We are in the middle of the most complicated period in the history of advertising. You may have thought the advertising industry suffered its biggest change when it went digital, but that was just the beginning. There still is no viable business model for supporting digital content, despite all the VC dollars and public company dollars that have been invested.
Why? Because consumers are unwilling, except in special circumstances, to pay for the costs to produce the content they wish to read or view. Yet they don’t want to be surveiled, followed, or retargeted and they’re not willing to endure advertising, the traditional tradeoff for free content.
Publishers and advertisers are in the same position as consumers. Publishers don’t want to ruin the user experience for their visitors, while brands want to be in the most visible places on a page, or at the beginning of a video. They are spending the money, and they want the ROI.
No one can agree on how this will settle out, despite all the IPOs in the ad tech industry this year. Several companies that have IPOed are still bleeding money.
This state of affairs is what always happens when an industry is in the middle of a big change. It will eventually settle, but it’s a good time to be a revenue-producing private company (as we are) rather than stake our existence on the public markets.
Right now, everyone wants to use data, but no one wants it collected about them. This is the real conundrum in the world of online advertising. This came to our attention when comScore agreed to settle a class action lawsuit about the amount of data it collected from consumers it was monitoring. But it’s not just about comScore, it’s about Nielsen, and third party cookies, and every data collection mechanism we are all so dependent on for decision-making. It’s about what IAB has called “Metrics That Matter.”
Let me know when you find a way to gather Metrics that Matter from a consumer without violating her privacy, from a publisher without changing its user experience, or from an advertiser without gathering customer data.
Predictions are seldom correct, but we predict that it will take a generation to settle out, after which people who grew up with free digital content will be willing to offer information in exchange for better, more appropriately targeted ads. Oh, and while we’re predicting, we also predict the return of good creative.