Advertising works but does it have a future?

by Kathy McCloud

The vast majority of all online adverts go through either facebook or google. A report from eMarketer showed that in 2016 Facebook and Google collectively accounted for 57% of all mobile advertising.

Many news sites you visit still have adverts on their pages, but the value of these adverts seems to be dropping with brands preferring more targeted ways to reach their customers.

On Facebook you can target very intensely which enables brands to lower their customer acquisition costs.

There is such a large pool of users on Facebook and so much available data on each of them that brands can pick apart demographics and locations more precisely than through traditional media advertising.

This has been hitting media outlets hard, but many have approached the problem with innovative ways of redefining their value pitch.

Morrison reports on ex-Guardian editor Alan Rusbridger’s comments after stepping down in 2015:

He said it had forecast online revenues of £100m. In the end, the newspaper’s digital turnover was £81.9m – down 2.3% on 2014 “because it all went to Facebook. They are taking all the money” because “they have algorithms we don’t understand, which are a filter between what we do and how people receive it. This is going to get worse because they have a means of distribution which we simply can’t cope with and the more people switch on to these devices, the more problematic that question is going to get.”

So, what are other outlets doing for adverts?

The Outline was founded by venture capitalists and chooses to only have a small number of advertisers at any one time. It then promotes those products or brands hard with adverts which are both intrusive and non-disruptive at the same time.

Their clever use of design – providing a vibrant, colorful, yet disjointed feel – masks the presence of the tastefully composed adverts within the overall aesthetic.

Perhaps the focus on writing to a particular demographic and providing this couture advertising package to those readers will allow for ads to prove successful again as a model?

The lack of clearly scalable opportunities for this particular angle The Outline have taken makes me curious how it will move forward, but it’s one to follow.

And there is precedent for doing higher value deals with companies looking to advertise in a way which is tailored toward your outlet. After all, native advertising and partnership schemes are in a sense an extension of the traditional advertising model.

Companies like Buzzfeed have utilized native advertising as one of their revenue streams and seen themselves rocket into mainstream discourse.

Their prices are custom so it’s difficult to report on how much it costs brands, but Buzzfeed are willing to produce articles, listicles, and videos for your brand and promote them to their audience – targeting to your needs.

One advantage this has for brands is the creation of highly professional evergreen content which will continue to show and promote your brand for years to come.

Through this kind of native advertising model, publishers are able to provide a different service to Facebook – they can play on a form of value Facebook isn’t currently equipped to create.

As this model has developed, third party applications like Hexagram have begun to break into the market. Companies like these source publishers who are happy to have promotional content appear on their site and connect them with brands who want that content to promote them. Hexagram then creates the content and pushes it through to the publisher.

The revenue for publishers from third-party content creation will be lower than the in-house Buzzfeed model, but not every media outlet has the infrastructure in place to deliver a Buzzfeed style system. The Hexagram model probably adds a useful media revenue stream to small time publishers.

In conclusion: Traditional online ads are likely dead, but fresh daring approaches look to still have a future.

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