The Ads Affair: How the Industry Has Changed and Is Changing

By Boris Pfeiffer,
business.com writer
|
Aug 18, 2020
Image Credit: Rawpixel Ltd / Getty Images

With consumers more savvy to advertising efforts and aware of privacy concerns, companies are having to rethink how they promote their products and services.

Advertising has come a long way from "Mad Men" executives and glossy billboards. In the digital age, advertising predominantly takes place online, and in ways you may not even be aware of. What was once aggressive popup boxes with flashing lights is now ultrasubtle messages, carefully placed among social media feeds and hidden beside blog posts.

Every company's marketing strategy incorporates advertising in some way: It's essential to how brands shape their reputation, distinguish themselves among markets, and reach and convert consumers. Naturally, as trends have shifted and customer behaviors have changed, advertising has had to adapt. This is especially true now when people are more savvy to advertising efforts and privacy concerns. Companies are having to rethink how they promote products and services.

In order to be successful in this fast-paced, ever-evolving world of advertising, it's useful to understand how it has transformed over time. Let's take a quick look how the digital ads industry has constantly responded and evolved in the face of public pressure.

Early beginnings

The first digital ad appeared on the internet in 1994 when HotWired began selling space on its website for banner ads. The opportunity for brand exposure was seized by AT&T, who paid $30,000 to place an ad for three months, seeing a click-through rate of 44%. That's over 73,300% better than today's average click-through rate of just 0.06%.

Fast-forward to 2019, where the digital ads industry was estimated to be worth $333.25 billion. A key reason why digital ads grew so significantly was because, early on, companies realized that this marketing technique could be easily customized towards specific user groups. Moreover, it could reveal insights about user behavior and generate data that helps businesses better understand their audiences. As the industry began to gain momentum, data tools emerged offering the option to analyze and optimize ad campaigns, meaning ads entered a new territory of more complex ROI models.

Now, amid the COVID-19 pandemic and mass remote workforces, online marketing is shifting from "shouting at" customers with ever-more intrusive banners to getting them to voluntarily interact with native content. With this relationship, both sides get something – companies earn valuable data, and customers receive validation via things like quiz results, white papers or product recommendations. This type of honest, direct value exchange is the only real way to drive long-term marketing efforts, especially as mistrust around digital ads has grown over the years.  

Desktop to mobile

In the mid-2000s, the rise of social media and Mobile Advertiser ID meant companies could identify and follow persistent customer identities, syncing their browsing behavior on both desktop and mobile, as well as their offline activity through device location. 

In the shift, Facebook was one of the first to experiment with how to present ads to users. Rather than overwhelm people with repetitive ads, it chose to run fewer, unobtrusive ads that integrated into news feeds, making them seem a natural part of a user's updates.

Following suit, YouTube, Twitter, and Instagram all later launched their own advertising capabilities. By 2017 – when half of all internet traffic was accessed from mobile – Google changed its search algorithm to prioritize mobile-friendly websites over sites that are not optimized for mobile. The change meant that a large majority of companies modified their ads strategy to weigh in favor of mobile ads.

Ironically, a recent study found that 91% of respondents believe ads are actually more intrusive today, compared to just two or three years ago. Moving forward, marketers can take the concept of user-first marketing and extend it in unlimited ways; for example, contests, webinars and other genuinely natural interactions. That's not to say that modern-day marketing means turning away from online ads, but rather that companies are clear about what and why they're collecting personal information, and how that process benefits the user. Whether on mobile, desktop or another medium, if your ad opt-in notice is a page of dense legal jargon, you're not on the right track.

Rising concerns about privacy

Due to social media ads' highly-targeted nature, data scraping and online social tracking have become ways for businesses to collect more in-depth insights about their target audiences. Social media sites might warn users that they will have access to user data, but there isn't always confirmation that it won't be sold to third-parties.

