Another Look at Online Advertising

Online advertising has been a hot topic for the past week or so, with Ars Technica trying out an interesting, somewhat desperate experiment wherein they blocked access to their content for people using Adblock. Of course, if this were to become some kind of movement among publishers, it would probably just spark a technological cat-and-mouse game that would surely be reminiscent of DRM cracking or iPhone jailbreaking. But in their post-mortem, Ars states that it was a worthwhile awareness campaign, and I hope that’s true. But I thought it would be a good idea to try to bring the collective OSNews brainpower together and crowdsource the idea of how to raise money for a web site in an age where advertising is increasingly un-viable.I suspect that the an occasional plea for users to whitelist your site from Adblock is going to become a regular event, like the yearly school fundraiser or a public radio pledge drive, among tech web sites. The last time we brought up the subject was less than a year ago. I guess the big difference is that two years ago, when the advertising market was strong, publishers didn’t worry about it all that much. But now, a lot of people are just barely hanging on. People who depend on their web sites’ earnings to make a living are in the worst shape, surely, and OSNews is lucky to have a few dedicated volunteers that make all the difference. But we’ve been trying to implement a way for regular contributors to receive some compensation for their writing, as a way of increasing both the quantity and variety of what’s published here, and our lack of funds is the only thing holding that program back.

As came up in the discussion when we last brought this up, people have a lot of legitimate gripes about online ads, but they also have some misconceptions. I personally have problems with ads that make noises or jump all over the place, or don’t stay in their own area, or have intentionally-annoying animations to grab your attention. I also have a huge problem with ads that trick users into scams. I try to be diligent about getting rid of those kinds of ads if they ever show up.

Let me explain how the whole ad thing works at OSNews (and at most sites like OSNews): we don’t sell ads directly. That’s too hard. You have to centralize that kind of activity or it’s too inefficient. We outsource that work to a company called Techvertical, who also sells ad space for O’Reilly and Betanews. They work with ad agencies that buy adspace for companies like HP, Intel, and Microsoft. This is pay-per-view advertising, so if it’s blocked, we don’t get any money from that. However, if the click-through rate falls too far, then those advertisers stop buying space from OSNews, because it’s “not performing.” This actually happened to us. HP used to be a big advertiser at OSNews, but after a couple of ad campaigns “didn’t perform,” they dropped us. And once you get dropped, it’s pretty impossible to get back on. There are always other web sites to try out. But usually, and especially over the past year since the big tech companies just aren’t buying like they used to, you have some ad inventory that you don’t sell, so we offer our unsold ad inventory to a secondary market, where we can get a higher volume of ads, but at a lower price. What we can’t sell there, we send to Google Adsense, which is pay-per-click and generally doesn’t pay as well as the other ads.

We used to have other sources of revenue, such as comparison shopping, but the problem with these is that someone has to manage them. Working with volunteers, our first goal is to get news posted, and there just isn’t anyone who can take the time to work on cultivating other moneymaking ideas, especially since, in my experience, you will spend weeks trying something out, only to find that it ultimately isn’t successful.

But now that’ I’ve given you a little background, I’d like to ask a more fundamental question:

So what’s wrong with the advertising market?

As advertising evolved on the web, it started out relatively unobtrusive and has become larger, busier, and more intrusive as time goes on. Other media, such as newspapers and television, started out with intrusive advertising. In fact, on television they used to talk about the sponsors during the show, and evolved away to inter-show spots later on, though the in-show sponsorships are indeed making a comeback now, largely due to ad-skipping, I suspect.

But the trajectory of internet advertising has had the unintended side effect of building up a growing resentment, as people remember a time that advertising wasn’t such a nuisance. That being said, remember popups? Internet users scored a major victory over popups ten years ago. Of course, popups didn’t disappear because advertisers grew a conscience. It was because browsers blocked them. Advertisers stopped using popups only when browser makers made it impossible for popups to work they way advertisers wanted them to.

