The advertising bubble continues to over-inflate

Written by on March 22, 2016 in Opinion with 1 Comment

Girl blowing HUGE bubbleTargeted advertising is a myth. The last time I ate at Mcdonald’s was probably 20 years ago. The last time I gambled was at least 15 years ago (and lasted approximately 15 minutes – the length of time it took to lose $50 in a casino on Macau). I do not have babies, I am not about to retire. I do not, ever, intend to study for an MBA, I didn’t even go to University.

The adverts that confront me (I use the word wisely) when I look at articles to comment on, critique or be cynical about, generally try and sell me burgers, gambling, baby stuff and places to retire. I am fairly convinced I will never retire, and that I will die at my desk, still confused about why the advertising industry is not completely bust.

And yet it isn’t. Far from it, the bubble seems to have more and more life blown into it. Facebook now has three million active (as opposed to passive?) advertisers. In the last quarter of 2015, its advertising revenues grew by 57 percent. eMarketer reckons that social media advertising will be worth $36 billion in 2017. Worldwide advertising spend is due to hit $579 billion this year. This is partly due to the Olympics in Rio, the entertainment of Presidential rantings from the US and some soccer tournament or other. Internet advertising is set to overtake TV advertising in 2017. Yet media buyers are bullish about TV advertising too.

Then there is the DOOH (Digital Out Of Home). The potential of the DOOH and the IoT is, apparently vast. And the potential to get it badly wrong is as vast. Essentially the DOOH when hooked up with the IoT (or IoST) will allow advertisers unfettered access to every device we own, monitor and interact with and serve ‘contextual messaging to the right audiences and at the right times’. Oh, dear Lord, help!

And Sir Martin Sorrell, chief of advertising giant WPP took home £190,000 a day last year. A day.

So, I must be wrong, right?

Even if I am wrong, or getting old, the advertising industry is facing some tough fights over the coming years.

Ad blocking is increasingly popular. Hundreds of millions of mobile users have downloaded apps. It is probably the fiercest of many battles in the arena at the moment. Advertisers and publishers refer to the fact that ad blocking companies are ‘gate keepers’ for decent content as ‘blackmail’ or ‘extortion’. Customers are now realising that the way that advertising is delivered to their device is using data, storage and battery – and that is not likely to make anyone happy.

Privacy regulation is putting the pressure on the oft-quoted aim of companies to better target their advertising – see retirement homes and burgers. Even Apple, who are very strict in whether and how they use customer data (who knew?) are considering extending the use of data as their fortunes flatten and turn.

Adverts themselves are becoming a new channel to market for the bad guys. Just recently high profile sites such the BBC, Newsweek and the NYT were embarrassed by inadvertently serving up malware with their adverts. No wonder customers would rather switch them off.

Programmatic advertising is almost certain to backfire. If humans cannot create personalised, intuitive and compelling adverts, getting a computer to do it is not great decision making. Fox, the latest broadcaster to announce they are getting into programmatic, even offer a guarantee, and have built a product called AIM – see what they did there?

Creativity seems to be leaking from the industry as well. With so many channels, and therefore different approaches that are needed, perhaps this is not surprising. Certainly the last time I saw an advert on my mobile or laptop that made me smile, cry or want to buy something was, well, never. Apart from this advert, of course:

Even the advertising industry, it seems, is losing faith in its own creative ability.

Let us hope, for the sake of companies like Facebook, whose fortunes are so closely linked to the health of the advertising industry that the direction of travel remains positive. But, boy, does it have the feeling of a bubble about it.

Or, perhaps, I need to go and study for an MBA and reconsider my position.

Now where was that ad?

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About the Author

About the Author: Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet. He is publisher of DisruptiveViews and previously BillingViews. .

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  1. Michah Himmelman says:

    Indeed, the advertising paradigm can be likened to a general food store that would have an advert for coca cola at the entrance, and whether you look at it or not, regardless, you can take a free bar of chocolate home.
    I think that more or less sums it all up. Be sure that such a store would be out of business quickly.
    Web sites, i.e. content providers and makers, must / need to find a way to charge customers for the intrinsic value in what they offer; whether information, news, comments, anecdotes, entertainment…
    Were they to charge fair value (sub dollar) prices people might be willing to slowly transition to a sustainable economic market paradigm.
    Chocolate is not for free yet… but I’m waiting for that bubble..

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