(The Big Disrupt) Ad Blocking: Why The Fate Of The Online Ad Industry Is In The Hands Of Publishers And Advertisers, Not Ad Blockers

All markets and industries are in some way inefficient and that’s a good thing to some extent as if all markets were efficient, the world, at least in an economic sense, would be nowhere near as dynamic as we know it.  There are very few industries as inefficient as the online ad industry and the singular phenomenon that shows just how inefficient it is is the rise of ad blocking. 

It’s quite hard to argue against the position that ad blocking would never exist if the online ad industry wasn’t so inefficient as if it was efficient the industry would surely have paid close attention to the widespread hate for their ads and responded by building better ads that weren’t as creepy and annoying as they are now but now they’re paying for their negligence.

However, the continued success of ad blockers rest solely on what publishers and advertisers do in response and no one knows this better than ad blockers. Ad blockers know full well that they could be put out of business rather quickly if publishers and advertisers found a way to make better ads that weren’t a pain in the neck but ad blockers also know that this isn’t going to happen anytime soon as the inefficiencies that allowed ad blockers to rise in popularity are still in place.

Publishers and advertisers response to ad blocking so far has signaled that they’re not aware that the future of the online ad industry is their hands and are acting like an industry with a boot its neck even though to some extent they have the upper hand. Publishers have gone as far banning their readers and advertisers have threatened to lawyer up and take ad blockers to court but neither approach will work as market inefficiencies are almost always exacerbated rather than addressed by bans and courtroom dates.

The hundreds of lawsuits and various anti-piracy initiatives the music industry unleashed upon free music sites like Napster and potential customers didn’t make a dent in solving the issue of music piracy, a better user experience provided by Apple’s iTunes and music streaming companies like Spotify did. If anything, bans and court dates have the effect of alienating customers (especially those who represent their future customer base) and emboldening companies exploiting market inefficiencies industries have failed to address for years.

This is the reason why Uber can get under the skin of regulators, taxi drivers, journalists and insurance providers in every country it operates in and still remain a quite popular service among its customers as neither party mentioned above have been able to tackle market inefficiencies in the taxi industry as effectively as Uber has and never will.

In sum, publishers and advertisers to a certain extent have forgotten who decides whether they win or lose and ad blockers have served as an unhealthy reminder and if they don’t find a way to make consuming content on the web a more pleasurable one, Publishers (especially) and advertisers will pay the price.

(The Big Disrupt) Ad Blocking: Why advertisers ‘faster horses’ approach to ad blocking won’t work and publishers will pay the price

Henry Ford's famous “If I had asked people what they wanted, they would have said faster horses” quote is often used to deride the preoccupation in modern business with customer feedback and inspire young innovative entrepreneurs to follow the beat of their own drum but the central conceit of the quote is that Henry Ford didn’t ask his customers what they wanted and therefore had no idea what they would have said. Sure, he would have run into a couple of his customers who wanted the average carriage horse to rival seabiscuit in speed and power but there’s a good chance that he would have run into a large majority block of customers who wanted anything with less smell of horse’s ass.

Advertisers, publishers, and the online ad industry in general have a number of problems from the viewability of ads and ad fraud but arguably the industry’s biggest problem and existential threat is how they choose to deal with ad blockers and early signs look like advertisers are making same mistake Ford made as well as most people who use his quote.

From the Washington Post blocking their content from readers using ad blockers to advertisers promising to making better ads and even threatening to sue ad blockers, it’s clear quite clear that advertisers have missed the key message behind why ad blocking is popular: no one likes ads, online ads especially.

Banning readers (WTF), making better ads or suing ad blockers is not going to work and is likely to make things worse. The problem with online ads is that they’re a real pain in the neck and can ruin user experience. You might argue that this is where making better ads come in but no one reads the Guardian or the New York Times for a Land Rover ad and never will no matter how well it’s made. People (me included) have generally grown sick of ads hijacking their screens, popping out of nowhere in-between text, and following them around the internet and have turned to ad blockers to end the madness.

However, this madness only exists because people (me included) are less than willing to pay for content which gives publishers and content creators no choice but to reserve and sell ad space on their sites. I doubt you’ll ever see advertisers and publishers singing from the same hymn sheet on anything if consumers of content like you and me were willing to spare a dollar or two for great content but instead we find publishers having to side with advertisers.