And this is the crux of the problem: advertisers only care about results. Ultimately, they want people to buy whatever they’re selling. They have been accustomed to very unscientific advertising programs wherein they spend a lot of money and don’t have any way of measuring how well their ad is received, except by measuring their sales months later. Internet advertising promised a panacea. Not only can you target your ads to a narrow slice of the populace, either by choosing a niche publication or by using sophisticated technological targeting, but you can track your ad’s performance tightly, counting views and clicks, all the way down to where their click led them, even to a final sale in some cases. But they were blinded with science. With all the tracking of views and clicks, branding and goodwill are left off the ledger.

When Coca-Cola or McDonalds advertises in a magazine or on TV, their goal isn’t to get you to run out that minute and buy some sugar-water or a meat sandwich. They want to instill some kind of emotional connection to their brand and product, so when you’re at the gas station and feeling thirsty, you reach for a Coke instead of some other kind of soda. Because online advertisers are obsessed with clicks and measurement, they’ve lost that idea, and in fact might be counteracting their efforts. In their efforts to get your attention to click on the ad, I suspect that many advertisers are making enough of a nuisance of themselves that they’re actually building up ill-will among their potential customers and harming their brand in the long-run.

Of course, junk advertisers like “I lost 20 pounds in four days” aren’t going to be worried about branding or ill-will, since they’re just scams anyway. The low end of the spectrum will always be a race to the bottom of cheap psychological tricks and appealing to the feebleminded anyway. But let’s focus on respectable publications and otherwise-respectable advertisers.

The problem we have is that advertisers and their agents, in their quest for clicks, are constantly pressuring publishers toward ever-more-intrusive ad sizes and behaviors. Unfortunately, more intrusive advertising is scientifically proven to attract more clicks. Because in most cases the advertisers themselves don’t get any feedback on whether readers hate the more intrusive advertising, from their point of view, the bigger the better. There needs to be some push-back, but the publishers don’t have enough clout to do it. If they refuse to run an intrusive ad, it seems there’s always someone else that will be willing to run it if the price is right.

Since I don’t think it’s likely that publishers will be banding together to resist advertisers any time soon, and I don’t think that there’s going to be any spontaneous organization of readers overtly pushing back against intrusive advertising, I think that our options are limited. I think our best bet might be a mixture of technology and public action. If, for every ad placed online, the advertiser could receive direct feedback from readers about how they feel about the ad, and readers could channel their approval or outrage directly to the person who’s placing the ad, then I think we could see more circumspection. If advertisers had to face the music for their ads that take over the page or make noise, or flash, and could see that not only are those ads attracting attention, they’re attracting a fair amount of negative attention and are actually generating ill will among consumers.

Of course, another course of action would be for those people who are bothered by ads and are sophisticated enough to install a browser plug-in to install adblock and just stop looking at ads. Taking the pop-ups phenomenon as a model, you could say that we could send advertisers the message by not looking at their ads. But it won’t happen that way. The way that advertisers track ads, they’re looking at pageviews and click-throughs. If you don’t view, and don’t click, you’re not on their radar. They’ll just find someone else to show the ad to. And adblock won’t do to display ads what pop-up blockers did to pop-ups. All modern browsers block popups. Unless all browsers came with adblock preinstalled and enabled by default, adblock users would never have an impact. They just wouldn’t be counted as eligible participants as far as the advertisers were concerned.

And of course, as both Ars and OSNews have pointed out, while the advertisers won’t notice that you’re using adblock, the publishers sure will, and they’ll be the ones who suffer. Advertisers would actually be happier, the more that anti-ad activists installed adblock. They only want their ads to be seen by people who aren’t ideologically opposed to clicking on them, because it ends up costing them less. So the underdog heroes of the story (the publishers) get less money while the villains (rapacious advertisers) get a better deal under the adblock scenario.

The other fallout from adblock is that as publishers see reduced impressions from adblock use, and declining revenues, they’ll get to a point where they need to consider running more-intrusive (and better-paying) ads to make up for the budget shortfall. Then their non-adblock-using readers have a degraded experience. Then some of those readers might be tempted to adblock, and you have a vicious cycle, with a portion of the readers suffering with intrusive ads, the publisher having to cut back on original reporting and other expensive content to deal with a reduced budget, and the advertisers perpetuating this negative cycle without even knowing it.

