“Data Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Rob Leathern, CEO of social advertising platform Optim.al.
Like many in our industry, I have a love/hate relationship with advertising. Even though I'm an ad technology entrepreneur, I actively ignore or skip ads both on television as well as online. On the other hand, in the last month just via Facebook ads I've bought products, found great books to read, discovered a new restaurant in my area and learned about new food products I ended up buying. As online advertising response rates continue to drop, alongside advertisers' desire for better, more immediate targeting of all stripes, we are forced to ask the question: is widespread "ad avoidance" a steady-state inevitable problem, or a slow but worsening "terminal" downward spiral?
While most web and television users understand that advertising pays for a lot of the content they see, without any household-level scorekeeping mechanism, the avoidance of advertising has many properties of a "tragedy of the commons" problem. Some other suckers watch the ads that pay for the content that we all enjoy. Unless everyone dodges them of course, but surely they won't?
Some may recall that Tivo had a 30-second skip feature initially, which it later made more difficult to access in order to "play nice" with the TV industry (it was easy to hack and turn back on). Tivo's rival SONICblue with its ReplayTV took a more aggressive approach with a feature called "Commercial Advance" that raised the ire of, and launched a lawsuit with, over 20 entertainment companies. In spite of an EFF-funded countersuit, this legal battle helped drive it out of business amid reported $1 million a month legal bills, leaving many questions unanswered regarding the use of copyright law to protect advertising. Today, trickery like (buzzword alert) "native advertising" promos that include stars from the show, or having 4 shorter ad pods instead of 3 mean that 50% of DVR users still actually see *some* ads when regular non-auto-skipping is used.
What should be the limit between consumer friendliness and the right for broadcasters and publishers to make money with advertising, not just online but also on TV? DVR penetration in the US is now over 45%, and over 38% of US households now have at least one TV connected to the Internet (although mostly gaming devices and Netflix). It's becoming far less of a theoretical question.
When it comes to online ad blocking, Adblock Plus has always been somewhat of a geeky niche product. And recent activity by startups like AdTrap (a box to block ads across devices on your home network), and an ISP called "Free" in France that has a default router setting blocking ads (though this may be more about net neutrality than advertising) also appear to be somewhat outside of the mainstream, but have drawn some new attention to the ad blocking mentality online, where customizing and hacking your usage experience is far easier than with television.
As ad response rates and CPMs drop, some online publishers are experimentally choosing to avoid advertising and instead charging a subscription fee going to become (more) viable. Andrew Sullivan is eschewing advertising for "The Dish" [ironically, no relation to Dish TV] in favor of a $19.99 per year subscription fee. If it means no more ridiculous "top 10 slideshows" to grab meaningless pageviews, I'm all for the idea. They're not the first to experiment, but most publishers won't be able to pull this off.
Even though I'm a fairly aggressive (DirecTV) DVR user, I would gladly pay an extra monthly fee for the ability to block ads in real time. My perfect example is live sports, specifically NFL games. I am okay with my kids seeing football or soccer games on TV, but I'm not okay with the violent video game ads or promos for the network's adult shows that typically feature in most of the ad pods during a game. Sometimes I let the DVR record ahead and watch a game somewhat delayed (and then avoid Twitter and Facebook while watching!), but I'd rather have the ability to have the screen blanked out automatically during commercial breaks. Sure that's a few fewer viewers for advertisers to reach, but I'm happy to actually pay the publisher for the chance to opt-out of these violent ads. Call it an "ad payoff" if you like - I know lots of Hulu Plus users who want to pay Hulu more to avoid their repetitive, interruptive online video ads.
How is it that as a website publisher I can choose what kinds of violence, language and nudity are okay in my Yahoo/Right Media or Google exchange online ads (noting this certainly doesn't work perfectly) but as a consumer paying over $150/month for a television service I can't say anything about the kinds of ads my family gets to see, except by DVR'ing everything and making sure to skip every ad? The ads online are far less interruptive and much harder to notice, and yet there are already lots of controls in place. People can opt-out, tweak their ad preferences with large publishers like Google or Yahoo, and millions of VC dollars are helping ad targeting companies do ever more to find consumer signals to build better targeting.
I believe that the convergence of addressable user identity services as provided by Facebook or Google or Apple, with television will need to finally provide advertising choice to users or risk irrelevance. Publishers need to see the ads on their site or channel holistically - not as individual units or pods - and gauge and optimize user response and satisfaction by looking at response and feedback data across the entire ecosystem of ads they carry.
A good deal of the ad avoidance we practice is inevitable and technology will increase it stepwise, but it won't be terminal if we demand more of our publishers and broadcasters. Relevance and targeting are not enough for the next 10 years of advertising. Providing consumers more choice, and having ad systems that can react smartly to our feedback are crucial.