Adtech Is Harmful to Consumers

9/12/11

If the ads on the websites and in the apps you frequent disappeared tomorrow, would you miss them? Can you think of any specific sites or apps, other than search, where introducing ads improved user experience?

I happened upon these questions a few days ago while preparing the opening remarks for a FutureM event my startup, Shopximity, organized here in Boston. I was surprised I couldn’t think of any examples. I asked my co-workers. I asked friends who were website publishers, mobile app developers, and adtech execs. They could not think of any examples either. Then it hit me: display ads are not just content. Display ads are bad content.

This year in the U.S. advertisers will spend $24 billion on display ads. Two hundred advertising intermediaries, which control hundreds of thousands of servers and manage petabytes of data, will deliver 5 trillion mostly irrelevant ads that will reduce the user experience of 215 million people on average 16 billion times per day. Never has so much computing power been applied with such disastrous effects. It’s time we do something about it.

Most ads don’t deliver value, which is why six in 10 people surveyed by AdWeek actively ignore them. Average click-through rates (CTRs) have dropped in half from the small 0.2% in 2007 to the dismal 0.09% recently, as reported by DoubleClick. Some choose not to see ads altogether: AdBlock has more than 20 million active users. To deal with this, rather than improving user experience, the display advertising industry is waging a war against consumers. In the words of Seth Godin, “Advertisers distract users; users ignore advertisers. Advertisers distract better; users ignore better.”

More intrusive ad formats and more sophisticated targeting risk alienating users and further eroding their trust. The poor user experience of display advertising is an externality that ultimately hurts publishers and advertisers. They, and not the invisible ad intermediaries, have the relationship with users and to them accrues the good will and wrath of users also. I shudder to think how much worse user experience could get when the display ad industry reaches the $50 billion mark in 2-3 years. The vicious cycle has to end. We have to stop talking about display advertising being relevant and valuable and actually make it so or stop doing it.

Dozens of startups, Shopximity included, have taken on this challenge and are re-thinking display advertising using better ad formats, effective yet respectful targeting, and cooperative ways to engage users. In fact, not a single company presenting at the Mobile Marketing Frontiers event I am leading on Wednesday morning is doing traditional display advertising. The event will be a great chance to see what’s next in marketing. The same is true of many other FutureM events, which is why I’m so excited about this week. If you haven’t registered for FutureM, now is the time to do it. (The discount code “Shopximity” will save you 20%.)

For the display advertising players, the message is simple. You are at a Darwinian moment. You have forgotten that the user is ultimately in control. It is simply not OK to operate in a manner that is net-negative to user experience. Own up to your responsibility and figure out how to deliver valuable and contextually relevant ads. Hurry, because the startup across the street is a year ahead of you.

Simeon (Sim) Simeonov is a serial entrepreneur and investor. Currently, he is founder and CTO of Shopximity where he works to make shopping better for everyone. You can read his blog at http://blog.simeonov.com and follow him on Twitter at @simeons. Follow @

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  • http://www.getabl.com mark slater

    The user is NOT in control…..yet.

    But there are companies out there, including ours that are out to change that.

    All you need to do is look to the berkman center and the VRM movement over there to see the future of marketing. It removes interruption, its permission based, and the user controls it.

  • Jules Pieri

    Insightful piece Sim. I advocate going even further…making good content that is monetizable.

  • carlos

    Isn’t the real question you should be asking “are there any websites I like to go to on a regular basis that I don’t pay for?” And how would you feel if they were gone. Would that hurt your experience? For better or worse, those ads you and most people don’t like pay for your usage of those websites. Without them, you have no website.

    I personally just ignore them most of the time, but now and then do see something I like and click on it. But they don’t actively hurt the experience unless they are interstitials or pre-roll, which are annoying.

    just some thoughts.

  • http://shopximity.com Simeon Simeonov

    Mark, the Berkman Center is doing some great work indeed.

  • http://shopximity.com Simeon Simeonov

    Jules, when the content does the marketing consumers often have the best possible user experience. Daily Grommet has been a true leader in this area.

    The question for me is whether we can make these types of high-quality experiences scale to a be a meaningful fraction of the $24B / 5 trillion impressions industry. We need automation, either through technology (Google AdWords in the search space) or people (About.com in the content space), to operate at this scale. That’s where I’d like to see lots more innovation.

  • http://shopximity.com Simeon Simeonov

    Carlos, thanks for joining the conversation. People do want free content and are most certainly willing to accept advertising to get it. The question is, why should the advertising suck? You point out that you learn to ignore the ads. In turn, that forces advertisers to come up with more intrusive ways to advertise, ones you cannot as easily ignore. That’s what I mean by there being a way between consumers and the display advertising industry.