Advertisement Slots are Disapppearing
The internet is a wonderful and scary place. It has proven time and time again that it is a beast that cannot be controlled. Those who wish to make a profit off of it must know the consequences, as there is little stability with it. As consumers grow smarter and more wary of advertisements, they will do whatever it is in their power to avoid them. This includes pop up advertisements, banner advertisements, etc. Studies have shown that consumers click on said ads intentionally only 0.17% of the time. This is why news sources have adopted more forms of native advertising, where companies pay the news source to write articles or sections that look like normal content, but actually is promoting the company and its associated products. This delineates the trend of having specific advertisement spaces for companies to pick and choose from.
As we studied in class, the model used for advertisers to buy banner spaces on websites can be simplified to two parameters: the clickthrough rate of the slot, and the value a buyer has per click. This model should now be refined to accommodate for the changes described in the sources below. Firstly, online advertisements are shown to have extremely low clickthrough rates, on average. These low clickthrough rates show that, on average, buyers who have lower values per click will get these advertisement slots. The question rises as to why would any company invest in online advertising banners. The value for these commodities seem to be too low. Though the depreciation for advertising slots is similar in newspapers/magazines, it doesn’t seem to be as harsh. However, many news sources have migrated to the electronic medium due to its free nature and easy accessibility. The ethical impact is still greater, as this economic blow causes the need for other means of revenue. This further explains the economic need for native advertising.
In order to incorporate these new “slots” of native advertising, we can treat these native advertising articles as slots themselves. These native advertising do not have a “clickthrough rate” per-say, but the effect is the same. A clickthrough rate can be interpolated to a qualitative gauge of how a consumer gets influenced or notices the product being advertised. Most people, as mentioned, are swamped by traditional black and white advertising. This makes the “clickthrough rate” for traditional advertising to be lower than “native advertising,” as consumers are less likely to immediately steer away from native advertising than traditional (it is just hard to distinguish native advertising from genuine material). Thus, according to the VCG principle, the buyers with the highest values will get these slots. This will drive the demand for native advertising over banner advertising, thus eventually obscuring traditional advertising to oblivion. Disregarding ethical boundaries, the network study of advertisement slots shows that native advertising is superior to banner advertising in effectiveness, and bigger buyers (who tend to have the most say in the economy) will tend to go towards this newer form of advertising. Therefore, unless people are aware of the ethical quandaries of native advertising, big companies will go towards this path of advertising, changing the world of journalism, the internet, and advertising forever.
The article: http://smallbusiness.chron.com/disadvantages-online-advertising-options-10212.html
John Oliver’s Video on Native Advertising: https://www.youtube.com/watch?v=E_F5GxCwizc