Why Advertising as a Service is imperative for publishers and brands

Welcome to the November edition of Spotlight, Novatiq’s roundup of the hottest stories in digital marketing and adtech.

What we have for you today: YouTube cracks down on ad blockers, Meta goes premium in the EU, and the ad industry speaks out against subscriptions.

Advertising vs. subscriptions: the battle is on

If you’re blocking ads while watching content on YouTube then beware, the company is coming for you. In its latest escalation against users attempting to block ads on its service, YouTube is warning that they are in breach of its terms of service. In some cases, the company is restricting access to its service until ad blockers have been removed. It’s message to consumers is clear: either put up with ads or subscribe to its premium service.

While YouTube is still very much focused on making its ads business work, other digital platforms appear to be focusing their efforts on subscriptions as the monetisation mechanism of choice. Meta is the latest company to join this group, launching a €9.99 (or €12.99 if users sign up on their phones) monthly subscription for ad-free access to Instagram and Facebook.

This is a big move for a company that was once a champion for the ad-funded internet. In Meta’s case the move likely owes much to recent GDPR fines against the company relating to how it uses the personal data of users in its advertising model, as well as to make up for the decline in ad revenues following Apple’s privacy changes to its IDFA. Whatever the reasons, there’s now a clear movement towards replacing advertising with subscriptions. It’s one unlikely to prove a success.

Ad-funded models rule supreme

The fact is that despite growing demand for a privacy-conscious internet, people do still want a predominantly ad-funded internet. And while consumers may be willing to pay for a subscription here or there, they simply do not have enough money to consume all the services they want to access for a fee – especially during a cost-of-living crisis.

This has proved the case in the past. When Spotify and YouTube first introduced ad-free subscriptions in the late-2000s, industry experts were quick to predict the end of ads on those platforms. This obviously didn’t come true, and 60% of Spotify‘s base are “freemium” users who happily receive ads.

The future prospects of the ad-funded model are therefore secure. Certainly, this seems to be the view of the industry at large. As David Kennedy-Cosgrove, managing partner at WiredCo, told AdNews this month: “People don’t really mind ads that much, the poor ads just wash over them without interference, the good ones work.”

Reframing the debate: Advertising as a Service

Publishers looking to future-proof their digital services and/or content will therefore need to continue to focus on advertising. But rather than forcing consumers to watch advertisements à la YouTube, innovators are reframing the debate and looking at how they can ad real value to consumers’ lives through advertising. Done well, advertising becomes a service that consumers will willingly sign up to.

One brand doing just that is TextNow, which has launched a blend of free mobile service and strategic advertising that connects brands with young consumers. Here, the mobile phone service becomes both the offer to consumers and the platform through which they can be reached for targeting – exactly what the likes of Meta used to be so good at doing.

Where people are switching off from advertising it is because the adverts aren’t useful to them. They’re little more than spam. Research out this month highlights the scale of the challenge, finding that 70% of people find digital advertising annoying and unpleasant, and 72% report that bad advertising experiences have negatively affected their perception of a brand.

However, the research also reiterates the point that consumers are still robustly in favour of an ad-funded web. Fifty-six percent of respondents agree that they enjoy reading free content from reputable publishers, and 39% say they like discovering new products and brands on the open web.

Consumer-first advertising

Publishers that welcome irrelevant, “junk” ads onto their platforms to boost revenues, as Amazon is accused of doing (the FTC case is ongoing), will only harm their consumers and tarnish their brand.

Conversely, publishers that focus on consumers by delivering privacy conscious, personalised advertising at the right moment, on the right channel, and at the right time will be delivering a true service and one that’s fit to support ad-funded content. The technology is available today to deliver just such consumer-first advertising and will certainly be much more appreciated than yet another subscription paywall.

More from Novatiq

There were a couple of exciting announcements from Novatiq this month. First up was our new partnership with Digital Media Services (DMS), the digital arm of Choueiri Group, Exclusive Media Representatives for over 25 Arabic and international publishers. Through the collaboration, brands will benefit from unparalleled access to privacy-first, data-driven ad campaigns that are more relevant and engaging.

Another big cause for celebration was winning the Big Data – Advertising category at the Middle East Technology Excellence awards along with our partner Etisalat by e&. This was in recognition of a new, privacy-first “digital currency” that enables safe audience recognition and activation in the digital advertising ecosystem.

As always, if you’re still hungry for insights relating to the digital advertising ecosystem, then swing by our website and take a look at our latest blog. This month, we’ve taken a deep dive into telco-verified IDs, explaining the opportunities on offer for telcos and how these can be best realised.

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