If you’re a fan of the hit TV series Mad Men, you might think advertising went through a golden age in the 50s and 60s, and that it’s an industry of mavericks, creativity and glamour. Don’t believe the hype. Advertising has always been a very conventional b2b service industry with no real booms or slumps. However the modern ad industry is very different from the Mad Men era. Back then it was all about selling campaigns, billboards and TV airtime, today it’s a business that specialises in selling your personal data.
As an industry, advertising is still relatively the same size as it ever was. Analysis by Bloomberg shows that since the 1920s the advertising industry has always represented between 1-2% of GDP in the USA (similar in other developed economies). Which is unusual. It makes advertising more like a tax, or legal fees, or contract cleaning services. It’s a cost of doing business within a marketplace, rather than a driver of economic growth like manufacturing, retail or finance.
Advertising has always consisted of two parts, media owners (e.g. billboards, TV airtime or your Facebook feed) and campaigns (the actual content of adverts themselves, produced by advertising agencies). The psychology behind advertising was the simple idea that memorable adverts (on the radio, TV, newspapers, magazines, billboards etc.) influence which brand of goods you put in your shopping basket. That need to be memorable put a premium on creating eye-catching adverts with famous faces, zingy slogans, catchy jingles and so on. Most people assume advertising is still like this. It’s not.
Today, around 40% of global advertising spends are on digital ads which use a very different approach to influence what you buy. Ad companies track your digital behavior, to show you ads for things they know you’re interested in, e.g. if you visit an online shop, their ad technology tracks you all over the internet, displaying their ads everywhere you go to close a sale (called retargeting). They’ll bid to own the right to display adverts against the search terms you use (search engine marketing). They also produce content that appears to be news items, videos or features that aren’t obviously adverts (called native advertising) which facilitates more tracking. There are dozens of variations, all of which require capturing information about you.
Ad companies say this is a harmless convenience to show you relevant ads, no different from scheduling TV ads (e.g. showing toy adverts during kid’s TV shows) or sponsoring genre shows or sports coverage based on audience demographics (like the old soap operas). However, unlike previous attempts to reach specific target audiences, the depth and scale of the data modern ad companies collect on the public is vast, and the efficacy of behavioral targeting is questionable. Both privacy campaigners and client brands are questioning it.
Unlike previous attempts to reach specific target audiences, the depth and scale of the data modern ad companies collect on the public is vast, and the efficacy of behavioral targeting is questionable.
Since 2014, the 5 biggest advertising corporations have spent over $665 million acquiring ‘ad tech’ companies that specialise in tracking and analysing personal data (your age, sex, income, shopping habits, internet browser history and thanks to smartphones, even the places you visit). And the media owner giants like Facebook and Google scan the contents of your posts and emails to work out what you like and the things you buy.
These modern advertising practices are placing the whole industry at risk. There is an EU-wide privacy directive limiting ad tracking. Last year, one US smart TV manufacturer (Vizio) settled a crippling $2.2 million lawsuit over snooping on customer’s viewing habits without consent. Over 200 million people worldwide use internet ad blockers. Over 50% of people report they only click on mobile ads by mistake. Every year, it’s estimated that between 10-15% of users configure their browsers to prevent ad companies from tracking their online behavior. In fact, the stats say you’re more likely to survive a plane crash than click a banner ad. Native ad formats work much better than display advertising, but studies suggest that overall, trust in advertising is at an all-time low.
Which is hardly surprising. The advertising industry tracks personal data on a scale that dwarfs most government security agencies. They get away with it because they claim the data is ‘anonymised’ but cybersecurity experts suggest those claims are debatable, given the depth of consumer internet, social media and smartphone use. There is little clear oversight, regulation or jurisdiction about how much data is captured, stored and used in the trans-global digital world.
The stats say you’re more likely to survive a plane crash than click a banner ad.
The golden age of the Mad Men, if there was one, was the age of selling big ideas. Today, the digital Mad Men are selling big data, gathered using the technology of Big Brother. And given how many people are reacting against the deluge of invasive digital advertising in their lives, the advertising industry could soon be in big trouble.
Watch our episode on What’s Killing Creativity on Monday 13th March on RTUK.
At Renegade Inc. we’re all about giving people space to make up their own minds. If you want to explore this topic for yourself, here’s a bunch of interesting links we found when researching the topic, that make a good starting point for your own research. Stay curious…
On trends in the Ad Industry
On Privacy Issues…
Is the pursuit of happiness even possible? Or does this goal actually make life increasingly miserable and liberty more elusive?