In all the mounting media coverage of problems with the Internet, such as invasion of privacy, vulnerability to hacking, political manipulation, and user addiction, there is one constant: online advertising. Online advertising is the lifeblood of Google, Facebook, and many other Internet enterprises that profit by providing personal data to various vendors. Moreover, the move of tens of billions of dollars from conventional print and broadcast media continues, with devastating impacts, especially on print newspapers and magazines.
But does online advertising work for consumers? The Internet was once considered a less commercial medium. But today consumers are inundated with targeted ads, reviews, comments, friends’ reactions, and other digital data. Unfortunately for advertisers, consumers are not intentionally clicking on online ads in big numbers.
Google’s search ads tackle people when they search for a product or service. A controlled study by eBay research labs in 2014 concluded that Google was greatly exaggerating the effectiveness of such ads—at least those bought by eBay. eBay’s researchers concluded that “More frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses, resulting in average returns that are negative.” This is the “I-was-gonna-buy-it-anyway problem,” says an article in the Atlantic.
The Atlantic notes:
Whether all advertising—online and off—is losing its persuasive punch…Think about how much you can learn about products today before seeing an ad. Comments, user reviews, friends’ opinions, price-comparison tools…they’re much more powerful than advertising because we consider them information rather than marketing. The difference is enormous: We seek information, so we’re more likely to trust it; marketing seeks us, so we’re more likely to distrust it.
Some companies like Coca-Cola have cooled on using online advertising. But advertising revenues keep growing for Google, Facebook, and the other giants of the Internet. These companies are racing to innovate, connecting ads to more tailored audiences, which tantalize and keeps hope springing eternal for the advertisers. The Internet ad sellers also provide detailed data to advertise themselves to the advertisers staying one step ahead of growing skepticism. This is especially a problem when there is inadequate government regulation of deceptive advertising. It is the Wild West! Online advertising revenues are the Achilles’ heel of these big Internet companies. Any decline will deflate them immensely; more than public and Congressional criticism of their intrusiveness, their massive allowed fakeries, their broken promises to reform, and their openings to unsavory political and commercial users. If they lose advertising revenue, a major revenue bubble will burst and there goes their business model, along with their funding for ventures from video hosting to global mapping.