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Peak Advertising - When Ads (and Content) Become More and More Useless

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I came across this paper the other week via Chris Dixon’s Twitter account describing a possible phenomenon: Peak Advertising.

Who knows if it’ll end up being true or not. But it makes some sense and it’s worth discussing.

If you’re familiar with Peak Oil, you’ll inherently understand this too.

Here’s the theory.

Key indicators for online advertising effectiveness have declined since the launch of the first banner advertisement in 1994. These declines are increasingly placing pressure on even the most established businesses in the space.

These developments suggest important (and potentially painful) implications for market structure, privacy, and authenticity online.

Existing alternatives appear at present to be insufficient to replace lost revenue from near-future declines in the value of display, search, and mobile advertising.

Ultimately, the economics of the web will necessitate pivotal decisions about the financial underpinnings of the Internet in the decades to come.

Let’s rephrase: Users are becoming more sophisticated and clicking on ads less than before. Ads are less effective, and are plagued by click fraud, driving prices downward. This will eventually becoming such a problem that it will threaten entire businesses (Twitter, FB, whatever else) we have come to take for granted.

These businesses will therefore have no choice but to begin invading users’ privacy further and further to help target their ads.

Due to the nature of math, companies will also create massive monopolies / oligarchies to create efficiencies, allowing them to remain profitable despite these problems.

Whether it turns out to be true, well… it’s interesting either way, isn’t it?

All the more reason to do things while they work. All the more reason to attempt new things to gain advantage now, while they work.

Here’s the full PDF in case you are curious.

* Filed by at 4:03 pm under random


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7 Responses to “Peak Advertising - When Ads (and Content) Become More and More Useless”

  1. Mitch Jackson Says:

    Glad there isn’t a button that needs to be clicked to build relationships. Instead of users being required to be told what to do (click here), they now know what to do and that’s difficult to monitor. Again, maybe the concepts of monitoring and measurement are in the past 🙂

  2. Jeremy Meyers Says:

    Good riddance. Time for the house of cards built on bullshit to fall.

  3. Rezwan Razani Says:

    Well Amen. On the road to conscious consumerism, in search of pareto optimums, advertising is a lot of noise. Although I can sense the fear – the economy depends on this! How do we get people to buy our stuff, to justify our paychecks and help us pay our bills? This is part of a bigger problem. Some thoughts on finding true preferences at Citizen Budget Balancing App. http://ajaban.com/index.php/blog/article/citizen-budget-balancing-app And about consumption overkill we’re stuck on at http://www.fusionenergyleague.org/index.php/blog/article/ozzie_zehner_not_an_energy_problem_a_consumption_problem

  4. Momekh Says:

    What you call Peaking may just be saturation…
    Effectively the same effect as users are concerned I think.

    And I agree… Take advantage now!

    E.g. Adwords has pretty much left the domain of the small business owner and agencies are again becoming more relevant. This has yet to happen with Facebook. And unfortunately, this is bound to happen me thinks…

    Thanks as usual for the heads up

  5. James Says:

    You’re right, very interesting. We’ve definitely seen a ramp up in need for online marketing/advertising in recent years, and the rush to establish a beachhead while there is still (some) beach to claim could be the reason…this is why we encourage our clients to collect email addresses like it’s their job. If they don’t, and have no direct line to their prospects, they may not have a business in a few years.

  6. Raghav Says:

    Well no doubt companies are actually invading our privacy, but thats the only thing left to do, everyone know the common place where the ads would be, and most of the users understand the affiliate link phenomenon.

    They could just hover the mouse and see where the link leads and if outside the blog or website, thyey dont really click it.

    Its hard to track when we have audience that doesnt really wants to click on the links easily

  7. John Cooper Says:

    The Click-Through Rates are really low the past years. I think viral marketing and social media is the way to go.

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