Publishers, advertisers and advertising networks need to solve the online advertising problem

I roughly know how online advertising works. Either an advertiser goes directly to a publisher and negotiates the use of some space on the publisher’s website in which to display an advert, or — perhaps more likely these days — advertisers sign up to advertising networks and publishers do likewise, then the publisher includes the code supplied by the advertising network on their website and the advertising network delivers what it feels are appropriate adverts into the space the publisher has allocated.

There are number of metrics that might be used to track the effectiveness of adverts. First there’s the number of times and advert is viewed. Of that number, a small percentage will interact with the advert, giving the number of times an advert is clicked. And of that number a small percentage will complete the goal of the advertiser, which is often to make a purchase of some sort; this is usually called a conversion.

A lot of adverts are set up to generate clicks via Pay-Per-Click (PPC) networks and this is where much goes wrong. If an advertising network rewards publishers for each click it generates, then publishers are encouraged to place blocks of adverts on their site and care about little else. They might place those adverts in prominent positions because all they need are clicks and they’ll receive money based solely on the number of clicks they generate. The publisher is not interested in the number of conversions the advertiser thereafter makes, although if the advertiser is not ultimately making money from those clicks then they won’t want to advertise on those websites.

There is another way to reward publishers and that’s paying them based on conversions rather than clicks and that’s the way affiliate marketing often works, for example. Typically, the publisher gets a percentage of the sale. This is often called Pay-Per-Action (PPA) advertising, where the ‘action’ is often a sale but it could also be something like signing up to a newsletter.

Very rough figures would indicate that the average percentage of clicks per view an advert generates is somewhere between 0.5% and 5%. Then of the number of people who click through, the average percentage of conversions an advertiser makes is somewhere between 0.75% and 9%. These are just averages and it varies a lot between market sectors and products.

But there are broad percentages at work all the way through and, in general, the more views an advert gets, the more clicks it’ll generate, and the more clicks it generates, the more actions (sales, maybe) it’ll result in (and I emphasise the “in general” part of that sentence).

Whatever the model, the incentive for publishers and advertising networks is often to generate clicks, which means they must first generate views. There are a whole set of financial dependencies in this. Publishers often need money to keep their web sites alive: they may have to pay for servers to host them and personnel to write the content. Advertisers need money to remain as profitable businesses and advertising networks need money to support their own activities, which is to provide reach and convenience for both advertisers and publishers.

The thorn in the side of all this is us. We don’t go to websites to see adverts and if we’re overloaded by them we’ll either just not visit the site or install some ad-blocking software.

Some people might unreasonably expect the whole internet to be free but most people are vaguely aware publishers need to earn money to support themselves.

But we have limits. I can only speak for myself but if a site has any sort of pop-up advert I’ll generally avoid it. Likewise with any site that autoplays any video or audio, and I would never again visit a site that forces me to watch an advert before I can access the content I’m after. Furthermore, a site that doesn’t do any of those things but is simply overloaded with adverts will also be blacklisted by me.

I’ll give you an example of a site I visited the other day. I arrived at the site through a search for “when will ios 13 be released” and one of the top sites Google offered to me was MacWorld. After clicking on the link in Google’s search results, I was presented with this:

MacWorld screen that's mainly adverts.
MacWorld screen that's mainly adverts.

There’s a massive advert along the top and down both sides of the screen, there’s a big Google Ads block right in the central part of the screen and at the bottom-right it popped up and autoplayed and a video advert. I’ve marked in red the bits of the screen I might be interested in. At the top there’s the menu bar and I could feasibly be interested in that, although I wasn’t on my visit, and then at the bottom you can see the title of the article and (just) the start of the first line.

The vast majority of that screen is advertising I’m not interested in and I won’t visit that site again. That is, in my opinion, a site that is seriously overloaded with adverts — at the top, above the fold — and it’s a big indication that something’s going wrong with the online advertising business.

The thing is, if we see enough sites that assault our eyes with too much advertising, we’ll get fed up with things in general and install ad-blocking software. This is unfortunate because we may also be depriving the sensible sites — those with ‘acceptable’ advertising loads — of revenue too. Yes, you can whitelist sites in most ad-blocking software but I’d wager most people don’t bother, or if they do then they do so infrequently.

Some advertisers or networks will tell us what we’re doing is immoral and the internet will go out of business if we block all the advertising. They do have a point but I’d suggest the onus is on them to ensure advertising is acceptable to us. I’m not going to block a site that has one or two small, static, unobtrusive adverts and I will sometimes actively whitelist such sites.

I may be missing something here but I would have thought fewer advertising spaces on sites would make each space more valuable and thus the economic considerations would be maintained, although I suspect in reality it’s a bit more complicated than that.

Either way, something is going to have to change. There’s the privacy issues of all these adverts tracking us and there’s the user experience of how these adverts are presented to us. I’m concentrating on the latter in this article and if publishers are allowed to bombard us with too many adverts then it’s all going to collapse in a heap as more intelligent ad blockers are created and installed by users.

The publisher is ultimately responsible for the space they give over to advertising on their sites, but the sledgehammer nature of ad-blockers means that terrible sites can have a knock-on effect for all other sites, which in turn has a knock-on effect for the advertising networks and the advertisers themselves. So all three parties in the ecosystem need to get together and define some standards, punishing uncooperative publishers accordingly.

It’s simple really: either they do that or we’ll block the lot of them.