Fewer Ads, Better Results

Saturday Night Live has decided to eliminate 30% of its ad slots next year, giving more time for show content and introducing six spots for branded content. SNL is not the only  publisher to make a decision like this. For almost ten years, publishers have toyed with the idea that fewer ads could produce the same or higher revenue without alienating audiences. Now, because of ad blockers, the idea seems finally to be taking hold. Several premium publishers have re-designed their sites with fewer ad units, hoping to create higher revenue by featuring ads that are more visible and more enticing to consumers who have downloaded ad blockers.

That’s not only because publishers want to survive, but also because they have found out that ad blockers, like everything else in the world, have unintended consequences. They not only block ads, but also airline check-in pages and retail check-out carts. And in doing their work, they throw off error messages to ad blocking consumers who don’t understand why the sites aren’t available. So now, suddenly, everybody cares about cleaner, more visible layouts and faster page load speeds.

We’ve been saying for a long time that one of the reasons for low CPMs was the infinite supply of digital ads. It’s simple economics; constraining supply raises the demand and prices should rise. Now this has finally seemed to be happening. Last month on our ZINC platform we achieved record high CPMs.

But we also have long held the opinion that one day digital ads could be the same quality as TV and that seems to be coming as well. Some of the most successful TV shows, like Empire, have ads that feature members of the cast (Pepsi’s comes to mind), and on successful podcasts like TWIT.tv hosts and guests describe their nights on Casper mattresses or their latest Audible reads. For the advertisers, host reads yield higher ROI, and for the hosts, higher ad rates.

With fewer ads and more branded content, digital advertising could once again be watchable. There is one other piece missing from this mosaic, and that’s targeting. With the capabilities we now possess to target potential and existing customers, there’s little reason to buy for nothing but scale and spam people who aren’t interested in your ads. When Facebook ads work, they work because the Ads Manager allows for very fine-grained targeting of specific interested niche audiences, not because the advertisers reach for the largest possible audience.

Consumers know when they’re not the intended target of an ad, and now they wonder why advertisers don’t know the same thing.