Discontent turning to all out war in advertising

Written by on August 20, 2015 in Opinion with 0 Comments

Target missIn an outburst that is reminiscent of the howls of protest from operators when video started clogging up their networks and there was nothing they could do, operators have found a new cause to complain. Senior VP of almost everything at Deutsche Telekom, Tomasz Gerszberg, wrote a piece on LinkedIn (which immediately disappeared) saying that advertising networks and exchanges should pay operators.

His reasoning is that adverts on mobiles uses up a chunk (between 10 and 15 percent) of a customer’s data plan. Customers clearly do not like this. Customers clearly do not like ‘annoying adverts’ on mobiles anyway. Gerszberg’s solution is that if advertising networks paid operators, it would subsidise customers’ data plans. This would mean, his logic goes, that operators could zero rate adverts. This would mean that customers would not buy as much ad blocking software as they do currently (190+million customers are using ad blocking software at the moment). Advertising, his thinking goes, would be more targeted and relevant and everyone wins.

Which is a sweet thought.

The thing is that companies like Facebook, that erstwhile social network that gave its soul to the commercial world and thus became a commercial network, live and die on advertising revenues. In the first quarter of this year, Facebook took in $2.4 billion in advertising revenues. This explains why the company is investing heavily in trying to make them relevant and targeted. Mr Zuckerberg even believes that one day we will be able to share content rich, ‘touchy feely’, emotion loaded posts by thought alone (I want what he’s having please waiter). We are at the stage where we are being persuaded (or not) that Facebook’s ad platform is maturing. ‘Today,’ according to a post by Jan Rezab, CEO of Socialbakers, ‘more ad placement, targeting, and objectives are offered and are being actively used to a greater benefit by advertisers. As ads become more specialized and advertisers become more precise, we’ll continue to see ad effectiveness skyrocket.’

Which is also a sweet thought.

The real problem is that only some adverts are compelling and only a few are funny. Those are the ones that people watch. To offer a greater level of targeting than ‘men,’ or ‘millennials’ is meaningless if the advert takes you to an external site in order to annoy you (Five things you should never eat – and by the time we get to tell you numbers two to four, you will either have subscribed, died of starvation or slit your wrists). Or if the advert sells you something you bought two days ago.

Both are flawed. And this kind of cumbersome targeting will only increase, not decrease, the uptake of ad blocking software being sold. Apple has now allowed developers to build ad blocking software for iPhones and iPads.

Of course we are in the early stages of targeted advertising. But unless common sense is deployed early in the piece, the advertising wars that are beginning will actually fizzle out. Investment tip of today: ad blocking software companies.

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Alex Leslie

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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