Are ads a thing of the past? 

Posted by Communicator London

From many points of view, 2020 could have gone better. And advertising revenue looks like it’s one of those viewpoints. Global ad spending is set to decline 9.9% this year, saved only from plummeting further by US election spend. And Twitter has stirred up headlines most recently after its Q2 ad revenue fell short of predictions by $24 million, and it declared it was looking at other ways to keep the lights on – one of which being a paid-for version of Twitter.

 

Reactions from Twitter users to the possibility haven’t been enthusiastic, with many users saying they’d be gone if it came into effect. The idea of charging users to engage in a platform that for many is part of how they connect on a day-to-day basis does at first look seem drastic. But many of the platforms we use daily already use this model: Spotify being a prime example, with 130 million paid subscribers compared to 156 million free users. YouTube is pushing free users to subscribe with increasing insistence – by introducing more intrusive placements such as mid-roll ads and withholding certain features such as background play from its non-paying users.

 

Is this the future of social? 

It seems possible. Social advertising doesn’t have the best rep right now, so paying to avoid ads doesn’t seem like too unlikely a concept. On top of the potential 30% of people who use ad-blockers, big platforms’ management of advertising has been surrounded by controversy over the past year: from Facebook’s refusal to fact-check political ads, data scandals and the #StopHateForProfit campaign which saw companies like Coca-Cola, Diageo and Unilever pull spend over the month of July. Anyone concerned about misinformation or keeping a grip on their data has many reasons to consider paying to solve the issues.

 

Beyond a desire to avoid ads, there’s an increased willingness to pay for quality content. Patreon, a platform that allows artists and creators to set up subscriptions to gain access to their content, has reported a 65% month on month increase in the amount that creators are earning on the platform, proving particularly popular in lockdown when many out-of-work artists used it as a revenue stream. While much of Patreon’s appeal comes from the fact that fans can support creators directly (with Patreon taking a cut of course) its growing popularity shows that many people would rather pay to access their favourite bits of the internet than scroll mindlessly and have ads interrupt them. Platforms have been known to lure creators with the promise of revenue – like Instagram is doing by monetizing IGTV and giving influencers a cut of the ad revenue. If companies could use subscriptions to promise creators a slice of the pie, that could prove a successful draw for them and their follower bases. 

Where does this leave brands with advertising budgets ready to spend? 

  • Don’t worry too much, ads aren’t going anywhere fast. While almost half of Spotify’s users pay not to receive ads, that still leaves a sizable number who are, and any big platform like Twitter looking to recruit paid subscribers will have to maintain a free version – where business can continue as usual.

  • On the flip side, for those who do pay for ads, the only way they’ll interact with your brand is via organic content or influencer partnerships, which places a greater emphasis on getting these right. While many brands may have moved away from maintaining a strong organic presence, a social ecosystem that relies more on a subscription model would make it more necessary for brands to maintain a balance of paid, owned and earned.

  • The possibilities for paid social are increasing – TikTok is making a huge effort to recruit advertisers with their Don’t Make Ads, Make TikToks campaign, which was closely followed by Snapchat’s first ever B2B campaign. New short-form video platforms like Triller which was #1 on the app store in 50 countries in the first week of August, will soon be courting brands’ advertising budgets heavily too. And in the past few months more unlikely ad channels have emerged – within gaming for example, with many brands advertising within lockdown smash-hit Animal Crossing, or on streaming platform Twitch, the Amazon-owned platform with both a free ad-supported version and a premium version recently rebranded as Prime Gaming.

 

Advertising is what’s traditionally kept social media networks free and enabled them to reach large scales, and it’s going to take something pretty big to shake that model. But right now, users are becoming more aware of the hidden price of advertising, and demanding more from the platforms they spend their time on too: personalised content like the kind TIkTok’s ultrasmart algorithm serves, combined with ads that aren’t so personalised as to feel intrusive, in an environment where they’re free to express themselves but protected from hate. It’s a lot to ask, which isn’t to say that ads don’t have a place in meeting these demands, but there’s every chance that the future we’re heading towards is a blended model which brands can’t just offer up money to be a part of.

 

Communicator is a social-first creative agency that focusses on the person behind the platform. We believe that the power of human truths drives impactful creative and adds real business value.

 

A full service social creative agency providing strategy, creative and content production, paid, social media management and work with brands such as Jack Daniel’s, Heineken and Berry Brothers & Rudd to create compelling social campaigns that make a difference.

 

If you want to hear more about how we can help you visit communicatorlondon.com or contact Danielle Smith, Managing Director at Danielle.smith@communicatorlondon.com

August 14, 2020 

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