I came across this paper the other week via Chris Dixonâ€™s Twitter accountÂ describing a possible phenomenon: Peak Advertising.
Who knows if itâ€™ll end up being true or not. But it makes some sense and itâ€™s worth discussing.
If youâ€™re familiar with Peak Oil, youâ€™ll inherently understand this too.
Hereâ€™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.
Letâ€™s rephrase:Â 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 usersâ€™ 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, wellâ€¦ itâ€™s interesting either way, isnâ€™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.
Hereâ€™s the full PDF in case you are curious.