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The Relentless Growth of Digital Advertising

Digital advertising is everywhere. Defined as advertising through online channels such as websites, social media and search engines, digital advertising spending worldwide is expected to reach $835.82 billion by 2026. From independent solo-run publishers to some of the largest companies in the world, digital advertising is a major source of revenue.

What does this mean for the future of the online environment?

For one, the growth of digital advertising has opened up innumerable career opportunities that didn’t exist before. Bloggers can monetize their content and earn a full-time income from their websites. Being a YouTuber or TikToker is a legitimate profession and career aspiration. The growth of ad-funded careers is expected to continue. However with earning opportunities closely correlated with the serving of ads, we’re experiencing ‘ad overload’. The user experience is suffering.

Pop-ups, interstitials and banner ads cover up content on sites. Reading helpful articles becomes a chore as you’re attacked by ads from every angle and have to find the almost invisible ‘x’ to remove them. YouTube starts serving multiple pre-roll ads to its videos and reduces the size of its “Skip ad” button; a frustration for the user but a UI decision likely generating millions of dollars for the company.

Side-by-side screenshots showing how YouTube's "Skip ad" button has reduced in size.
YouTube’s “Skip ad” button has reduced in size and text.

But despite the overflow of ads we encounter throughout our online experiences, it remains a highly lucrative industry, made efficient through the laser-focused targeting of a specific audience. Want to target 18-34s? You can. Want to target pet owners? You can. Want to target students? You can. Even better, want to target a young, pet-owning student? You can!

There’s a general understanding that ads just ‘get in the way’ and are mostly ignored. To an extent this is true. Click through rates (CTR), which are calculated by dividing the number of clicks on an ad by the number of times the ad was seen, are typically between 6-7% for a good performing campaign. However social media and ad tech platforms are continually honing their algorithms to display ads aligned to our interests, thereby in theory making the ads more clickable. It’s one of the reasons why data is seen as the new oil. The more information a platform has on us, the better its ability to serve ads we’re most likely to engage with.

But as ads creep further into almost every aspect of our online experience, people are pushing back. We don’t want all our information for Meta, TikTok and Google to review, process and utilise in order to serve the most effective ads. People are using VPNs, switching to privacy-first browsers such as Brave, or simply refusing to use services that don’t respect data privacy. The consequences of such actions have the potential to make digital advertising less effective.

A mobile phone with a chain wrapped around it with a padlock.
More internet users are concerned about data privacy.

The combination of historically low CTRs, competition from other advertisers and the ad overload often found on many websites means that those who pay for ads need to work extra hard to get the attention they seek for their brands. A variety of businesses have emerged over the years to help make one’s advertising efforts more effective such as copywriting businesses, ad conferences, design agencies and consultancies. For many businesses, navigating the complexities of digital advertising with all its metrics on targeting, bid adjustments, CPCs and so on are better left in the hands of a competent agency so that each dollar spent on a campaign is used wisely. The problem, however, is that a campaign budget can very quickly be eaten up before the campaign even commences, which leads onto the next point.

There’s a growing perception that the internet is becoming a ‘pay to play’ environment. TV, radio and print ads have often been out of the price range for many people. The advent of digital advertising was supposed to change that. An independent solo publisher of a magazine site could also promote their brand in the same way large multi-million dollar businesses could. But once digital advertising started gaining more traction, it became difficult to keep up. Those with deep pockets would flood the internet with their ads, driving up the price for those who wanted to compete or simply drowning them out. When TikTok, for example, was attempting to break into the upper echelons of social media platforms, it was spending $3 million a day on ads in the United States.

And then there’s the confusing Google-dominated search environment. Google Adsense, which allows publishers to display third-party Google ads on their websites, is a major source of revenue for content writers. Google often talks about the user experience, explaining that it’s important not to overload your site with too many ads. However in contradiction to their assertion, one can very often find sites high up in the search results cluttered by ads, making any attempt at navigating their pages a horrible user experience.

