The haters are totally wrong about advertising. Here’s why
Over the past few years, many otherwise intelligent people started spouting anti-ad opinions. With little reflection and less evidence, they spread tropes about digital ads in particular that are incredibly trendy – and often wrong. Salesforce strategy exec Martin Kihn shares the most common attacks on advertising and explains why the naysayers don’t know what they are talking about.
Is it true that everyone hates ads?
Rep Anna Eshoo (Democrat, California) recently called digital advertising a “pernicious practice” that “allows online platforms to chase user engagement at great cost to our society.”
Dr Augustine Fou wrote in Forbes: “Chief marketers should assume fraudsters are feasting on their digital ad budgets, until proven otherwise.”
The New York Times ran an alarming story headlined: “The advertising industry has a problem: People hate ads.” Let’s look at the ad-haters’ claims one by one:
1. Digital advertising is mostly fraud
Certainly, there’s fraud in ads. Sexy scams like the one where Grindr ads were disguised as more pricey Roku ads are lovingly covered by people like Dr Fou. But hey, there’s fraud in fruitcake baking too, and it gets televised.
Advertisers aren’t stupid. That's why most of the biggest spenders use tools like Moat and IAS to minimize fraud risk. The best estimates put the amount of invalid traffic, including fake clicks, at around 3% of $450bn in global ad spending in 2019.
That’s still outrageous – as Michael Tiffany, co-founder of White Ops (now Human), often says, global credit card fraud is less than 1% of revenue. But ad fraud is nowhere near 88%, which a study by Oxford BioChronometrics once claimed.
2. Anyway, people really hate advertising
In a dramatic op-ed in Marketing Week a few years ago, professor Mark Ritson said: “Accept it, people hate ads – yes, all of them.”
Some people do, anyway. Back in 2016, when it became hot, ad blocking was detected in about 23% of web sessions, according to a study by Audience Project. More recent estimates show a slight decline to 18% of sessions. Ad blocking is also lower in mobile channels, so the shift to mobile diminishes it.
eMarketer puts the rate of ad blocking at 27%, increasing slightly each year at a slower rate. But even this level distorts the truth that ad blocking – like pundit wealth, unfortunately – is not evenly distributed. One group in particular skews the average by blocking ads 52% of the time: young gamers.
Ads can be entertaining, even informative, and provide a sweet break from the intensity of a just-discovered body or a third-down-and-goal. The best studies show that most people neither hate them nor love them.
As Dashiell Hammett said in The Thin Man: “You’re like everybody else: some people like you, some people don’t, and some have no feeling about it one way or the other.”
3. All advertising is just a tax on the poor
People who can afford to subscribe to an ad-free version of a service will do so every time, right? This makes sense, but our pandemic-era proliferation of subscription-hungry streamers and publishers is taxing something else – our patience.
The past year saw Paramount+ and Discovery+ join HBO Max and Peacock from 2020, which joined Apple TV HD, Disney+, Amazon Prime... and of course cable, internet, news, SiriusXM. No wonder half of respondents to one recent survey said there were “too many services” and 40% told Deloitte’s 2021 Digital Media Survey they wanted to quit at least one streamer.
In fact, half of consumers told The Trade Desk they didn’t want to pay more than $20 a month for streaming TV and showed distinct signs of subscription fatigue. Even if the survey is biased or its respondents confused, the limit to subscription tolerance can hardly be infinite. Netflix’s recent disappointing quarter may be a warning sign.
What’s the alternative? What we’ve always had: a combination of ad-free and ad-supported media for all.
4. The web is evolving beyond ads
Will there be advertising in the metaverse? This is a widely-discussed question with an obvious answer: yes. There are ads on bobsleds, man.
Some have argued that the web is morphing into a voice- and whatever-based mesh that won’t have any use for ads. You don’t hear Alexa delivering promotions, do you?
Channels always start by vowing to be ad-free and then need revenue. Voice is a creative and effective channel. Estée Lauder put a prompt in a podcast where the listener had to say, “send me a sample!” and they got one. Pandora launched Voice Mode to promote such ads, measured via – what else? – say-through rate (STR).
In the end, like Elon Musk, advertisers always find a way to be heard, even when nobody’s in the mood.
“The edifice of digital advertising is unstable and likely to collapse,” Scott Galloway told Insider last fall.
Now US advertisers will spend about $171bn in 2022, up a record 30.5% from 2021, according to GroupM. In our teenage dystopian industrial world, many things may be about to collapse. Most likely, advertising isn’t one of them.
Martin Kihn, senior vice-president strategy, Salesforce.