Digital Advertising is Broken; This Is How To Fix It

86.6 million US users block digital ads. 

Average click-through rate is 0.06%

These are the headline figures that should be keeping ad execs up at night. Part 1. Identifies the reasons why digital advertising is in such a bad state. Part 2. describes possible solutions, including how artificial intelligence can be used.

Advertising is just about the oldest profession in existence. It has shaped what society thinks, feels and buys from the earliest days of civilization right up until the present day, but it has some major problems that need fixing. 

The traditional digital approaches are fundamentally broken. It is time to adapt to a changing environment or die.

The number and range of messages published today are broader than ever before, and so the need for good, clear advertising has become more important than at any previous time. When ads for companies from around the world selling goods or services are available at the click of the mouse, where should you spend money? Advertising plays a crucial role in guiding us towards the product or service that could enrich our lives, expand horizons, solve a problem or help claim our place in the world.

Great (digital) advertising for a great company should benefit everyone, and yet we are in a time of huge declines in both the presence and the impact of online advertising. What used to be the new frontier of advertising is shrinking rapidly.

Why should we care about Digital Advertising?

Quite simply, if an ad can work online, it can also pay the bills. Advertising by its very nature can afford to keep many interesting websites online simply by being given a good platform and access to a dynamic audience. This is not to say that any website should be at the whim of adverting/company but rather that the right partner can strengthen the online experience while supporting the bottom line.

Ads should be thought of as something useful, not just a means to an end. They are a way of connecting with a brand or finding something new. Without ads, the financial models of many websites will need to dramatically change. For some, a subscription model will be possible but most others will need to look for other revenue streams. This will ultimate lead to the closure of sites who had had something to say and an audience who was engaged.

What is going on in online advertising in 2017?

It is important to consider both of these dangers separately to understand

Danger 1. US ad blocking project to increase by 24% in 2017 to 86.6 million US online users.

Danger 2. The average click-through rate of display ads is only 0.06%.

The twin problems of aggressive Ad blocking and super low click-through rates can only be solved through a radical new approach to digital content.

A Quick History of ad blocking

Firstly, looking at online ad blocking, it is important to understand why it has become so prevalent and why it will increase further. Ad blocking software was created by and for a tech-savvy audience who saw online advertising was becoming increasingly intrusive. The software was rapidly taken up by a somewhat broader audience who were inundated with online ads. Ad-blocking has started to come ready installed in browsers and operating systems. Removing the need for (a non-tech savvy) audience to discover, select, download and install the software will be the next great leap in ad-blocking use. This further removes friction until its use will be the common default for all browsing. 86 million US users block ads, what will be the number in 2018?

"If you think online advertising is hard now, just wait until next year…"

Click-Through Rates 2017

The three problems below combine to create an environment that is against any engagement with an ad, any ad. The end result of this poor advertising experience is a dropping online engagement.

Problem 1. Quantity. Too many ads on a page make for a crowded viewing experience. While it is technically possible to put any number of ads on a web page the end result is akin to a crowd of people all shouting at the same time.

Problem 2. Quality. There are too many low-quality ads in general. Just because it ‘can’ be inexpensive to produce and publish ad online doesn’t mean they should look cheap.

Problem 3. Relevancy. The majority of adverts are not relevant to the audience, either through lack of targeting or context.

How to fix the Problem - Part 2.

Originally I was going to write up new approaches that can be taken to tackle ad blocking while also increasing click-through rates. With a descriptions of how Hyper-Personalisation and Artificial Intelligence can be used to change digital advertising.

Instead, these approaches will form the basis for a new (as yet unnamed) advertising company.