In 2019, TikTok launched a setting called "personalized ads" where users could block the app from using personal information to show targeted ads; Instagram also allows users to opt out of targeted ads. Requiring users to opt out of advanced targeting is inherently to stack the deck in favor of the tech-savvy – seniors and children, for example, might not understand how to turn this off. Not to mention, most people use social media across a number of devices; in some cases, privacy settings have to be updated across every phone, computer and tablet in use. 

In response to increasing opt-out privacy controls, companies have to find new ways to understand and meet customer needs, without having access to their online behavior. The key to ethical marketing is to get voluntary consent from a user versus tracking users without their knowledge. Online quizzes and interactive content are a savvy alternative because they allow marketers to collect more "real" data about user preferences and personalities through their quiz responses and lead-form data. Not only is this data more telling than an IP address and general demographic details, it's also garnered in an ethical, transparent manner.

The Facebook ads boycott

Facebook has been heavily scrutinized for its compliance running microtargeted political ads. The company has refused to stop firms placing political ads based on user data and behaviors. Even more concerningly, Facebook has said it won't block "newsworthy" ads that violate its speech policies. Taking into account the 2018 Cambridge Analytica data breach, where millions of Facebook users' information was harvested for political advertising, Facebook is now under extreme pressure to reassess its approach to digital advertising. Currently, 750 companies, including Adidas, Coca-Cola, and Hershey, are boycotting ads on the platform and demanding better policing of undemocratic content. 

For many businesses, joining the boycott has been an automatic decision, although admittedly, the following has been dominated by larger companies with disposable marketing budgets. Smaller brands that cannot risk sacrificing their marketing goals have tailored their participation to show support without harming their bottom line. For example, companies have chosen to pause ads only briefly (a couple of weeks instead of months), invest their ad budget in social initiatives, and utilize other ad techniques such as quizzes to capture leads. The boycott is no doubt a turning point in the ads' story, as companies of all sizes discover that advertising can be done (and more effectively) outside of the assumed top platforms.

Opt-in marketing: A quiz-based future

Digital advertising is set to become a consumer-led movement. As consumers are more privacy-conscious, companies will need to move to new, transparent modes of promoting their products. True, customers having more autonomy over their data will make it difficult for in-depth tracking and building audience data profiles. However, the good news is that there are other options.

For instance, quizzes and interactive content in advertising, and marketing as a whole, have been growing in popularity. Quizzes turn the advertising proposition on its head. Instead of brands' typical "shout as loud as possible" approach, quizzes are entirely user-driven and directed. People take them to learn something about themselves or a topic, and they choose to because they provide value. Moreover, quizzes allow them to submit information voluntarily. This technique isn't disruptive to the user experience and is more effective than traditional ads because it establishes a question-and-answer dialogue. 

And it works. Rather than passively scrolling past ads, 82% of people were found to engage with quizzes exposed to them on their newsfeed. Why? Quizzes prompt a sense of curiosity in consumers: They are rewarded by testing their knowledge (e.g., "How much do you really know about investing?") or discovering what product they should buy or category they best fit (e.g., "You're a savvy saver!"). 

Companies, on the other hand, get a stream of voluntarily given data about how customers view themselves. And because customers want insightful results, they'll provide truthful data during the quiz. With quizzes, data is gathered more ethically, and the data itself is much more qualitative than quantitative. Beyond merely analyzing a consumer's number of clicks, quizzes can show why people choose to act. 

Freely given accurate and personal data is a powerful alternative for an advertising industry reeling from increased privacy and consumer distrust. "Mad Men" main character Don Draper summed it up best when facing change:, "Make it simple but significant."

Expect to see advertisers move from collecting data from an unwilling public and embrace consumer-led marketing channels like quizzes in the future.

Boris Pfeiffer is the CEO and co-founder Riddle.com. Before launching Riddle in 2014, Boris was heavily involved in the online gaming industry - first managing European operations of Kabam, then setting up his own game studio. Boris has deep roots in the global start up space, having created tech businesses in Asia, the U.S., and throughout Europe. He’s a published author of “Facebook Fan Pages” (2011) and “Quizmaster” (2017), married and father of two, and in his rare leisure time, can often be found enthusiastically (if badly) swinging away at the local golf course.
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