The Advertising Paradigm Shift Is Already Afoot

As we discussed in our last blog post, paid ads both work and don’t work. They’re better than nothing, but not much. And they’re inferior to many alternatives. We’re in the midst of a paradigm shift (from seller-centric thinking to buyer-centric thinking) that is aligning itself with the buyer-driven sales cycle – and this change is being resisted as much as carriage owners resisted the automobile.

We spend a lot of time in this blog explaining the why of content or inbound marketing: why it works, what’s changed. 

This article is more about the that of content marketing: statistics showing that marketing is undergoing an evolution in thinking from being seller-centric, to being buyer-centric. It’s undeniable. 

Some call it banner blindness. Paid advertising is yielding less and less, as a function of its cost, as DSP and programmatic networks compete with the ‘black box’ goliaths of yesterday (viz. Google), and as ad platforms are running out of innovations. At this point people feel ads are ‘creepy’, ‘intrusive’, and even violate privacy in many cases (your phone is listening to you –  c’mon man). There can be no denying this reality (see linked images below). It’s been happening for a decade, and it’s reached a fever pitch at this point. Nobody likes ads; we suffer them; we tolerate them.

The data show it. Experts are saying it – have been for a decade. And your own buying habits – where you, yourself (as a marketer or consumer) are ignoring roughly 10,000 ads a day – bear it out. It’s undeniable. 

We believe there’s a place for paid placements (usually coupled with agnostic, research-friendly, relevant, useful content), and there always will be. But the days of SEM and GDN offering returns, especially without content offers, are nearing an end.

Google – once considered the gold standard in fair-minded and sustainable practices – is spamming YouTube with pre-roll, and mid-video ads; they launched expanded text ads some years back, eating more of the search engine results page. DSP networks, as competition for Google Display Network (GDN), have slowed Google’s rising PPC costs, but a) not much, and b) are witnessing the same falling click-through rates.

The revenue and excitement is just not there, for anybody, and the ad publishing industry is relying on more and more (intrusive, interruptive, creepy) technology, while offering less. Because competition is rising, here at the Sunsetting Of Paid Advertising, and based on their revenue, Google seems to be charging a) more b) from more advertisers, c) while click-through rates are falling. 

Hosts aren’t getting near the AdSense money they were, per click. The ROI isn’t there for marketing companies. We’re getting less and less, despite the application of more and more technology, out of ad dollars in the digital domain. Only placement platforms are doing well. 

Competition from DSPs and programmatic networks in theory presents a downward force on rising ad costs (as levied by Google and Facebook), but with yield collapse outpacing the falling prices, there’s no net gain for marketers/advertisers. It’s like getting a raise that doesn’t keep up with inflation. 

Linked Articles (2015 To Today)

If you look at the evolution of anything – technology, history, and culture – you see a few patterns: 

  • At the point that evolution is necessary, or revolution is  called-for and detectable, the underlying problems had existed for a considerable length of time; 
  • The adaptive (change) pressures come either from a better solution within an existing context or circumstance (e.g. the automobile replacing the horse and carriage), or a changing context (e.g. people moving to videoconferencing because of the pandemic) – or both.

We at FlashPointLabs believe that diminishing click-through rates are a byproduct of a) search causing a buyer-driven sales cycle, and b) more ads being shown, resulting in an increasingly harried and sophisticated population of consumers. Facebook’s and Google’s growing profits show more people are competing for advertising space; banner blindness and abysmal click-through rates suggest people care less and less about the ads they do see.

Things are quickly reaching a kind of marketing singularity, where innovations in collecting, extracting meaning from, and usably applying information are reaching a preternatural ceiling, in an increasingly desperate attempt by marketers to extract ‘wins’ from consumers who are less and less interested in seller-centric ads. 

The end of any paradigm, whether it’s the fall of the Berlin Wall, or Rome; whether it’s withdrawing in Vietnam, or moving from analog to digital computers – is marked by grotesque and unnatural iterations of the old thinking and technology. A failure to understand times had changed. The de facto death of widespread paid digital marketing will be no different. 

We’ve never had better data about consumers – individually and in the aggregate; never been better able to test ads; never been better able to optimize ad spend; never been better able to see what’s working and what’s not; never been better able to target ads at people like to buy. We’re using AI to do this now. We’re leveraging more and more power and intelligence at restoring falling click-through rates; and we’re failing. Because we’re (most of us) do not comprehend the root problem. 

And yet, across Google, display is clicking-through at 1.91% for search, and .35% for display. Many times more display ads are shown, though I couldn’t find those statistics. As a function of total ads shown (a weighted average that represents clicks / total ads shown of any type), basically, 99+% of the time, people are opting not to click your ad. In any other circumstance, this would amount to a failure. It’s only still widely practiced in marketing because ads are shown at such scale that it kind of works. 

This trend of ‘more tech diminishing yields’ in paid advertising will reach absurd levels before it finally dies. We will be exploiting technology to stalk, profile, pester, hound, target – in ever-more-intrusive and unethical ways;  weaponizing ‘interruptive’ marketing and getting nothing for it – before the practice is abandoned altogether. This is the pattern paradigm shifts follow. 

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” Arthur Schopenhauer

We are absolutely in the midst of a paradigm shift in marketing and advertising – witnessing the death of effective paid advertising. The situation is becoming impossible to ignore or deny: paid digital ads are increasingly cost-ineffective. This trend of ‘more tech, diminishing yields’ in paid advertising will reach absurd levels before it finally dies. We will be exploiting technology to stalk, profile, pester, hound, target – in ever-more-creepy and unethical ways; weaponizing ‘interruptive’ marketing and getting nothing for it – before the practice is abandoned altogether. This is the pattern paradigm shifts follow. 

What Do We Make Of This? What Other Options Do We Have?

I mention two types of paradigm shifts above: where the situation changed and the old solutions no longer work, and where someone came up with a better solution to a problem within the existing framework or situation. Because marketing kind of works (about 1% of the time, on average), you could argue both that the situation had changed, and marketing no longer works, and also that someone just came up with a better way to solve an old problem. Since click-through rates for paid ads were never very high to begin with (about 5% at the birth of the Internet), it’s not entirely the case that Web 2.0 killed paid advertising. It basically never really worked, next to organic. The best news in all this is that we have ‘the automobile’ to replace the horse and buggy. We have better ways to do things.