Online advertising continues to grow fast fueled by increasing consumption of entertainment online and growth in ecommerce (up 38% YoY according to NMA).
That is the good news.
The bad news is that outside of search the existing models are coming under strain due to banner blindness and lack of tolerance for interrupt advertising. The industry response so far has been to focus on targeting the ads better, which makes sense, but I’m not sure it will take us far enough.
As I have been saying regularly on this blog and elsewhere, the best potential answer to this problem that I have heard is a shift to permission based advertising based on a user controlled profile. Something I have been calling VRM.
By profile information I mean things like surfing history, search query
history and user entered data about their likes, dislikes, wish lists
and so on.
Reading NMA this morning the following excerpt made it clear to me that at this stage there is far too little trust between the advertising industry and consumers for this stuff to work. This is from the Privacy Special in the NMA of 17/7/08 (no link due to their paywall):
Privacy storm brewing
121Media closes its ContextPlus ad-serving service, amid the threat of legal action, and becomes known as Phorm
Privacy International labels Google data retention policies ‘hostile to privacy’
After BT is joined by TalkTalk and Virgin Media as potential Phorm users, public outcry sees Phorm‘s share price drop by a third in a day; Tim Berners-Lee, inventor of the web, warns privacy is being eroded online. He claims that he would change his ISP if it worked with Phorm.
The Information Commissioner’s Office says Phorm is legal so long as it is strictly opt-in; Google rejects calls from the EU’s Article 29 Working Party for it and other search engines to not keep cookie data beyond six months, following its volunteering in 2007 to ‘anonymise’ data held longer than 18 months.
Privacy protesters threaten to picket BT‘s AGM and give police evidence of earlier Phorm trials on its network; Phorm and BT maintain, despite past slipped deadlines, the ISP will start rolling out Phorm shortly.
This shows the absence of trust very clearly, and the cost of that absence for BT and Phorm.
My strong instinct is that the only way consumers are going to get over this lack of trust is for a) the advertising industry to start sounding like it cares, and b) if we find a way for people to experiment with letting people target ads against them in a low risk fashion.
The best way I can see for this to work is to build consumer internet apps which generate profile information as something of a by-product and then to give users the option to edit their information and also to opt in for ads to be targeted against it.