Greetings as ever from London, UK, where the daylight hours are getting shorter, and we are now starting to realise that autumn is now upon us. 

But a shortage of daylight hours doesn’t mean there is a shortage of great topics for this newsletter, and this particular newsletter might even be seen as somewhat controversial. 

Firstly, I will encourage you to take a breather and ask yourself: Why do we, as a publishing industry, rely on advertising revenue so much and is it the right strategy? 

We have, for example, heard much chatter recently in the media industry about “ad irritation” and the pressures on publishers to diversify revenue streams away from “traditional” ad strategies to look for new ways to generate monies — and, in doing so, create a better, more valued, customer experience. 

I will take a look at this fascinating topic here today.

Incidentally, how to combat ad irritation was the focus of my recent INMA Advertising Initiative Webinar featuring Christian Bø, insight and strategy director at Mindshare in Norway.

Speaking of controversy, I will highlight a newly launched Google tool for creating better ads later in the newsletter. On the face of it, it looks a really good idea — assuming it’s intelligent enough to carry out its operation efficiently and effectively. However, it’s causing concerns in “ad-land” as maybe all is not what it seems. 

See what you think.

Pros and cons of reliance on an ad revenue strategy

There are a number of pros and cons when it comes to a reliance on ad revenue. Let’s identify some of the important ones.

Pros

What are some of the pertinent reasons why publishers should continue to include advertising as part of their future revenue mix? 

• Profitable: The most obvious reason. It remains in many news media companies the biggest or at least a significant revenue line. Simple. Fact. Why would we want to give it up? 
• Flexible: Publishers can maximise their revenue through varying experiments with different/much smarter and creative ad formats/ad placements and match any emerging trends or any audience segments and interests. 

• Scalable: Creating great ad content for clients that is ultimately valued by end users and, therefore, drives traffic and audience engagement. The right approach here will see publishers continue to increase revenue from ad impressions and clicks will grow organically. 
• Revenue diversification: One example is that many media companies who have adopted paywall strategies (and, therefore, subscription revenue) can diversify revenue streams by introducing advertising to the mix. Plus … 
• Creative opportunities: Tech today allows for a much better range of options to put into our sales armoury. For instance, the likes of AR/VR/MR being one such space where the shiny new things in the market today allow for new experimentation and new opportunities that can truly leave customers (both advertisers and end users alike) eyes wide open and receptive. And, of course, with new revenue streams for us. Tech today also allows for better targeting, better personalisation, and, therefore, better received messaging for audiences. What’s not to like?

• “Passive” income: While building advertising revenue isn’t necessarily a passive income stream, ads located adjacent to “evergreen” content will generate revenue without the need for any content creator involvement.

Cons

There are always two sides to every tale, of course. And while ad revenue has many advantages, there are also a number of cautions media companies need to be aware of.

• Tech risks: Media companies that don’t know how to balance advertising with content run a risk of irritating their audiences, which will no doubt eat into their ad revenue. Dare I say, sometimes publisher greed, short-term focus, and ignorance can be factored into this with no thought to the longer implications. It can easily happen. 
• Unpredictable: A major disadvantage of any reliance on online advertising is that things such as platform algorithm changes, audience engagement volatility, and ad policy fluctuations can affect how much income ads generate.

• Limits on control: Media Web site proprietors don’t automatically have total control over specific ads displayed on their site, which can lead to irrelevant, inappropriate, or sometimes damaging/conflicting messages and bad juxtaposition of ads and editorial content.
• Ad-blocking/ad irritation: Ad-blocking software may well prevent ads from displaying and therefore decrease our revenue pools. That said, there are a number of ad-blocking “recovery solutions” that can help publishers regain at least some of this revenue. We can use ad-blocking recovery messages, for instance, to ask users to allow ads on our site or offer them other ways to support our Web site. Nevertheless, it’s still an issue.

Summary

Advertising revenue has become an incredibly important asset for media companies over many years, allowing them to monetise content without having to lock it behind a paywall. 

We cannot abandon it now. We would be crazy to. We may have seen a downward trends in what is labeled “traditional” advertising, but it still remains significant for so many publishers. It will remain the lion’s share of revenue for many years to come. And the new opportunities available to us — in an ever-changing but increasingly creative, more personalised, more targeted world — might just shift their focus somewhat. But advertising (in whatever form) will still remain crucial to our futures. 

Those publishers and other people in the chain, such as app developers and others, that use paywalls can reap the benefits via a continued strategic and creative inclusion of advertising, thereby diversifying revenue streams, increasing first-party data opportunities, and reducing their risks in the process. 

There is, of course, no one-and-only route to the monetisation of content. And Web site proprietors/sales teams must understand all the tricks and tools available to them to be aware and well educated so the consultative sell gives us an invaluable USP. 

It’s important to understand that developing a significant stream of online ad revenue requires a thorough, long-term strategy. We should not abandon our focus on that. As said, advertising revenue in increasingly varied forms will be around as a cornerstone to media revenue for many years to come. 

However, focusing on the customer experience must be paramount. New tech, new skills sets in/for our staff, and a refocus on ad instigation from creation to market will allow for all that. 

And maybe, just maybe, that’s where the much-maligned AI has an important role in our advertising futures. As we begin to use AI more and more for things like ad automation and the more menial tasks in the ad process, it will allow us to focus more on creativity and more on creating truly experiences that customers value and desire more of. And will be prepared to pay for! 

Creating content and then linking up with, say, an ad network is far from being enough these days. Media companies need to produce great content yes, but then monitor engagement, respond to varying traffic peaks/troughs, focus on creativity, and review the performance of their all their ad tech continuously, ensuring each part in the chain is working in harmony.

And, above all, avoid any ad irritation by putting the customer as king!

Advertising revenue and our focus on it is/should be alive and well by taking a modern and forward-looking lens.

Google tool

Also, an issue has arisen in ad-land which may well interest and possibly concern you. It will certainly make you alert to a scenario which you will want to watch out for. 

Last month, Google announced it was launching a new tool called Creative Guidance for Google Ads. The “guidance” is generated by a robot. In this case, Al can now (Google quote) “assess where you can improve your video ads based on our creative best practices.” 

This all seems reasonable. However, as member of the UK’s Code of Advertising Practice panel (CAP) for the Advertising Standards Authority (ASA), it seems to me “best practices” refers not to keeping ads decent, legal, honest, and truthful (the ASA’a mantra) but instead to making them get more eyeballs.

The ad-robot works to align all video ads with Google’s ABCD of advertising: Attention, Branding, Connection, and Direction. 

Some critics have said there is no “E” for Ethics in all this, as the advertising industry has noted that Google’s Al ad machine does part of what advertising agencies get paid to do. 

They question now being asked: Is this another footprint on the road to obsolescence for agencies? Time will tell. How will this change the ad market? How will it change our relationships with agencies? Will this ultimately require a fundamental shift in our dealings with brands and advertisers direct?

One to watch.

About this newsletter 

Today’s newsletter is written by Mark Challinor, based in London and lead for the INMA Advertising Initiative. Mark will share research, case studies, and thought leadership on the topic of global news media advertising. Sign up for the newsletter here.

This newsletter is a public face of the Advertising Initiative by INMA, outlined here.

E-mail Mark at Inma.mark@gmail.com with thoughts, suggestions, and questions or follow him on Twitter (@challinor).

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