Also search engine optimization (SEO), the process of improving site rankings in Google’s search results, is becoming more confusing. Google’s Helpful Content update in 2023 decimated many publishers’ businesses by greatly reducing the number of organic visits to their sites. Big brands that have acquired ‘site authority’ over the years, perhaps through other sites linking to them (backlinks), are able to exploit this authority by publishing articles unrelated to their area of expertise, and still have the articles rank highly on search results; pushing out legitimate, authoritative articles published by experts. So how does a small publisher compete? Very often, it’s pay to play.

Screenshot of Google's helpful content update article
Google’s Helpful Content Update harmed many businesses.

An inevitable consequence of ad overload is widespread ad aversion. There were 763.51 million adblock users worldwide in the last quarter of 2019; a considerable rise compared to the 212.99 million users in 2013. As a result, a war of attrition is ongoing in which platforms are using adblocker detection technology to encourage or force users to turn off their adblockers. YouTube, for example, notifies users that “Ad blockers violate YouTube’s Terms of Service”, and you’re then presented with the options to either turn off your ad blocker or subscribe to YouTube Premium. Interestingly, one theory is that the ad overload on some websites and platforms is intended to provide a frustrating experience that eventually convinces people to pay for a premium, ad-free mode.

For many people, however, it’s not the ads themselves that are the problem. It’s the intrusiveness and the clickbait-style ads that are shoved in our faces. Have a look at Taboola, Outbrain and RevContent ads to see what you’re (hopefully) missing. Very often, a site’s credibility is brought into question when they publish an informative, authoritative article followed by this one simple trick to lose 10 pounds of fat overnight. Despite the number of internet users who find Taboola, Outbrain and RevContent ads a negative experience, they continue to generate revenue for publishers, and as such are likely to stick around as long as the money keeps coming in.

But ultimately if you’re engaged in digital advertising, whether as a publisher looking to earn money for your content or as a business looking to promote your products, it’s generally understood that a large chunk of clicks will be meaningless. According to the Association of National Advertisers, at least 23% of the $88 billion spent annually by marketers on programmatic advertising on the open web is a waste.

Screenshot of YouTube's notification to users who run an ad blocker: "Ad blockers violate YouTube's Terms of Service".
YouTube prevents users from running an ad blocker.

If you run an ad campaign, there’s a chance that a large part of your budget gets used up by illegitimate clicks. Click farms are businesses from which you can purchase likes, followers and subscribers. Fake accounts are created, for example on social media platforms such as Facebook, to make up the numbers. However to appear legitimate, these accounts will attempt to behave like a normal user, perhaps by posting a random picture or clicking on an ad.

A good indication that you’re getting a lot of clicks on your ads by click farms or other illegitimate services is via the average time spent on your site. Often you’ll see that these visitors view your site for less than 5 seconds, and understandably so since they’re not on your site to view the content, but to appear like a normal user to the social media platform they’ve been created on.

The large amount of waste involved in digital advertising has given rise to a flourishing influencer marketing economy. Why have your budget used up by click farms when you can pay an influencer to promote your products? In 2023, the influencer marketing industry is worth $21.1 billion and is expected to grow to $143.10 billion by 2030. Some businesses are bypassing traditional ad serving and sponsoring creators on social media platforms instead. Often a creator will place a small break within their videos to give a shout out to their sponsors.

Ultimately all these efforts revolve around ways for businesses to get in front of potential customers. Whether it’s partnering with a TikTok influencer, running a text ad on Reddit or sponsoring a video on YouTube, digital advertising is on the rise. The future of digital advertising will undoubtedly latch onto the innovative technologies driving the internet today such as generative AI. Ads could be placed between or alongside AI-generated responses on ChatGPT or Bard. Perhaps answers could signpost to relevant businesses or products that help solve a user’s query. If the metaverse ever takes off, interactive avatars could engage with users about their products, answering questions and demonstrating the product’s capabilities.

Digital advertising is expected to grow, with global spending likely creating a trillion dollar industry in the near future. Ad aversion will grow in tandem, catalysed by a flood of ads on websites, content and social media platforms. As such, digital advertising will require balancing huge demand within the internet ecosystem while leveraging innovative solutions to incorporate these ads into the latest technologies. A lot of people are fed up with ads but it’s a necessary element to monetize and drive independent content creation. The future of the digital advertising landscape is looking both chaotic and intriguing.

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