Ads vs. users: the internet's original sin

Ads suck

Ads are the original sin of the internet: access to the sum of human knowledge – but you have to watch a 15 second YouTube ad for car insurance first.

Ads aren’t a bad bargain per se: free to content, in exchange for our data and attention. But because the free internet runs on ads, there’s an intrinsic conflict between user experience and profitability.

A tax on your attention

The internet is designed to be as annoying as possible without quite driving us away.

Think of ads as a tax on your attention. No ads means no annoyance, but also no ad revenue. On the opposite extreme, no one will visit a website plastered with pop ups and banner ads, so that also results in no revenue.

Advertisers optimize between annoyance and revenue.

The economics of the internet drive websites to maximize ad impressions – which means the internet is designed to be as annoying as possible without quite driving us away. The $300B+ spent on ads each year come from thousands of human lifetimes spent glancing at ads, one second at a time.

As Facebook tells it, ads provide a valuable service to consumers, informing us of useful products. In practice, only 4% of iOS users choose to trade privacy for a “better ads experience”. A majority of consumers say targeted ads feel “invasive”, but a majority also say they’re bothered by irrelevant ads.

Trade offer – Facebook gets: YOUR DATA. You get: CREEPIER ADS.

The true cost of ads

The businesses that buy ads aren’t having a great time either. Ads are essential to launching a new business, and micro-targeting lets even small, niche businesses reach their target audience. Unfortunately Google/Facebook/Amazon ads are hardly a competitive market. When the iOS privacy updates degraded Facebook ads’ effectiveness, many small businesses had to buy more ads and raise prices.

Companies spent $300 billion on digital ads in 2019, but almost all that money went to Google, Facebook, and a handful of mega influencers. Consumers actually pay twice for ads: first with our attention, then to cover the cost of ads themselves, as reflected into higher prices.

Ads are getting worse

Our relationship with ads is adversarial. We get AdBlock. Websites get Ad Block-blockers. In the early days of the internet, people used to click flashy banner ads all the time, but we’ve since learned to subconsciously ignore them. Consequently, ads have gotten better at tricking us with so-called “native ads” designed to mimic the content they’re placed next to:

I feel dirty when I click a native ad because I know I've been tricked.
SPONSORED CONTENT: Journalists make compromises to stay in business!

Social media is particularly good (bad?) at blurring the lines between content and ads. Even non-sponsored content is chosen to maximize ad impressions. Social media algorithms promote outrage, sensationalism, and misinformation because strong reactions drive more engagement – and therefore more attention to tax with ads. Our individual newsfeeds are tailored to feed us whatever content triggers us, with terrible consequences for mental health, media literacy, attention spans, vaccine hesitancy, and democracy itself.

The alternatives suck more

There are currently no great alternatives to ads, but paywalls and subscriptions are the most popular. 180 million Spotify subscribers agree it’s worth paying for ad-free music. Niche publishers like The Economist and Foreign Policy monetize  paywalls at the cost of limiting their readership, but paywalls also invite piracy.

A $50/year Forbes subscription only buys fewer ads.

Brave Browser attempts to compensate users by making advertisers pay users to see ads. It’s a fair idea, but it still pits users’ desires for privacy and lack of distraction against advertisers’ desire for targeting and impressions. The economics simply don’t work, as an engaged user only earns $0.16 per day.

Ultimately, the social media companies the command the most attention are unwilling to give it up. Even Twitter’s paid subscription still includes ads. Facebook will never be ad-free.

Can we do better?

In the last decade, ecommerce grew to $5 trillion, and digital ad spend to nearly $500 billion – both up 500% from 2012. Yet the dumber, less optimized internet of 2012 was a more authentic and positive user experience.

Tellingly, it's also when Facebook's popularity peaked.

Any fundamental improvement to ads has to align incentives between users and businesses. Ad publishers like Google and Facebook are tremendously useful, but ultimately self-interested attention brokers. Brave has the right idea of letting businesses pay users, but ads require such massive volume of impressions that their market is too inefficient.

If ads are the internet's original sin, what does salvation look like? We need to look at the rest of digital marketing and customers’ purchasing journeys to figure that out. Next we're going to look at the influencer economy.