As much as IAB (Interactive Advertising Bureau) CEO Randall Rothenburg would like admonish Ad blockers as thieves and extortionists (which they’re not but they may be something worse: industry killers), they are serving a need advertisers and publishers have ignored for years in eliminating forms of ads that makes consuming content online a more trying experience than it should be[1].

Advertisers create these annoying ads because to some degree it’s not their problem to make them compliment a site’s user experience and publishers run these ads because they pay the bills and consumers of their content don’t. But thanks to ad blockers, this scenario publishers find themselves in has to change fast or they may go out of business. Ad blockers aren’t exactly the good guys in this tale as they do charge publishers not to block their ads and to a much lesser degree threaten an industry that might not be liked but are pretty good at getting people buy things they don’t need or at the very least making you aware that they exist.

In sum, it looks like publishers are going to pay for advertiser’s sins as well as the price we weren’t prepared to subsidize in the first place.

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[1] R. Rothenburg, 2015, Ad Blocking: The Unecessary Internet Apocalypse,  http://adage.com/article/digitalnext/ad-blocking-unnecessary-internet-apocalypse/300470/

(The Big Disrupt) IT: CIO’s – Taking change on the chin?

We’ve written much about the role of CIO and the challenges they face but it seems like CIO’s are finally adjusting to the wild and radical change regarding the nature of their role as new technologies such as the internet of things take shape.

We’ve often said that CIO’s are arguably the most relevant members of C-suite yet the most in danger of becoming the most obsolete as the CIO’s find themselves in a position to innovate and add to the business but also undermined by the spread of IT usage under their nose which often leaves them having to pick up the pieces of IT failures largely not of their making or in the worst case scenario, pack their office into a box.

However, CIO’s are definitely in the ascendancy as they have tended to add business value and drive innovation for their organizations rather than fall victim to the winds of change which to some extent still threatens their position. With organizations becoming more data driven than ever and more willing to embrace technologies thanks to an ever changing consumer habits, smart CIO’s have seen this as a chance not only to add value to the business but as a way to position IT as key imperative to the business as getting IT wrong can cost a company millions in lawsuits and reputational damage at the hands of embarrassing news reports.

However, the main reason CIO’s have become increasingly important is that every company you can think of is conducting business in the digital space and are looking to become faster, more agile and responsive to customers and see technology as a number one way to get there which presents CIO’s with a great challenge and even greater responsibility as the failure to do so can leave them lagging behind competitors who are more or less trying to do the same thing but faster.

This has seen an explosion of new roles dedicated to fostering this digital transformation that compliment CIO’s but certainly overlap and in some cases compete with their role. If anything confirms this fact it would be that Mark Chillingworth, UK editor of CIO magazine took a somewhat philosophical position of welcoming CTO’s and CDO’s to their annual CIO summit but made it a point to clarify that “we (I presume CIOs with an applause line penciled in) should be looking at a future where the CIO and CTO are distinct”[1].

This should be no shock given he heads a magazine solely focused on CIO’s and him being a proponent of a well held position that the proliferation of  CTO’s, CDO’S and CSO’s exist because CIO’s dropped the ball on the digital transformation and organizations across the board have had to basically give responsibilities to CTO’s and CDO’s CIO’s should be managing. This argument is pretty convincing and is held a number of CIO’s even though even when they see CTO’s and CDO’s as lifesavers who have taken hefty responsibilities of their already jam packed plate.

Nontheless, CIO’s have embraced their perceived shortcomings and are definitely set to become unofficial COO’s in their organizations as technologies such as the internet of things will ensure that organizations become more IT dependent than they already are.

In sum, it wasn’t that long ago when every business or tech blog or site (including us) was convinced that CIO stood for “career is over” but increasingly CIO’s have seen their apparent death of their relevance to their as a way to prove their worth and seems to be better for the challenge.

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[1] M. Chillingworth, 2015, It’s time to be a customer centric CIO, http://www.cio.co.uk/blogs/editor-in-chief/its-time-be-customer-centric-cio-3625934/