Alphabet/Google’s revenue continues to grow. In fact, earlier this year, it briefly surpassed Apple to become the most valuable public company. But, over the years, Google has reported one number that has left the advertising world wanting to know more. Since 2011, the average ‘ad cost’ continues to decline. In simple terms, Google is serving more and more ads every year, but each ad is earning company less and less. To someone in the online advertising world, this should not be news; online ad effectiveness has witnessed slow and steady decline over the years. The industry doesn’t want its customers to know about some underlying issues that are creating an online advertising bubble. Following six issues are a big reason for concern as there would likely be no turning back the moment advertisers get a grip of what is really happening.
1 – Perils of Technology & Automation
Yet, there is a much bigger irony at play – virtues of automation are becoming its own flaws.
Advertising technology has seen tremendous advancement in the past decade. From precise user tracking and matching algorithms to automation and programmatic buying, placing an ad now requires very little human effort. For most part, this has been a big boon for all stakeholders, but some cracks are starting to show. For one – advertisers took industry’s word on ad effectiveness, who in turn totally relied on advanced technology for their argument. If you look at ad performance over the years, it paints a completely different picture – online ad efficiency has been declining, and it has been declining for some of the most advanced online businesses who really know what they are doing. Yet, there is a much bigger irony at play – virtues of automation are becoming its own flaws. Automation has made it extremely cheap to plan and place ads on small/low quality websites, which has encouraged advertisers of all sizes to join in hordes without understanding anything about ad efficiency.