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

Early beginnings

The first digital ad appeared online in 1994 when HotWired began selling space on its website for banner ads. AT&T seized the opportunity for brand exposure and paid $30,000 to place an ad for three months. The result was a click-through rate of 44 percent. That’s way better than today’s average ad click-through rate of just 0.1 percent.

Fast-forward to 2023, when the digital ad industry was estimated to be worth $627 billion, according to Statista. A key reason why digital ads grew so significantly was that early on, companies realized this marketing technique could be easily customized toward specific user groups. 

Moreover, digital ads 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 that offered the option to analyze and optimize ad campaigns. This allowed ads to enter a new territory of more complex ROI models.

With this relationship, both sides get something — companies earn valuable data, and customers receive validation via quiz results, white papers or product recommendations. This honest, direct value exchange type is the only natural 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 desktop and mobile as well as their offline activity through device location.

During this 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 were integrated into news feeds to make them seem like a natural part of a user’s updates.

Following suit, YouTube, Twitter and Instagram all later launched their 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 not optimized for mobile. The change meant that a large majority of companies modified their ads strategy to weigh in favor of mobile ads.

While mobile ads bother 36 percent of consumers less than other methods, many people still prefer ads that target their needs. Sixty-three percent of them want to see less irrelevant ads, reported Gitnux, and 48 percent desire incentive opportunities. Marketers can take the concept of user-first marketing and extend it through 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 should be clear about what and why they’re collecting personal information, as well as how that process benefits the user. Whether on mobile, desktop or another medium, you’re not on the right track if your ad opt-in notice is a page of dense legal jargon.

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” that allowed users to 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 means inherently stacking the deck in favor of the tech-savvy — seniors and children, for example, might not understand how to turn this setting off. Not to mention, most people use social media across several devices; in some cases, privacy settings must be updated across every phone, computer and tablet.

In response to increasing opt-out privacy controls, companies must find new ways to understand and meet customer needs without 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 savvy alternatives because they allow marketers to collect more information about user preferences and personalities through 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 ethically and transparently.

The Facebook ads boycott 

Facebook has been scrutinized for its compliance running microtargeted political ads. The company has refused to stop firms from placing political ads based on user data and behaviors. 

Facebook also said it won’t block newsworthy ads that violate its speech policies. Considering the 2018 Cambridge Analytica data breach, in which millions of Facebook users’ information was harvested for political advertising. Facebook remains under pressure to reassess its approach to digital advertising. More than 1,000 companies including Adidas, Coca-Cola and Hershey, boycotted ads on the platform in July 2020 under the hashtag #StopHateForProfit to demand better policing of undemocratic content.

For many businesses, joining the boycott was an automatic decision. Admittedly, the following was dominated by larger companies with disposable marketing budgets. Smaller brands that cannot avoid sacrificing their marketing goals tailored their participation to show support without harming their bottom line. 

For example, some companies paused ads briefly (for a couple of weeks instead of months), invested their ad budget in social initiatives, and used other ad techniques, such as quizzes, to capture leads. 

Opt-in marketing: A quiz-based future

Digital advertising is set to become a consumer-led movement. As consumers become more privacy-conscious, companies must move to new, transparent ways of promoting their products. 

True, customers having more autonomy over their data will make in-depth tracking and building audience data profiles difficult. However, the good news is that there are other options.

For instance, quizzes and interactive content in advertising and marketing 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 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. Interactive content almost doubles the conversions of more passive material, according to a Demand Metric study. Why? Quizzes prompt a sense of curiosity in consumers: They are rewarded by testing their knowledge (e.g., “How much do you know about investing?”) or discovering what product they should buy or category they best fit (e.g., “You’re a savvy saver!”).

On the other hand, companies obtain 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 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. Expect to see advertisers move from collecting data from an unwilling public and embrace consumer-led marketing channels such as quizzes in the future.

The future of advertising

Although advertising changes, some things remain the same. Consumers still want authentic engagement, and they continue to use social media and QR codes for product referrals and brand information. But new trends, such as AI, will help enhance the customer experience. Here are a few things companies should consider with their marketing.

Local markets

In the past, businesses primarily looked toward large advertising agencies to deliver their brand message to the masses. Working with a nationally known agency that hired the most creative and award-winning marketing team could skyrocket your brand. 

In today’s ad market, companies seek out small, local advertising firms that have a pulse on their target customers. An ad agency that understands local culture, political affiliations and even where the community spends its downtime can significantly increase customer loyalty and avoid public relations mistakes.

AI

To engage customers with an immersive experience, advertisers can make use of AI and generative media. AI ad features integrated into Facebook and Google make it a no-brainer for companies looking to spearhead their industry. 

AI can tailor experiences to your target audiences, create aesthetically pleasing content, and collect competitive customer data. It can instantly combine product reviews and social media comments to create vital first-party data.

Connected TV (CTV) ads

CTV ads on platforms like Apple TV and Roku are expected to skyrocket in upcoming years. As consumers settle into their favorite paid subscription apps, there has been a sharp rise in FAST (free ad-supported streaming TV) channels.

In 2022, Netflix and Disney+ added an ad-supported tier to their streaming services. Following suit in May 2023, the most-watched CTV app, YouTube, looked to cash in on advertisers with a 30-second nonskippable ad option for CTV.

QR codes

QR codes are taking advantage of the rise in mobile phone use. Opening your phone’s camera app and focusing on the QR code can take you to a landing page. Anything can be placed on the landing page, including multiple links, visuals and videos.

QR codes can be placed anywhere. Businesses can put them on vehicles, websites, social media, physical business locations and more.

Social media sharing

By 2024, Statista projects global social media spending on ads will reach $300 billion, dominated by brands such as YouTube, Facebook and Instagram. Brands will continue to seek to authenticate their products through social sharing because consumers trust friends’ social media recommendations more than reviews and company messaging.

Younger generations are paying more attention to social media ads, too. Nearly 40 percent of Gen Zers, for example, spend four hours or more on social media, according to Statista. Some 66 percent of such consumers say offers and promotions used on social media contributed to them seeing the brand in a positive light.

Boris Pfeiffer contributed to this article.