Everywhere I look, I am reading about how advertising is going to save the world.
In the past week, Google talked about how adverts can fund mobile phone charges, Vodafone announed an advertising subsidised service and a virtual network operator announed plans to launch a completly free mobile phone that is funded by advertising.
There are reports after reports flowing around the internet about how we are just scratching the surface of advertising and how it will continue to grow and subsidise paid-for services.
The problem is – I see an advertising bubble forming – not dissimilar to the one which formed in the late 1980’s.
At the time, advertising was SO big that a company actually offered to sell you a car for Â£100 if you drive a minimum number of miles per year and they covered the outside in adverts.
When crazy ideas like that crop up – you know you are in a bubble.
I walk around and am now surrounded by brands everywhere.
The problem is – what is the economic model for this. Advertising is supposed to promote a product or service, not be an end in itself. Too many businesses seem to think that the advertising revenues are a bottomless pit which has no end and anything can tap into the media dollars without any regard to the “why” of the adverts.
Throw adverts at teenagers and give them free phones etc.
With the huge surge in advertising that will arrive in peoples enviroment with all these “service subsidies” – we face a situation where people will get annoyed and tired of the marketing messages and switch off.
A piece of chocolate is nice – a tonne of it is going to make you sick.
When I run adverts on my commercial websites, if I don’t have a decent paying advert – I show a blank space. This makes the adverts stand out a bit more when they do appear and so the interest level is higher.
Yes, I could fill every spot with cheapo adverts – but that then means less white space, and more clutter. It’s messy and lowers the return rate for my premium advertisers, lowers my overall income – and lowers the user experience for my readers.
The same applies to the advertisers as well though. As they see more and more adverts appearing everywhere – their return is going to fall as well.
Then they will pull back, making their adverts a bit more scarce and hence standing out more.
What will happen to the “subsidised by adverts” business model then?
Companies will fold – potentially spectacuarly – leading to more column inches about the death of advertising and the bursting of the bubble.
Let us look at an example.
Sky TV (UK broadcaster) has a subscription service and also shows adverts. If you watch a program on their main TV channel, Sky 1 – there are loads of adverts popping up during the program. OK, I gather it is not as bad as in the USA – but it is still annoying.
Let’s look at Sky’s financials though.
Over the three months to October, Sky pulled in Â£78 million from advertising – and a staggering Â£792 from their subscription income.
They have the opportunity to take all the adverts out of their programming completly – by upping the monthly subscription fee by a mere 10%.
In other words – pay an extra Â£3 a month (average subscription is Â£32.08 per month) and get all your TV channels without adverts.
No more interuptions while watching your favourite shows!
How many customers would decline such a wonderful offer?
There is a real opportunity for Sky to differentiate itself from the other TV broadcasters – while also doing the advertising industry a favour by calming things down a bit.
In our hectic modern lives, who wouldn’t pay Â£3 a month for a bit of peace from the insessant pressure of the commerical world?
Especially as we approach Xmas.