Wednesday, July 8, 2015

The End of Online Advertising and the Future of News

Earlier this year I wrote about banner blindness, or why people don’t click on online ads. It was a cautionary tale for marketers and publishers thinking that online advertising might be a new savior.
Now comes more proof that online ads aren’t working.
In a column in the July 3 Globe and Mail, Carl Mortished writes about the alarming—for publishers—growth in the use of ad-blocking software.
According to a 2015 Reuters Digital News Survey, 47 per cent of American readers of news websites and 39 per cent of British readers are using software to block ads.
For publishers of news, this is a worrisome development. Most have moved away from paywalls, since readers have demonstrated over and over again that they won’t pay for news.
This was confirmed by the Reuters survey, which also found that three-quarters of Britons and two-thirds of Americans would never pay to watch or read news.
So if readers won’t pay for news, what are newspapers and other content providers to do? Try to sell more ads.
That’s the strategy being employed by a number of publications, including the Toronto Star, which recently dropped its 18-month experiment with a paywall. 
Instead, newspapers like the Star are going to a tablet version or using their websites to sell eyeballs to advertisers. 
The more eyeballs they can get, the more advertisers they can attract, and the more they can charge for advertising to stay alive.
But that strategy won't work if people are blocking ads. 
Says Mortished: “Web advertising revenues are falling and no one seems to have a solution that would keep readers happy while allowing advertisers and publishers to make a profit . . . readers have declared war on the publishers, a conflict in which neither side can gain long-term advantage.”
In exasperation, the Guardian (which is free online) has installed a message on its website that pops up when it detects ad blocking software, asking the reader to make a voluntary contribution. 
In Germany, media companies are taking a maker of ad-blocking software to court.
I have no answer to this problem. I don’t know how newspapers and other creators of news are going to stay in business if neither paywalls or advertising will generate revenue.

All I know is that buying ads on websites is not a magic bullet for catching reader attention—especially if readers are actively blocking them.

No comments: