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The crisis in online advertising

Posted on: Monday 9th of November 2015

The online ad industry is in a mess. Today’s model works by mass online surveillance, hoovering up data about consumers’ online activities largely without their knowledge or permission, and depends on even further surveillance for any incremental improvements. This is now generating a trust crisis, a regulatory and PR backlash, and an astonishing rise in ad blockers that could see millions of consumers ‘going dark’.

The meteoric rise of the ad tech industry over the past few years has resulted in brands losing control over where their ads are shown while the publishers who do most to attract ‘eyeballs’ lose increasing proportions of potential revenues to the third party data gatherers who follow consumers from site to site. And that’s not counting stunningly high levels of click fraud.

This is a lose, lose, lose situation where all the key parties – consumers, advertisers, and content publishers – are losing out to a new set of technology parasites.

 

Time to clean up

Faced with this impasse, the industry is now awash with initiatives to clean up its act. Advertisers are realising the need to put online relationships on a much more transparent, less creepy, consensual footing.

But today’s mea culpas risk becoming a classic example of ‘too little too late’. Now that ad blockers are here, they’re not going to go away. Some advertisers now face the prospect of a permanent loss of 50% of their most valuable audiences. Likewise, new regulations drafted in reaction to the excesses of mass online commercial stalking will shape the advertising environment for decades to come. The future of the ‘accidental’ business model of the Internet – free services in exchange for customer data – now hangs in the balance.

 

False assumptions; new ways forward

What’s needed is a more fundamental rethink – one that challenges some of the industry’s most deep-rooted but erroneous assumptions.

One such assumption is ‘the more data the better’. In fact, in many cases, the more data you collect the higher your costs and the higher your risks. In many cases, less data may be better if it’s the right data, such as consumers telling advertising what their interests are and what they’re in the market for right now.

Another such assumption is ‘the less consumers know the better’. For a few years pervasive opaqueness meant that consumers were going online in a state of ‘ignorance is bliss’: The ad tech industry could do more or less what it liked. But then the lid was lifted on their practices and ‘ignorance is bliss’ morphed into fear, uncertainty and doubt. New approaches which give consumers control over what data they share with which companies, for what purposes, have the double potential of restoring trust while stripping out huge amounts of guesswork and waste.

We’ll be exploring these new approaches in the ‘reinventing marketing’ track of our Growth Through Trust conference in London on December 8. We’ll be showcasing new services that embody these new approaches and are proving it works. And we’ll draw on the experience of big brands doing their best to ride the advertising storm. The track is sponsored by Autograph, one of the companies pioneering new privacy enhancing ways of doing online advertising.

Yes, new consumer empowering models of advertising need new infrastructure, new processes, new skills, new metrics and new relationships. So they represent quite a challenge. But they also represent a huge opportunity to cut costs, improve returns on advertising investment and build better customer relationships. This is your chance to get ahead of the game.