The Online Advertising Bubble

Is it finally starting to pop?

Doc Searls
May 9, 2016 · 6 min read
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Maybe now is the time to short adtech.

I started calling online advertising a bubble in 2008.

I made “The Advertising Bubble”, a chapter in The Intention Economy in 2012.

I’ve been unpacking what I figure ought to be obvious (but isn’t yet) in 52 posts and articles (so far) in the Adblock War Series. This will be the 53rd.

And it hasn’t happened yet.

But, now comes this, from Kalkis Research:

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Here are a few of their charts:

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And here is their downbeat conclusion:

There are other signs. For example, a falling Ping-Pong Table Index:

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Of course, that’s about all of Silicon Valley. Just remember that adtech (tracking-based advertising) was very hot stuff for awhile there. But the shake-out was already happening in 2014. That’s when M&As picked up and private equity started moving in.

GroupM, the “world’s largest media investment group,” just published Interaction 2016, which is also bearish on adtech:

The emphasis is mine. (Hey, I know boldface tends to get read while blockquotes don’t.)

There are other signs. Last May, Business Insider said the ad tech sector looks an awful lot like a bubble that just popped. In June, The Wall Street Journal said adtech investment dollars are running dry. “These companies are struggling to even get meetings.” In December, Ad Exchanger called 2015 a “reality check” year for adtech.

Clearly the end isn’t near for the two giants in the business… Facebook and Google. Tony Haile, founding CEO of Chartbeat — and to me the reigning king of adtech moneyball — compares Facebook to the Sun, and everybody else to planets and other debris orbiting around it. One pull-quote reads, “It is Facebook that curates and distributes. It owns the relationship with the user, and decides what content the user sees and how many see it.” Meanwhile Google, which places a huge percentage of online ads (for itself and countless others), is said by Digiday to be exploring an “acceptable ads” policy obviously modeled on the one Adblock Plus launched, the leading ad blocking company. And while ad fraud has been bad, AdAge reports that it’s down, dramatically: “analytics firm Integral Ad Science found a 20.9% decrease in both overall and programmatic ad fraud last quarter compared to the fourth quarter of 2015.”

Still, I’ve been told by one (big) adtech exec that his business is “a walking zombie” and that he’s looking toward “the next paradigm.” One of the biggest online advertisers told me late last year that they yanked $100 million/year out of adtech and put it into traditional advertising for one simple reason: “It didn’t work.” I have a sense they are not alone.

Got any more examples? I want us to get as clear a picture as we can of the adtech edifice as it starts crumbling to the ground. Or not. Yet.

(Later…) Okay, thanks to readers we have some:

Originally published at blogs.harvard.edu/doc on May 9, 2016.

On Advertising

We’re an open community of Executives, Strategists…

Doc Searls

Written by

Author of The Intention Economy, co-author of The Cluetrain Manifesto, Fellow of CITS at UCSB, alumnus Fellow of the Berkman Klein Center at Harvard.

On Advertising

We’re an open community of Executives, Strategists, Designers, Developers and Students alike, skeptically examining communication, technology and culture.

Doc Searls

Written by

Author of The Intention Economy, co-author of The Cluetrain Manifesto, Fellow of CITS at UCSB, alumnus Fellow of the Berkman Klein Center at Harvard.

On Advertising

We’re an open community of Executives, Strategists, Designers, Developers and Students alike, skeptically examining communication, technology and culture.

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