Steven Spielberg’s 2002 movie Minority Report was for many dark and dystopian. Tom Cruise’s character walks through an invasive screen-lined lobby bombarded by ads. When a camera identifies him with a retinal scan, a dancing 3-D video calls out to him, “John Anderton! You could use a Guinness right about now.”
Some would say that future is already here, but will advertising keep encroaching on our lives like that?
Here are six signals that show a potential future without advertising and one giant reason we should celebrate.
1/ Ad Blockers on the Rise
In her her 2016 Internet Trends report, KPCB Partner Mary Meeker reported that ad spending is at all time highs, but ad blocker use is growing, faster. Ad blocker users grew to 420 million, up 94% from last year. Growth is global, and the leading ad blocking countries are China, India, and Indonesia.
2/ Subscription Streaming Accelerates
Music, TV, and movie subscription streaming services continue to grow. 46% of all US households have access to a streaming video on demand service, according to Nielsen. IFPI found that there were 68 million streaming music subscribers in 2015, up 45% from 2014. The most popular streaming services, Netflix and Amazon Prime, both offer completely ad-free experiences.
3/ Fraud is Big Business in Digital Ads
Have you bought digital ads for your latest campaign, and wondered why performance was so low? One culprit could be fraud in digital ads. In the most recent Bot Baseline Report predicts that advertisers will lose $7.2 billion globally to fraud bots in 2016. The study deployed detection tags to measure “bot fraud,” or non-human traffic. While direct media buys had lower fraud, ad formats such as programmatic video ads had 73% more non-human traffic than the study average.
4/ Media Companies Hunt for Models Old and New
The decline in print advertising has decimated the newspaper and magazine industry. The companies that survive are shifting their focus to the future, or back to the subscription model of the past.
The New York Times’s new Public Editor, Liz Spayd described the company’s shift to focus building an audience of paying subscribers, who already generate more than half of the company’s revenue.
The NYC Media Lab is on the hunt for new business models made possible by new technology. Justin Hendrix, the Lab’s Executive Director, says, “The rise of defensive user behaviors like installing ad blockers has created a context for experiments with business models for media that look beyond advertising.”
5/ Advertising Forces a Tradeoff
If you live inside of a company dependent on advertising for revenues, then you know the perils of a business model with inherent trade-offs and frictions. You are constantly having to balance the needs of your audience with the needs of your advertisers, and if you make one side too happy, the other side is not happy. This is true for any advertising-driven company, from Google to The New York Times to a YouTube vlogger.
The best public example is Facebook, who is always adjusting the pendulum to favor advertisers vs. users and then back again. In June, Facebook limited news and other advertising updates to “focus on friends and family.” Just yesterday, Facebook announced they would disguise ads to fight ad blockers – essentially forcing advertising on ad-blocking users. You can track these shifts backwards and forwards on a quarterly basis – they are always searching for the right tradeoff between giving their users what they want and monetizing those users with advertising.
6/ Advertising is No Longer Cool
The young and hungry entrepreneurs of tomorrow are favoring other business models over advertising. In the early days of the internet, the idea was to build an audience first, monetize later. Monetize later typically meant earn money through advertising.
At Y Combinator, one of the leading startup incubators, applications for ad-supported business ideas are at a historic low. New companies are seeking revenue through more popular business models such as Software-as-a-Service.
Why We Should Celebrate a Future Without Advertising
If the company founders of Silicon Valley can’t see advertising in their future, maybe this is the strongest signal of all. We’ll live in a science fiction future fantasy of a calm, focused life, free from the distractions of advertising.
Better yet, perhaps this hunt for the better business model will direct more innovation to better alignment between customer needs and value created. 100% focus on pure customer engagement, with no advertiser trade-off, may be the strongest position in the long run.
So what do you do if you’re dependent on advertising in your business model? Start thinking of business modeling as a verb, not a noun. Don’t fret, or bury your head in the sand. Begin the path towards business model innovation. Try to envision new models, experiment new ways to create and capture value, and co-create with your current and future customers. You may just find out that other models out there are better for your business.
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Reason Street's Most Popular Business Models
In a pay-per-use business model, use of a product or service is metered, and customers are charged when they use the service. “Pay-per-view TV” and online journal publications, custom research firms, who sell access to high value content on a per use or per download basis.
A two-sided-marketplace business model is a platform for economic exchange between two distinct user groups that provide each other with the benefits of a large network.
The explosion of the “subscription economy” is upon us with everything from flowers to car sharing to data storage to beauty care products now being billed to us on a monthly basis.
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