Why did it come to this: adblocking and the old deal

Some reports have adblocking penetration at anywhere between 10% and 40%. Some publishers are blocking content from the adblockers. Others are making the ads unskippable with ad block.

Broken systems are interesting, aren’t they?

The system of advertising is broken.

Here’s the best that I can explain it from as many perspectives as I can rally.

Advertising in the early days, radio, was incredibly lucrative. The development of a consumer economy in the roaring 20’s and consumerism in general was huge. A marketer could spend $1 on advertising and got $4 back. Paid media was crazy effective.

The same went for television. And then there was a sort of grand bargain, a big deal, struck between creatives, those that create owned media, and the business, those that bought and sold paid media. Ads could take place in between the content, but not in the content. Audiences got to be entertained. Marketers got to market. Creatives were free, so long as they created mass appeal lowest-common-denominator stuff, to create. This was the deal.

The web page, the outright technology of a web page, also reflects this grand bargain.

You have areas of the page that are rented out to marketers. You have areas of the page that are dedicated to the marketer and the set of enabling technologies and people that each take a cut. Creatives get paid enough to survive as part of that monetary chain between the marketer, the agency, and the adtech firm. And this is how it is.

There are all sorts of conflicting issues in this value chain.

The marketer wants to maximize the effectiveness of their spend. The shareholder ultimately wants the spend to be far more effective so that they can spend less. Most marketers want to increase the effectiveness of their spend so that they can get more spend. Some marketers have taken to kicking their agencies in the teeth – they want to maximize the number of paid media dollars while minimizing the labor cost of creating paid content.

The agency president wants to maximize the margin between what he pays his staff and what the commission he gets from the marketer. She’d like to minimize the labor cost, but not all the way to the point that an inferior, embarrassing product, is created. More cynically, she’ll tolerate a quality level that is commensurate with what the marketer will buy. This dynamic leads to such dynamics as the generation of a single commercial spot, the same three display ads, and the same nine keyword buys.

The human on the receiving end of the ad, in general, might not want to be branded. They might not want to be manipulated into believing claims about specific products. They might actually be interested in branding themselves with certain brands, but may be utterly uninterested in others. Most humans don’t like being interrupted. They want the owned content when they want it, and they wanted it a few seconds ago. Humans also don’t like to be bored. Ultra high frequencies of the same creative, constantly hammering away at a person will cause people to like a brand less, perhaps even to the point of being unbranded. This is especially the case when the same ad unit appears multiple times over an hour. The agency may argue that audiences are so in-and-out of a programme that they must do that to hit the reach targets; but it leaves dedicated audiences angry enough to opt-out of ads altogether.

And many did. Some audiences decided to opt-out of the advertising system. They bought DVR’s. They installed pop-up blockers. They’re installing ad-blockers. They’re opting out.

In no way do I view ad blocking as an extension of entitlement. I think that’s a rather convenient way of reasoning and psychologically satisfying on the part of the business. These aren’t bad people. Rather, it’s an extension of a behavioural pattern rooted in earlier years.

At least in Canada, marketers spend billions of dollars trying to convert audiences into their customers. A fraction of that spend finds its way to content creators. A large proportion of that spend goes towards adtech and agencies. And increasingly, a larger share of Canadian disposable income is going towards paying content aggregators for content – a trend that began with cable is ending up in subscriber services.

It’s all pretty dysfunctional.

Towards a new reality and a new deal

Let’s begin with a few needs.

People need entertainment.

Marketers need to generate demand for their goods and services.

Agencies need to perpetuate their existence.

Canadian society, to have some sort of a nascent civilization, at some level, needs a creative class.

Granted, the difference between a need and a want is a hearty debate. I’m only calling it as a I see it.

There are a few futures here.

In one version of the future, the creative class builds their own business units to engage audiences directly. Marketers are left out of the equation until the business units regress and we’re all right back to the cable model.

In another version of the future, the business class acquires their own creatives to engage audiences directly. Marketers are left out of the equation and we’re all right back at the ‘how many versions of Netflix will the public subscribe to’ model.

In a third version of the future, the marketer class engages the creative class to engage audiences as consumers. I’m the most pessimistic about this future because audiences will become savvy enough to distinguish the difference between creative and native advertising. I could be wrong about giving people way too much credit, but I think there’s a limit.

The most likely version of the future is a mix of all three.

We’re well into the digital revolution and newspapers have mostly survived. As has cable. As has radio. A lot of mediums persist. A lot of business models persist. As boomers grow older, they’ll continue to consume more television. Marketers who sell to this segment will thrive in these mediums. Expect more tub cutting ads. More stair lift ads. More travel ads. More reverse mortgage ads. More denture ads. Primetime on the broadcast networks will be graytime. And that’s a perfectly acceptable future. Nothing wrong with that.

Younger, impressionable, audiences will migrate to their entertainment platforms of choice. They’re not going on along with the old deal, one that they don’t remember and don’t care about. They know that marketers are out to get’em, and they don’t want to be gott’en. This state of affairs, of aggressive reassertion of the old deal, followed by a round of opt-out technologies, will persist until a new deal is worked out. Consider the penetration of adblock an opening move in a living tree discussion between the parties involved.

A future where the effective frequency is respectful and effective, consumers are happy to hear from brands, and the creative class thrives, is good. It’s not going to be optimal. But it’ll be better for some of the parties involved.