Years ago, the New Yorker published a cartoon about advertising. A little girl is watching television with her father and asks, “Why can’t they save all the commercials to the end, and then we could be honor-bound to look at them?”
Ads are a business hack. They provide a means of monetizing content that is valuable enough for people to want it, but not valuable enough for them to pay for it. While they work well in some situations — traditional publishing, for instance — they’ve become a crutch for companies who lack the imagination to develop a better model.
I have nothing against advertisements themselves. I like Mad Men as much as the next guy, I’ve read my fair share of Ogilvy, and I’ve spent time watching Old Spice commercials on YouTube. But the prevalence with which they’re used online reeks of laziness and clutter. Entrepreneurship is about building something that drives us towards the world we want to live in, rather than the world as it currently is. Are advertisements really part of our vision for the future, a “necessary evil” that can’t be overcome? Or are they a holdover form a time when we couldn’t think of a better idea for monetization?
Back to basics. How do ads affect a business? Here’s a gross oversimplification:
Traditionally, a business provides a product or service to its customers in exchange for money. If Acme Corp. wants to make more money, they’ll do things in their customer’s best interest. They’ll make a high-quality product and sell it at a price set by the market. The business provides value to its consumers, and those consumers provide money to the business. Win-win.
Let’s say Acme Corp. is actually Acme Online News Corp. Its customers aren’t willing to pay for content (they could get it elsewhere, after all), but they are willing to tolerate some ads on the side of the page if it means their news stays free. Rather than directly serving its customers, Acme now serves the advertisers. The readers are no longer the customers, they’re the product; Acme is selling their attention to advertisers.
Of course, if Acme wants to keep its advertisers, they have to retain readership. However, if they’re in the mold of CNN or MSNBC, they’re going to see how much they can get away with without losing readership. Their ads will start to multiply. They’ll add interstitials between pages. They’ll serve the advertisers rather than their readers.
Advertising is typically a race to the bottom. As users become desensitized to ads, each ad placement becomes less valuable. Most publishers create more ad slots in an attempt to achieve the same revenue, but this results in cluttered pages which are less likely to attract readers. (Wise publishers take the opposite approach and offer fewer ad slots for more money — one or two ads with plentiful breathing room are much more effective than lots of ads stuffed together.)
The New Yorker cartoon contains an additional, more subtle, insight. The girl states that we should be honor-bound to “look at” the commercials. We “watch” television, but “look at” commercials — our experience with advertising is less engaging than our experience with other content. In other words, its shallow.
I don’t mean to sound like I think the advertising model is inherently or universally evil. We aren’t being forced to use ad-supported services — in fact, I use many quite willingly. I would never use Facebook if it were paid service. I’m more than happy to get my news from Politico if it means avoiding the New York Times paywall. And yet ads still feel wrong, somehow. As designers we believe that the right solution and the elegant solution are one-in-the-same; advertising as a business model is far from elegant. It is convoluted and shallow, and so there must be a better way.
The issue of “Ads v. Other” has been brought to the forefront of the industry consciousness by recent discussions of Twitter’s positioning as an ad-supported online destination rather than a data platform. The company’s behavior suggests a renewed focus on keeping its data “in-house,” rather than keeping itself open to third-party apps. Perhaps this means it wants to ensure the value of ads in its pipeline.
But isn’t there another way? Twitter is already set up to be an underlying technology for the internet — a great firehose of data. Why not stick with the platform model? Likewise all the other companies who, when asked how they’ll wean themselves off of venture capital, respond with the trite, “Advertising.”
Perhaps it’s hasty to assume that our over reliance on advertising is a sign of laziness or a lack of creativity. It’s always possible that ads are legitimately the best way to keep these companies afloat. Or perhaps these companies are too busy innovating in other areas to worry about developing new forms of monetization.
I don’t have a solution or a replacement for the advertising model. Others have tried different things — micro-payments for blog content, reducing the number of ads so that each one becomes more valuable — but I still believe there could be a better way. This essay isn’t meant to be prescriptive; it’s meant to be a call-to-arms for everyone who’s starting or running an online business. Let’s not get lazy and assume we’ll be ad-driven by default. Let’s keep thinking about how we can do right by both our customers and our bottom line. If ads are the best way, so be it. If not, even better.