Why internet advertising is failing
Advertising on the internet has been a failure. And although you still see a lot of it, it's struggling. That's because everyone hates advertising on the internet. Everyone. You hate it, I hate it, advertisers hate it. And advertising is what pays for all of these things, just like newspapers and magazines.
Advertising is nothing new. And it has been largely accepted by people who read newspapers and magazines (not online!). People may hate billboards, or posters at the airport, but it's not the same topic of conversation as how much they hate advertising on the web.
As someone who is part of the industry, advertising has always fascinated me. And in a long career, I've never seen such hatred for advertising as the hatred on the internet. People will complain a bit about the commercials on the radio, or on TV, but nothing comes close to the burning hatred that people have when an ad gets in their way on their phone, or covers up something on a web page, or bounces around, trying to attract their attention.
As of this writing, what you're seeing is an effort to convince advertisers that internet advertising is worthwhile, while it's failing miserably. Advertisers are being told that sites like Facebook can "mine data" so precisely that targeted ads can make people unable to resist. It will turn consumers into buying zombies! But people have been resisting just fine. Even people who don't have ad blockers have learned to ignore ads on the internet.
As someone who has been on Adsense since 2009, I've seen my ad revenue (which has always been just pennies) stay about the same even though I have thousand more people who are visitors. They aren't clicking ads, and they probably aren't even aware of them. And as more and more people read this on their phone (they may be you!), there just isn't any room for an ad.
The collapse of ad revenue will mean the end of sites that are supported by advertising, like Facebook, or 9gag. And make no mistake, even if these sites had a subscription fee, it wouldn't come close to what advertising pays. So relax, Facebook isn't going to start charging $10 a month as a subscription, they need advertising revenue.
It's been fun while it lasted, but all of this has been financed by people who figured that they would get rich with advertising. And some people did make some money. But advertising is going away on the internet unless someone can figure out how to make it work, and make people not hate it (and I have no clue how that would be done!).
The good news is that sites that are supported by sales (like Amazon, or the store you order from online) will remain. They're not supported by advertising. The free sites that don't sell anything directly, like Facebook, will collapse, and a lot of investors will lose money. Right now the stock is still valued, but I wouldn't buy it. It's all based on advertising, and it just doesn't seem to be working, even after all these years.
Posted by Brad Hall