions tend to treat the symptoms instead of the disease. They are designed to generate vanity metrics such as impressions and clicks without addressing the underlying problem of the consumer not having the intent and context to consume or interact with the ad. These solutions are in the form of new ad formats either trick the consumer into thinking that ads are content (most native ad formats and ‘Sponsored Links’ solutions), or formats that force the reader into viewing the ad (such pre-roll videos and intrusive full-page overlays.)

3. Publishers: Content publishers need to generate revenue to keep their sites afloat, but their current monetization streams are drying up due to consumers tuning out ads and as a result reducing the value of their ad inventory. Thus when the advertiser offers them a new ad format with the promise of increased revenue, the publisher installs this new solution on their site, usually in addition to their existing ad solutions. As a result, they increase the amount of space that ads take up and the overall amount of ads that the consumer gets served. Therefore the publisher and advertiser trade-off the consumer’s experience for what amounts to short-term gains.

4.(… and back to) Consumers: The consumer’s experience gets worse due to the increased volume and intrusion of ads. The new formats can now disguise ads as content via native in-stream placements and often force the user to sit through ads before accessing the content they want to read or watch. The ad formats have gone from a minor inconvenience to an active annoyance. Naturally, the consumer starts recognizing the new ad formats and starts tuning these out too. No matter how an ad is formatted or disguised, once the consumer recognizes it as an ad, it’s just a matter of time before they train themselves to tune it out.

In response, the publisher installs even more ad solutions on their site to make up for declining revenue. When the ads get too intrusive, the consumer installs an ad blocking solution to completely remove ads from their experience. The impact of an ad blocker can be catastrophic for both the publisher and the advertiser. The publisher’s revenue declines as the lose out on ad impressions from consumers using ad blockers. The advertiser, on the other hand, gets diminishing returns on their investment. According to a study by Adobe and Pagefair, advertisers have lost almost $22B in 2015 alone to ad blockers. That’s a lot of money to waste.

And thus continues the vicious cycle, with every aspect of the ad ecosystem — the user experience, the publisher’s price of inventory and the advertiser’s ROI locked in a race to the bottom. In order for advertising to survive and thrive, something needs to break this vicious cycle. The Internet and all of its denizens desperately need an ad-tervention.

There probably isn’t a universal ad format that will serve the needs of every consumer, publisher, and advertiser, but what the ad-tervention can lay out are some basic tenets for publishers and advertisers. In my opinion, these tenets can be really simple:

Publishers: Before installing an ad solution on your site, evaluate the effect that the solution will have on your readers’ experience. If the solution is actively trying to deceive or interfere with the user’s consumption experience, make the trade-off in the favor of your consumer even if it costs you revenue in the short-term. You’re the conduit for the advertiser’s message, wield that power to get advertisers to create ad formats that deliver their message without intruding on the user’s experience.

Advertisers: Treat the consumers of your ads with the same respect that you treat your products. It is insane to try and promote products through channels that your potential customers are annoyed by and actively avoid. Instead of finding new ways to force or trick the consumer, focus on delivering experiences that entertain and inform them, and lead them organically to your brand’s message.

If the next generation of ad solutions start enforcing these tenets, the digital advertising ecosystem will eventually reach a sustainable equilibrium where the advertiser, the publisher, and the consumer are all deriving equal value from it. Creating, enforcing, and propagating these solutions won’t be easy, but then nothing worth doing is.