If you have been on social media or conducted searches over the past ten-plus years you may have noticed some significant changes across all of the big internet platforms and social networks. These changes have all been driven by the Internet advertising model. In the short term ads have helped some brands and marketers get in front of prospective buyers and enabled them to drive new revenue in new ways on various internet sites. But what has been the downside of the ad model on these big platforms and more importantly is the ad model sustainable?
First, what is an Internet ad model?
An ad model is a form of a business model that internet sites with a significant user base employ to generate revenue. The model typically transforms their site users into their product and collects detailed information about their users’ behaviors, as well as their demographic and geographic details to create profiles suitable for advertisement targeting. The platform then sells feed and display access to these users to advertisers who generally pay either by per view or for clicks.
Are Internet Ad Models bad?
Not all ad models are inherently “bad”, but there is a tipping point of no return. You may remember decades ago when Google and then much later Twitter, LinkedIn, and Facebook enacted their advertising platforms. In all of these cases, they were minimal and not very intrusive to the user experience. For example: Google only placed ads on the top far right of a page and it did not infringe on the users’ ability to find what they were looking for. Additionally, you may also recall the few ads that were in your newsfeeds on the other social platforms as they started their advertising programs. They were rare and minimally invasive to users.
The problems begin to arise when a platform needs to grow its revenue and have more brands wanting to advertise on its platform. That is the tipping point that is beginning to cause significant problems for both users AND brands alike.
Social Media Ad Models are not Sustainable:
I am just going to come right out and say what I said way back in 2017 and even earlier when Facebook made its decision to significantly restrict the reach of brand pages and begin its advertising program by force. The social media ad model is NOT sustainable. Not only do these platforms restrict the organic reach of brand pages or business-related content posts they nearly force brands to run ads to reach their own followers.
Now let me break down the clear problems with the ad model used by the big “free” user platforms on the internet today. When you understand what has happened and how it is impacting users and advertisers alike, it is very simple to see the writing on the wall. Let’s go over a few of the known and obvious problems of the social media ad model and the negative impacts it has created.
1- YOU are the Product:
An unfortunate fact of an internet platform having an advertising model is that its users become the product, not the platform itself. Collecting private data and detailed information about users in order to use them to generate revenue through throwing ads is a fact for ad models. The more you know about the likes, dislikes, interests, and behaviors of a user, the more targeted and effective the advertisements can be on the platform. However, users pay the price as the information collected about them intrudes on their privacy and makes them the product that the platform sells.
Being the product of a major website, social network or search engine means that you and your private information will be used in targeting ads right back to you, their product. It’s a vicious cycle that tends to decline in effectiveness as users understand how ads are being targeted and displayed to them and stop looking at or clicking on them.
2- Users Dislike Ads:
Many of us have become tired of the ads on social media constantly interrupting our user experience. In fact, according to Survey Monkey, 74% of users are tired of social media ads. When users dislike something, its effectiveness will continue to slowly decline over time and their behavior surrounding it will modify. In other words, if you are like many social media users, you have trained yourself to recognize ads inserted into your feeds, stories, and videos and either ignore it or click away to something else to avoid them.
There are many reasons why users are growing tired of ads on social media, search, and video platforms, but much of their disdain can be summed up under the phrase declining user experience. When user experience on a platform declines due to ads or for any other reason, there will be a day of reconning. And that day is coming.
The Survey Monkey study found the following key statistics about social media ads:
- Nearly 3 out of every 4 users said there are too many ads on social networks. For adults 35 and older that number grows to a staggering 78%.
- 63% of users say they only see the same ads over and over in their feeds.
3- Inventories At Max Capacity:
The biggest problem with ad models is that you eventually run out of inventory. In other words, platforms have to continually find more places to put ads. This vicious cycle compounds the user experience problem even more when every potential place on the platform has to start generating revenue also. This ensures that more ads will be displayed and more of the user experience will be disrupted. This also leads to more and more irrelevant ads being delivered to users because more advertisers and ads are being bought than are possible with proper targeting.
Irrelevant Ad Stats: 44% of users find the ads irrelevant to their wants and needs. For those 35 and older, the number balloons to 51%. (Survey Monkey)
Alternatives to the Ad Model
There are two main alternatives to platform ad models. Depending on the target user base the platform is going after, one may be more desirable than the other.
Subscription Model:
In a subscription model, users pay monthly for access to the platform. This is something we are seeing being done on X (formerly known as Twitter) for users. This is also something that SAAS (software as a service) platforms have been doing with B2B customers for decades now.
Transaction Model:
A transaction model platform generates revenue from the transactions or purchases made within the platform. A good example of this type of platform model is the website Etsy. This kind of model removes the expense of businesses related to advertising and reduces the privacy concerns for users. It makes sense for a shopping site, but as of yet, there are not many search or social platforms that have deployed this model. This is going to change.
Search Engine Ads Are At A Peak
Related to social ad models is search engine advertising. It’s become a challenge for users on the big search platforms to even decipher search results with the copius amounts of ads they are now pushing on the search result page. However, since this is a very different deployment of an ad model, I will cover the search ad model issues in a future post.
