There are a million ways to monetize your business, and a digital advertising salesperson can sell you each one. The official theme of the Interactive Advertising Bureau event this month, the IAB Annual Leadership Meeting, was how the online ad market will get to the next $50 billion in revenue. Yet the unofficial theme that wafted through the hallways and even onstage was: How do we move past the challenges created by the first $50 billion?
The first $50 billion ushered in promise and growth for an established industry on the search for sustainable alternatives to print and broadcast advertising. We built banner and display ads for websites and portals. We filled pages with as many ads as we could sell, making a serious dent in lost print revenue. We designed programmatic to deliver relevant ads at Internet speed. We literally tapped into the potential to reach people anywhere on their mobile devices. Social media emerged as a powerful distribution platform, and we discovered new ways to share and tailor content for social platforms and pray to Facebook’s algorithm fairy.
Yet, it’s finally become clear that the first $50 billion we generated through all this innovation is largely responsible for the situation we now find ourselves in: Ads frequently clutter a user’s online experience, slow their page loads and, at times, endanger their security. To patch up the wear and tear caused by building on a hyper-growth industry, we’ve coped by adding new technologies that adapt to the way users people discover and consume content today. At the IAB leadership meeting, industry leaders finally started to admit that these Band-Aids are causing more trouble than than the problems they were designed to fix.
The swift and painful ascent of ad blocking
$21.8 billion. That’s the estimated cost of ad blocking to publishers in 2015. The tension was palpable even before the meeting, as the IAB blocked AdBlock Plus executives from attending the event. IAB president Randall Rothenberg elaborated onstage during his keynote, calling for-profit ad blocking apps “an old-fashioned extortion racket” that confines free speech to whatever fits in their business model.
The inconvenient truth that the industry faced at the meeting is that current online advertising isn’t sustainable as we fully embrace mobile. Consumers will not accept disruptive, slow experiences, regardless of the content value. As Scott Meyer from ad-blocking extension Ghostery put it, “The consumer has made it clear that the [current] user experience is not what they’re looking for.” Publishers either need to change their advertising strategies or ad blockers will slowly but steadily drain their revenue.
Sales brings in more cents, less sense
According to Upstream Group founder and CEO Doug Weaver, “The first $50 billion in digital revenue was built around the scrappy, frenetic, take-no-prisoners, pursuit of success [by sales].” His keynote centered on resetting our sales goals to focus on excellence — not just successfully hitting quota.
To overhaul online advertising, the larger culture of ad sales needs a mindset shift, from selling more to selling more strategically and thoughtfully. If we keep with the former approach, we’ll sell our audience right into the arms of ad blockers.
Will overregulation of native advertising erode its luster?
Even native advertising is now at the risk of being regulated out of relevance. The U.S. FTC issued guidance on proper disclosures for native advertising at the end of December, calling for greater consumer protection from deceptive advertising. Through its vice president of public policy, Brad Weltman, the IAB shared its reservations about the commission’s heavy-handedness, calling portions “overly prescriptive.” And publishers, who view higher value, less obtrusive native advertising as a welcome alternative to display, are clearly finding the uncertainty over native ads discomforting.
The truth is, as native advertising matures and becomes more unified with content, these disclosures must be clear. No one mistakes a billboard for a message from the highway patrol, but someone reading a quality native ad may assume the content was penned by the New York Times or Buzzfeed. With a better user experience and more profitable rates, native advertising is here to stay. Publishers must take proactive control of their native advertising with clear disclosures as native continues its ascent.
Repenting the first $50 billion
We’ve already learned important lessons during the first two decades creating the digital publishing industry. Content farms no longer churn out search engine optimized explainers. Fewer publishers rely on intrusive pop up ads, though too many resist conversion. And the democratization of distribution opened up social media as a powerful way to surface and share what our networks deem the best content.
As we stare into 2016 and beyond, with a mix of optimism and fear, let’s remember that we’re still riding the wave of an industry in transition. New platforms and trends will come and go and stay for awhile, but the clear takeaway from the IAB meeting is that publishers need to refocus on the most important metric: their audience’s experience. We will repent for the sins of the first $50 billion and build up to the next $50 billion and beyond by remembering that audience, not ads, are our lifeblood.
Satish Polisetti is CEO and cofounder of AdsNative, a new ad server built for publishers and app developers. Follow him on Twitter: @sat_p.