Peak Advertising and the Future of the Web
June 3, 2014 2:04 PM Subscribe
"Advertising is not well. Though companies supported by advertising still dominate the landscape and capture the popular imagination, cracks are beginning to show in the very financial foundations of the web. Despite the best efforts of an industry, advertising is becoming less and less effective online. The once reliable fuel that powered a generation of innovations on the web is slowly, but perceptibly beginning to falter. Consider the long-term trend: when the first banner advertisement emerged online in 1994, it reported a (now) staggering clickthrough rate of 78%. By 2011, the average Facebook advertisement clickthrough rate sat dramatically lower at 0.05%. Even if only a rough proxy, something underlies such a dramatic change in the ability for an advertisement to pique the interest of users online. What underlies this decline, and what does it mean for the Internet at large? This short [PDF] paper puts forth the argument for peak advertising—the argument that an overall slowing in online advertising will eventually force a significant (and potentially painful) shift in the structure of business online. Like the theory of Peak Oil that it references, the goal is not to look to the immediate upcoming quarter, but to think on the decade-long scale about the business models that sustain the Internet."
- Key indicators for online advertising effectiveness have declined since the launch of the first banner advertisement in 1994. These declines are increasingly placing pressure on even the most established businesses in the space.
- These developments suggest important (and potentially painful) implications for market structure, privacy, and authenticity online.
- Existing alternatives appear at present to be insufficient to replace lost revenue from near-future declines in the value of display, search, and mobile advertising.
- Ultimately, the economics of the web will necessitate pivotal decisions about the financial underpinnings of the Internet in the decades to come.
AdAge: Google Profit Misses Estimates As Search Ad Prices Decline
Ars Technica: Why Ad Blocking is Devastating to the Sites You Love (previously)
The Guardian: Adblock Plus: the tiny plugin threatening the internet's business model
Wired: How Click Fraud Could Swallow the Internet
SEOBook: How Brands Came to Dominate Google's Relevancy Algorithm
Boston Review: Censored by GoogleSome smaller independent sites burned by Google's newly UGC-hostile filters: TVTropes - DaniWeb - RecipeLand - SkyscraperCity - EnglishForums - And of course, MetaFilterWaPo: Data brokers use ‘billions’ of data points to profile Americans
ProPublica: Everything We Know About What Data Brokers Know About You
Senate Commerce Committee: A Review of the Data Broker Industry - December 2013 [PDF] (previously)
Acxiom: A PDF guide from "the largest company you've never heard of" to the myriad lifestyle categories it crunches; see also Vienna Teng's "The Hymn of Acxiom" (previously)
Pacific Standard: Outing Advertisers: A Conversation With Reddit’s HailCorporate
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