The ad is dead, long live the ad: the future for digital advertising - Heart Internet Blog - Focusing on all aspects of the web

Do you enjoy online ads? If the answer is yes, you’re in the minority. Most people say they find digital ads annoying. They ignore the ads bombarding them online, or claim not to even notice them.

Whether you are okay with it or not, digital advertising represents big business. Huge companies like Facebook have grown up off the back of advertising. For designers and web developers alike, we live in an online world where advertising is part of the furniture.

To block or not to block

For those who are sensitive to online advertising, it’s not exactly difficult to shut it off. Adblockers are the solution of choice for a growing proportion of people. According to projections by eMarketer, 30% of internet users in the United States will use an ad blocker in 2018, almost doubling from 16% in 2014. Worldwide, 11% of internet users reportedly block ads.

At the same time, the climate for advertising has become more complex. GDPR, the European Union’s new set of data protection rules, sent companies big and small into a protracted tailspin over what GDPR meant for digital advertising practices. Is serving someone a personalised ad or emailing them a promotional offer an intrusion of privacy if individual consent has not been explicitly given?

In spite of these obstacles, ad spending is on the rise. Global ad revenue is expected to increase by 6.4% to $551 billion this year, according to data from Magna. Of this total spend, almost half will go to digital advertising, with 60% of this digital expenditure tied to mobile devices. The smartphone in your hand is a powerful advertising vehicle.

There are other positive signals. Advertisers in the European Union are beginning to regain confidence and reinvest in programmatic advertising following the arrival of GDPR at the end of May. After an initial sharp contraction in the weeks following May 25, spending on programmatic advertising is starting to recover.

The advertising duopoly

The two companies set to benefit most from the continued growth in advertising spend are Google and Facebook. Collectively, the behemoths from Silicon Valley hold a staggering 54% of digital advertising spending worldwide.

The dominance of the so-called advertising duopoly comes after a turbulent year for both firms. Google underwent a barrage of sustained criticism from advertisers after scores of brands pulled the plug on its YouTube platform amid concerns around brand safety. Inappropriate, sometimes violent content, was appearing alongside advertisements from some of the world’s most beloved brands.

Meanwhile, Facebook has been publicly battered from all directions after the Cambridge Analytica scandal forced Mark Zuckerberg to appear before lawmakers on both sides of the Atlantic. The PR nightmare erupted just a few months after the social media giant promised to clean up its platform and deliver a more user-centric experience less dominated by brands.

In spite of these setbacks, both companies have worked closely with advertisers and regulators in an attempt to maintain their dominant, highly lucrative positions in the space. They are not taking prisoners. At the end of January, Facebook cracked down on potentially deceptive advertisements associated with cryptocurrencies. “Two of our core advertising principles outline our belief that ads should be safe, and that we build for people first. Misleading or deceptive ads have no place on Facebook,” the company said in a statement. Google followed suit six weeks later.

A group of people planning during a meeting

Emerging challengers

The duopoly are right to take nothing for granted. In addition to legislative rumblings over monopolies and record fines from European commissioners, the competition is heating up around them. Amazon, which currently has less than 1% of global ad revenue, is set to increasingly attract advertising spend from the large agencies. Its aggressive and highly successful foray into the smart speaker market is ripe for advertisers. UK household bought almost 4 million speakers in 2017, 71% of them Amazon products.

In turn, the big consultancies are snapping at the heels of the advertising world. Deloitte has been going great guns developing its creative operations while Accenture has been aggressively moving into the agency space, working on a product placement solution that circumvents traditional advertising by inserting personalised products based on a user’s browsing history into shows that the person subsequently watches. That’s right: product placement tailored just for you.

The era of hard ROI

The commercial case for advertising is strong. The ability to measure advertising’s impact is more granular than ever. Marketers can see the exact number of impressions and levels of engagement for a specific ad campaign. Research confirms that people are more likely to buy a product online after watching a video. There’s no hiding behind uncertainty any more.

Google and Facebook are well aware of this, providing advertisers with a suite of custom analytics to gauge the performance of their ads. Their operating principle is to be as friendly and as helpful as possible to the advertisers. YouTubes’ TrueView only charges advertisers when someone watches for at least 30 seconds (or to the end of the video if it is shorter), or clicks on an element of the instream creative. YouTube Kids, which is ad supported, is free to consumers. Facebook touts Messenger Ads as a great way to reach the 1.3 billion people worldwide who use the Messenger platform.

Build the audience, build the technology, make it easy to serve ads and to pay. Why wouldn’t advertisers funnel money into Google and Facebook?

A phone with Facebook on its screen next to a laptop

Paid social

If display and search advertising are in solid health, social media platforms are feeling equally good about their revenue streams. Paid social continues to gain momentum among brands, with growing expectations that the investment will generate leads. According to deal site Retailmenot, more than three quarters of retailers are expected to spend more on social media marketing in 2018.

“Brands are looking at social media not just for brand building but for acquisition and performance media,” said Marissa Tarleton, CMO at Retailmenot. “In the past, marketers were putting aside a social budget for brand building, but brands are now putting more investment on social media because they can see a return on investment.”

At the same time, a growing willingness to experiment with Blockchain appears poised to disrupt the advertising industry in an attempt to bring more transparency to the ad supply chain and reduce the incidence of fraud as transactions get processed between intermediaries.

“As an advertiser, we know better than anyone that the current digital advertising system is broken,” Chad Andrews, global solutions leader of advertising at IBM, said in a statement. “We believe that blockchain can help our advertising dollars go further by eliminating unnecessary intermediaries, and combining disparate sources of data and reconcile immediate metrics based on measurement KPIs tied to campaign delivery.”

The creativity of ads

Digital advertising is undergoing a deep evolution as the internet and its infrastructure develop. In many respects, advertising is becoming even more firmly established in the underlying architecture of the digital world.

What this means is an ongoing need for creative content to serve the advertising needs of business and the platforms they feed. The continued growth of video advertising and the advent of interactive ads are just two areas in which marketers will be flexing their creative and commercial muscles in the months ahead in the pursuit of increased awareness, engagement, and sales.

For as long as there are businesses with money to spend, there will be advertising. Designers, copywriters, project managers, coders, marketers and everyone else who goes into producing compelling and engaging creative are more in demand now than ever.

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