Think about where you get your news and information. Most of us would say the Internet. We start our day with a smartphone, tablet or computer and a cup of coffee in one hand, reading the headlines so we have some idea of what is going on in the world. Now, consider how this content is created and who is paying to bring it to you.
We take for granted the unfettered access to news and information we have at our fingertips. Before the Internet became ubiquitous, we relied solely on newspapers and print, or radio and the evening news. Since the beginning news publishers have leaned heavily on advertising to generate revenue.
Like manufacturers, publishers need marginal revenue — that sweet spot where your cost to produce doesn’t exceed the amount the market is willing to pay, where maximum profit exists. Advertising has always been a primary means of generating revenue for these publishers, helping to cover the massive costs of infrastructure and journalists necessary to bring you quality articles and stories.
When radio was introduced there was an opportunity for a constant stream of programming. But how do you pay for this constant flow of radio broadcasting? One way was to sell radios and the very reason why many department stores got involved in radio and started their own stations. They quickly realized, however, that radio sales weren’t going to be enough to cover costs. Therefore, in 1922, a concept derived from the AT&T business model of selling time to customers for phone calls was born — sell advertisers time to broadcast their commercials. (More on the history of the first radio commercial see NPRs First Radio Commercial Hit Airwaves 90 years ago)
Similarly, for newspapers to cover costs, the news subsidy came along and ads became print-worthy content. In the 1700s, magazines and pamphlets began to hit newsstands and quickly led to the birth of informational advertising. Along the way newsstand and/or subscriptions covered the cost of printing, but ads generated profit and helped to pay for decades of investment in professional journalism.
In 1995, the Internet was commercialized and advertising evolved once again. Much like radio there was a constant stream of information, near free distribution, and on-demand access to a sea of published materials. Legacy publishers (print, television, radio) adjusted, and new publishers showed up. On-demand media grew beyond our imaginations (Google Books Project, YouTube, WordPress blogs).
But who did we pay for all this on-demand, limitless access to information? We paid for the infrastructure through our computers, phone or Internet and electric bill. Publishers, however, received none of these access costs, and “free” became a part of the Internet like “dark” is night.
But it doesn’t stop there. The revenue online advertising provides fuels innovation and sparked the great American “code rush” (face filter, anyone?). Innovation keeps it all humming and without online advertising new ideas will suffocate.
Eyeballs amassed and as Internet users enjoyed instant access to content, ad buyers emerged on the scene, eager to get into the game and enjoy on-demand access to qualified online audiences. Among the first to connect publishers immediately with qualified ad buyers was AdSense. This company was later acquired by Google for solidifying dynamic consumer segmentation across websites vis-à-vis behavioral tracking. Behavioral tracking was implanted as the lynchpin for Internet advertising and was coupled with real-time ad creation; together creating a rich bed for a new age of data-driven advertising.
Internet media buyers, in general, can only see a set of inputs and outputs. They never see the media; consider a “search ad” the buyer can’t possibly see it like a direct mailer. On the upside, a buyer can access highly-qualified users at scale but on the downside, transparency is fundamentally sacrificed.
Today, buyers generally aim to find clicks and use highly measured techniques deployed via an army of well-fed algorithms to control who sees what ad, where and how often. With data audiences taking the lead, the publisher, and to a more heightened degree the news publisher, gains new-ad buying customers but loses the direct relationships that provided absolute transparency.
This lack of audience transparency has brought forth an online advertising culture in which bots tracking clicks take priority over genuine consumer impact. We’ve stopped treating the consumer as a human being with preferences (albeit to influence and exploit)
Internet users have become fed up with not having control over what appears up on their screen, unable to choose ads or control ads they see, and this attitude has paved the way for the rise of ad blocking technology. Today, 420 million users worldwide are using ad blockers for mobile devices, and 220 million use it for desktop. (See also Tim McQuillen’s article If History Repeats Itself, What’s Next for Advertising?)
The long-term impact of ad blockers on advertising is unclear. But, short-term the side-effects are evident, and the longstanding investments in professional journalism and tailwinds for Internet innovation could become at risk.
Advertising is essential to publishing and the content we read — so how will it evolve if users block it all together? While cloud computing has brought online-publishing costs to near negligible levels, without ad revenue there is zero marginal revenue for publishers, deterring them from funding journalism, killing the journalist and affecting the quality of information we read.
The post originally appeared on https://blog.projectawesome.xyz