Class instead of mass: salvation for the ad-financed web?

Since the World Wide Web was released for commercial use at the beginning of the 1990s, making it available for the first time outside the American military and universities, there has basically been just one financing model—advertising. Only in recent years have some media companies starting trying to monetize their content using paywalls. In some niche markets this can work quite well, but paid content has not yet become a real alternative to ad-financed websites for the masses.

A fatal misjudgment made by the media is taking its revenge. They did not think the World Wide Web would be a threat to their traditional revenue models and made their content digitally available free of charge. Now every single publisher has become aware that the Internet is not going away, but changing everything including their dominant position in the dissemination of information. Paid content models therefore have a double problem today. They have to fight against the self-generated habit of free content while also asserting themselves against the many new media such as blogs, videos or podcasts. This often results in half-hearted attempts to provide paid content, which too rarely provide consumers with additional value they would be willing to pay for.

Advertising lacks relevance and resonance

As if it weren’t hard enough already, publishers have had to deal with another problem in recent years—ad blockers. These extensions for web browser can be used to block advertising formats even before they are displayed. According to the online marketing committee OVK of the German digital economy association BVDW, the ad blocker rate was recently around 24 percent. What may initially seem moderate means a significant dent in advertising revenues for publishers. When it comes to losing users to ad blockers, they are primarily responding with even more advertising space. This is resulting in a self-reinforcing cycle, because higher advertising penetration ensures even more opposition to ads among consumers. The seemingly stable ad blocker rate is deceptive, because anyone who has to search for content through loads of advertising on a website may not ever return.

The real problem is more fundamental, however. Even if advertising reaches consumers, it is often ignored for lack of relevance. And with its lack of relevance, it does not generate enough resonance. Like the publishers, advertisers respond to this by displaying even more ads. As a result, this is also becoming a self-reinforcing cycle.

Less is more

Resonance is the true aim of advertising. It should be perceived and have an effect on the consumer. The currently prevailing effect, however, is the opposite. Advertising is annoying, ignored or blocked altogether. To change this, the cycles described here must be broken and the campaigns, which are primarily designed for reach, must be rethought.

Reduction to a single ad on a website, for example, would have a much better chance of being perceived than an ad that has to fight for the attention of visitors on a website with numerous other ads. If the single ad is also placed in a setting relevant to the content and interests of the visitors, it has a good chance of not being ignored. Relevance in this case does not mean customers that are relevant for the sender, but a context that is relevant for the recipient. Such advertisements may even be perceived as useful, not by the publisher or advertiser, but by the consumer.

Meaningful tracking serves as the technical foundation for personalized advertising and allows the website to request an ad from the ad server that matches the visitor. But this is precisely what could soon become much more difficult than before. Although the e-privacy regulation, which was originally planned for May 2018, has been further delayed, the data protection conference DSK has already expressed its support in a position paper for an opt-in obligation for tracking mechanisms that make the behavior of persons comprehensible and/or create user profiles. This is currently causing a great deal of uncertainty about the admissibility and continued existence of numerous trackers, for which a publisher would have to obtain consent from each page visitor. This may work for a single tracker, but news websites integrate an average of over 12 trackers. According to a study conducted by WhoTracks.me, a decline of 7.5 percent can already be observed since the GDPR took effect.

The bottom line: Quality instead of quantity

Let’s be honest: the ad-financed web hasn’t been working for many years now. Various mechanisms within the value chain ensure an increasing amount of advertising, but decreasing relevance and resonance. Acceptance of advertising has probably never been lower than it is now. As hard as the blows dealt by the GDPR and E-Privacy Regulation may be or will be in the future, they also represent an opportunity to make a new start that has been necessary for quite some time. All in all, we need more quality in content, advertising and personalization so that advertisers, publishers and consumers can find their way back to one another.