In fact, about the only way I can think of to take action against online advertisers that will really affect them would be to click on their ads indiscriminately, thereby making them think that their ads are performing better than they really are. Or perhaps making it a point to click on the smaller, less intrusive ad units whenever you see them, while ignoring the big ones. But seriously, the only direct action that an individual could to to really make a difference would be to contact the companies and complain, but in order for that to make a difference it would take at least a few dozen complaints. But there’s not much that one person can do.

That being said, I think engagement is the key. I think someone could turn this into a lucrative business, believe it or not. I envision it like this: There’s a service that publishers can subscribe to, similar to the ad brokers that most of us use. This service inserts a footer under each ad unit that, by reading the adcode, associates each ad with its source, and inserts a kind of feedback mechanism below the ad unit. Maybe it could say “ban this ad” and “respond to this ad.” Each time you see an ad, you’ll also be able to engage directly with both the company placing the ad and other people out there who might have something to say about them or their products. This will be something that the company can participate in, but not control. Companies that make a good product, make a good ad, and are otherwise responsible netizens could build up a network of fans and admirers. Companies with scammy or shoddy products will hear from the haters. Otherwise-good companies that are running bad ads will get to hear about it before their reputation is damaged too badly, and have the chance to pull their unpopular ad and replace it with a better one.

Now that I think about it, I’ve just decided to start this business. The business model could be that publishers get to subscribe and add the code for free. They’ll be able to more closely monitor the ads that appear on their sites, and engage with both the readers and the advertisers in order to run more popular ads. Advertisers will have the option of paying a fee to get more sophisticated tools to engage with readers, and can insert more branding into the feedback experience, turning it into a marketing opportunity in itself. If there’s anyone out there who would like to collaborate with me on getting this service off the ground, let me know.

So now that’ I’ve been in the weeds taking about the ins and outs of the advertising business, let’s get to the point. The reason that we’ve talked about the adblock issue in the past, and the reason that Ars pulled its little stunt is that we’re feeling the pinch from the lousy ad market, and we know that our technically-savvy readership is much more likely to have adblock installed. Whenever anyone brings this issue up, there’s always a far amount of righteous indignation from one camp, who feels that our business model is of no concern to them, and that if one publisher stops producing, that there will always be someone else to give them their news for free. I don’t know if there’s much point in debating that topic. But others are sympathetic to our need to advertise in general but wish that we could find another kind of advertising that neither distracts them nor affects their browser performance.

But there’s our problem: ads that are tucked into the corner and blend into the background don’t perform, so advertisers don’t want to run them. And if we didn’t allow Flash ads, we would probably chop our revenues by 90%. If there were some kind of alternative marketplace for tasteful tech-oriented advertising that even came within the same universe of the revenue potential of the current setup, I’d enroll in a heartbeat. But for now, we’re stuck with what we have.

So why should you care? Well, people are always saying that they wish that OSNews ran more, better content. People complain about it being like Thom’s blog, and there isn’t enough of a diversity of opinion, etc etc. I can guarantee you this, however: if every adblock user on OSNews were to either whitelist the site or become a member, we could increase (double or triple, probably) our amount of original content, and increase the amount of diversity of viewpoints considerably. There are a few professional writers who are interested in contributing to OSNews, who would command a very modest fee for their work. But since the advertising market imploded in 2008/2009, OSNews can barely make the budget, so bringing on even modestly paid writers just isn’t possible right now.

There might be sources of advertising, or other sources of sponsorship or affiliate revenue that I’m not aware of. There might be OSNews readers who have great ideas or might be willing to lend some effort to getting this figured out. Most of the alternative sources of funds would involve a level of involvement and work that we just can’t provide, but maybe some readers would have some insight on this. Please include your ideas and thoughts in the comments.


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