The advertising-base business model on the internet is dying. And getting worse in the process.

 

 

Some of the most profitable businesses derive the majority of their revenue from advertising. The most notable examples of ad-base business models are google and facebook. However. The ads you see constantly online have become so invasive and problematic that these business models are starting to show signs of dying.
Since the internet began to be use by the general public. Advertising has been the foundation of many online businesses: news outlets. Social meia companies. Bloggers. And influencers all rely on advertising.

The most prominent representatives of the advertising-base business model are google and facebook. These two silicon valley tech giants are also known for highly targete advertising. Which should be banne completely due to its privacy violations and other problems.

First signs of death

News organizations have been trying for years to build a profitable web presence through advertising. In the early days. Display ads had a click-through rate of about 50% . And now that number has droppe dramatically because we have been traine not to look at display ads – which is not surprising. Because the average internet user sees thousands of display ads every month. So we have been traine to scroll past them without even looking at them.

This. In turn. Has made ads more intrusive and annoying: pop-ups. Flashing and moving ads. Animations – today’s advertisers are desperately competing for your attention.

Annoying ads trying to steal our attention.

However. The more intrusive ads become. The more they push people away. Today. Nearly a third of internet users install ad blockers to get rid of annoying ads (which. By the way. Also take up bandwidth and increase loading times).

Ad-blockers stop ads from being shown and spee up the death of the ad-base business model

For these reasons. Meia outlets are experimenting with subscription-base business models. With large publishers such as the guardian in the uk. The new york times in the us and der spiegel in germany having considerable success in this regard.

Social meia giants also affecte

While facebook and google may be at peak profitability. The social meia giants are increasingly showing signs of death — like shells washing up on shore.

For example. Google recently switche to infinite scroll for some users – this was likely done to test how they could serve more ads: “They had to make this change because they increase the number of ads. If search results were paginate. A large Betting Data portion of the links on the first page would be ads. With infinite scroll. This isn’t a problem because there are an infinite number of links on the ‘first page’.”

In addition. Recent financial data shows that google’s advertising revenue is no longer increasing; meta’s advertising revenue in 2022 was even lower than in 2021. Which is the first time since facebook was founde.

Statista shows that google’s ad revenue is no longer increasing – a first sign of death?

Statista shows that meta’s ad revenue has decline for the first time ever – a first sign of death?

Other social meia giants like twitter (or now x) and reit are also constantly changing their products to increase advertising revenue.

Twitter is charging an annual fee to individuals and companies who want to be verifie. A move that is consistent with the direction meia is heading in: toward a subscription-base business model rather than relying solely on advertising.

Reit has made it prohibitively expensive and therefore impossible for third-party apps to display reit content. The reason is obvious: these apps remove reit’s ads. Making the user experience more pleasant. As a result. These apps have become very popular. But they have also cut into reit’s advertising profits.

Taken together. It’s clear that even social meia giants are struggling to keep up with investor demand and trying to find new ways to make money.

Even though these giants have millions or even billions of users. Simply showing ads is no longer enough.

Free is not free

Some might say it’s a good thing that the advertising-base business model is dying — as a privacy-first company. We couldn’t agree more!

After all. Advertising. Especially targete Australia Phone Number List  advertising. Combines everything that is bad about the internet: profiling. Tracking. Invasion of privacy. The creation and enhancement of so-calle bubbles. And even the promotion of conspiracy theories .

However. The way big tech companies have built their subscription business models is not desirable. They seem to just add subscriptions on top of advertising. Tracking. And profiling. For example. On twitter. You can reuce the number of ads by 50% by paying. But you can’t completely stop being tracke and shown ads.

That’s why we’ve joine forces with other privacy-first providers to call on politicians to ban targete advertising .

Now it’s up to politicians to improve the internet for everyone. But there’s good news: the advertising-base business model. Which relies on tracking and profiling users. Has been declare illegal in a european case against facebook . This is just the first step in confronting the power of these tech giants. And there will be more to come.

We all know that on the web. Free isn’t free . We have to keep this in mind. Especially when privacy-invading services like twitter ask us to pay in addition to targete advertising!

Quote: if it’s free. You are the product.

 

What is an advertising-base business model?
Almost all of silicon valley’s giants rely on an advertising-base business model. Not just google and facebook. But also amazon (third-party sellers pay to have their products liste on the platform). Apple (think of the app store ads). And even microsoft (even though bing is not as popular as google search).

How tech giants run ad-base businesses

This business model has helpe these companies increase their revenue year after year for more than a decade. The factors that have made their business model successful so far are:

Fast user acquisition: google. Facebook. And many other companies chose an ad-base business model because it helpe them acquire users quickly: for example. Google and facebook were able to offer their services for free. So millions or even billions of people joine these platforms over the years. With a subscription business model. Where people had to pay for said services. It would not have been possible to acquire such a large number of users. On the other hand. The large user base also makes the ad-base business model work: silicon valley tech giants can show their ads to a large number of eyeballs. So they can continue to make money – even though the ad-base business model is on the verge of death.

Time and eyeballs: people are spending more time on the internet today than ever before. And a large portion of that internet usage is on social meia platforms. This provides these platforms with the opportunity to post a large number of ads and profit from people’s time and attention.

Tracking and targeting: by tracking what users view. Click on. And engage with. Google and facebook can build accurate profiles of users and thus target ads to them. This makes ad impressions more profitable than showing ads that are irrelevant to the user.

Analytics: analytics is an important part of targete advertising. Only through analytics can the platform know which ads are best to show to whom.

While google and facebook. The best representatives of the advertising business model. Still make hundres of millions of dollars per year from advertising. They have reache their peak. This is the first sign that the advertising-base business model is coming to an end. And hopefully it will make the internet better for everyone!

Why advertising-base business models are dying

The advertising-base business model has been criticize—not only because it infringes on privacy. But also because of the harmful effects it has on the user experience.

Made worse by ai : clickbait articles become popular on google searches because these publishers know exactly what the google algorithm wants to see. However. This is not high-end. Quality content. And ai makes it worse. These sites cater to the largest audience possible by producing as many clickbait articles as possible. Such as ” you won’t believe what celebrity x looke like as a child ” or ” five ways to get rich quickly “. The cheaper it is to create this type of content. The more content will flood the web. Ultimately making it worse.

Privacy invasion : advertising-base business models completely rely on collecting user data to deliver targete ads. Users are force to agree to very harmful terms and conditions when using social meia platforms such as facebook. They have to _sell_ their privacy to use these services and participate in online social interactions. In most cases. It is impossible to use these services without giving up privacy.

User experience : ads hurt the user experience because they take away what the user wants to see and divert their attention to what the advertiser wants to show. Flashing. Moving. Or pop-up ads are particularly annoying.

Loading time : ads require a lot of bandwidth. Especially animate or video ads. Therefore. They can cause slow loading times.

Impact : ads target users to get them to do something – whether it’s buying new shoes or voting for a certain party. Combine with psychological tricks (“Last chance to get this offer”) or the use of fake news and sensationalism in highly targete political ad campaigns. They can influence people in harmful ways.

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Author
Black and white picture of hanna being shocke a bit.
Hanna has been part of the tuta team since the launch of the secure email client tutanota in 2014. Over the years. She has become an expert at explaining cryptography to the average internet user. Making sure everyone understands why privacy is important and how encryption helps protect data online.
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