Is there a future for the online marketing industry?

By Martin Recke

Thinking about regulation as a possible fix for the digital woes our societies suffer from, the future viability of the online marketing industry quickly came into question, for a variety of reasons. In 2017, more than 60% of the worldwide online advertising revenue went into the pockets of only two companies: Google (44%) and Facebook (18%). This also means that 25% of the worldwide (not only online, but all kinds of) advertising revenue was snapped up by these two guys.

Not a very healthy market, or is it? Increasingly, it looks like a duopoly.

No wonder that ad-based business models like traditional mass media are quickly turning obsolete. The remaining share of the advertising market is fiercely fought over in a battle that resembles a race to the bottom. Publishers increasingly move to subscription-based models to avoid the traps of mass-manufacturing attention for the lowest possible price. As always, who pays the bills gets what he pays for.

The business model of traditional newspapers and magazines was two-sided, with advertising and the sale of copies as its two pillars. Digital publishing ditched the copy price and went all-in on advertising, driven by the assumption that higher reach and better tracking in the digital sphere would make up the difference. By now, this assumption can be considered proven wrong.

For a while, better targeting looked like a solution. After all, a perfectly targeted advertisement would be indistinguishable from information and thus worth a lot for all parties involved. Unfortunately, the gap between what the advertiser and what the user deem perfectly targeted turned out to be vast. What works well for advertisers often terribly annoys the user. The overall user experience suffered significantly. To quote Jason Kelley:

We'll only be amazed (and not repulsed) by targeted advertising—and by features like this—if we feel we have a hand in shaping what is targeted at us. But it should never be the user’s responsibility to have to guess what’s happening behind the curtain.


The imminent death of advertising has been predicted for years. Instead of dying, the market grew and continues to do so. Last year, advertising veteran Andrew Essex's book The End of Advertising made some headlines. For anyone who has at least some experience in the digital industry, what he says is not very surprising:

So if you begin with the covenant that the customer must come first, and that people will mostly reject a bad product, then you simply adhere to that policy and produce a holistic experience in which the entire product is cohesive. Many people misunderstand this and automatically make the leap to a world in which sugar companies will be dictating news reports on obesity. I'd like to believe that smart people will recognize anything that it's inherently inauthentic. The future I envision is inherently utopian and optimistic, perhaps too much so, and maybe a little elitist, but so be it. But please be clear: I am advocating for a better experience for the buyer and seller, in which there is a holistic commitment to quality and everyone wins.

User-first, a better product experience, and authenticity have been propagated by digital players for years. It's good to see these ideas finally gaining steam in the advertising industry as well.

Photo by Ross Sokolovski on Unsplash