The supporters of an open, democratic internet, funded mainly by advertising, are facing some big questions about how their vision will unfold. A freely accessible digital world, where websites and social networks are open to all, is the dream of many. But critics wonder if this is desirable or even possible.
Brands have shifted a huge proportion of their marketing budgets into online advertising in recent years, fuelling the growth of the internet and becoming the main source of funding for most websites and social networks. But while many campaigns hit the spot, others can be irritating, intrusive and irrelevant.
How can advertisers and web publishers make sure ad campaigns are effective and entertaining enough to pay the internet’s bills, while ensuring online services don’t disappear behind a series of privately accessed paywalls?
To discuss the future of online advertising, the Guardian teamed up with advertising technology provider AppNexus to run a roundtable discussion. The discussion was conducted under the Chatham House Rule, where comments were made on condition that they were not attributed to the speakers, to encourage a free-flowing discussion.
A key point of contention in the discussion was how the internet should be funded. One participant was passionate about the ad-funded model: “Largely it should be free. It is a wonderful tool for accessing information, for consuming information and for the distribution of brands.” But another thought that the quality of content on the internet inevitably suffers “unless you have the resources to fund it.” There are fears that ad revenue is insufficient to pay for all the content that is needed for the web. “Generally speaking, the ad-funded model puts a downward pressure on the quality of content. I have no problem with subscriptions,” the speaker said, adding: “There is no reason why it should be free.”
Digital advertising faces some serious challenges if it is to keep the web free – one of which is concerns over the ethics of tracking people’s online behaviour without their consent. The success of online ad campaigns is determined by the data that brands can access about internet users. How old are they? What are their interests? Are they male or female, single or with children? Much of this data will be collected from cookies downloaded on to users’ computers. Cookie data allows web publishers to track users’ online journeys and observe the actions they take on different websites. They can then use this data to helps them target campaigns to different groups.
The impact of data protection regulation
But the forthcoming European Union General Data Protection Regulation (GDPR), to be implemented in 2018, will tighten up data privacy – and this, some speakers felt, could undermine the ad-funded model of the internet. The stringent new rules, which force companies to get “unambiguous consent” from online users to make use of their data, are expected to be adopted in the UK regardless of Brexit.
Some participants worried that the Directive’s clampdown on using data could make it difficult for certain companies to operate on the internet or to run advertising campaigns. “Some businesses may not survive,” warned one speaker.
The participants also discussed whether website owners relying mainly on cookie data are at a disadvantage to websites and social networks where users log in and give their personal details. Facebook, for instance, has in-depth login information about users – their locations, names, likes, activities and friendship networks. The social network offers this data to brands, facilitating highly targeted advertising campaigns.
One participant spoke of an ad campaign for the launch of a new product where a strong creative film was shown on Facebook. Depending on how users reacted to the film – whether they watched it the whole way through, or just with the sound off – more messages were served to them and these were refined in stages according to each user’s reaction. The speaker said this was highly effective, as it allowed the campaign to filter out those who were not interested and to deliver relevant messages to potential customers.
Another speaker said Facebook allows brands to constantly change their online advertising as they receive new data about people’s likes and dislikes: “I really feel it is only since Facebook has come along that we have had this opportunity to assess data very quickly and then tweak that data.”
But another pointed to a recent statement from household products manufacturer Procter & Gamble (P&G), the world’s largest advertiser, that it had decided to stop using Facebook’s targeting tools.
“They had assumed it would be efficient to target (air freshener) Febreze to families with kids and dog owners, but it proved more efficient to go broad in the targeting.” P&G said it was better to promote some products to everybody rather than paying for targeted audiences, as everyone uses laundry detergents or washing-up liquid. Tightly targeted campaigns are more suitable for very specific, niche products.
Some of the speakers were concerned that online advertising places too much emphasis on data and not enough on creativity and persuasion. The use of data was criticised as “the tail wagging the dog” and there was a recognition that some advertising creatives believe data gets in the way of making good campaigns. “They feel the use of data depersonalises,” said one speaker, who added the caveat that attitudes are changing. “I think people have got used to the fact it is not a case of either having data or creative – it is about using both together.”
There was a consensus that cookie and login data works best for hard-sell campaigns, encouraging people to buy now, rather than for softer-focus, persuasive brand advertising.
Retargeting – a waste?
And speakers accepted that “retargeting” campaigns – whereby a user who has visited a website, perhaps to look at some shoes, then has ads for that website follow them around the internet for days, weeks or even months after – are unpopular with users. “It is so frustrating as an advertiser that I am spending on retargeting,” said one speaker. “I am very well aware that those advertising platforms aren’t good enough and that we are overly retargeting.”
The problem of retargeting was seen as a failing of automated advertising – called “programmatic advertising” – where software dictates what ads people see based on the data. But some thought that as programmatic technology evolves to become more sophisticated, it will overcome these drawbacks and will deliver a better experience for users and brands.
One problem with automated online advertising is that the ads may appear on any website and next to inappropriate content, for instance an ad for an airline could be placed next to an article about an air crash. But one speaker predicted that automated “programmatic” advertising will be able to answer this problem and help brands sift through data to find the most receptive audiences for their messages and identify the most appropriate places to run the ads.
“Programmatic is very helpful for understanding who those people could be, what their behaviour looks like and how you could go about finding them.” Another compared the situation of programmatic advertising to email. “Email is one of the best-performing channels. But it was tainted for a time because it was abused.”
The discussion turned to the use of machine learning, where software analyses data to make judgements about what products, ads and content people should be offered. One speaker said machine learning and robotics would revolutionise marketing. “What we’ve seen in programmatic advertising is one of the earliest areas where it has made inroads, but I think it will be right across the shop.”
But another warned that widespread use of robotics and technology would lead to a depersonalised world: “People are just turning into a kind of jelly between lots of robots.”
The discussion returned to the question of whether advertising will continue as the main source of funding for the web. One speaker thought younger users would be reluctant to ever pay for online content. But another disagreed: “We cannot assume that people between the ages of 12 and 21 are going to behave and operate like that for the rest of their lives. We all go through generational change.”
At the table
- Jasper Jackson (Chair) Assistant Media editor, the Guardian
- Sanjeevan Bala Head of data planning and analytics, Channel 4
- Romain Bertrand Managing director, eHarmony UK
- Steve Chester Director of data and industry programmes, IAB UK
- Chris Clarke Chief creative officer, international DigitasLBi
- Jo Coombs CEO OgilvyOne
- Nigel Gilbert Vice-president, strategic development, EMEA, AppNexus
- Annabel Kilner Commercial director, Made.com
- Sille Opstrup Head of digital, Pernod Ricard UK
- Giles Pavey Chief data scientist, dunnhumby
- Daniel Spears Programmatic director, the Guardian
- Bradley Love Professor of cognitive and decision sciences, UCL
- Sarah Todd CEO, Geometry Global
- Jamie West Deputy managing director, group director of advanced advertising, Sky Media UK
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