Why Digital Ad Forecasts Are Irrelevant: The Future Is Not Display Ads

You're Looking At The End of The Box-Based Advertising World

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Sometimes you think something is so simple to think about that it can't possibly be right.

I was struck by just that feeling in looking at some of the recent eMarketer data on display advertising and the billions of dollars currently spent on it. Digital advertising is going to undertake a radical transformation over the next 1-3 years that I can only assume makes display ad forecasts irrelevant.

Why? Because there is no such thing as display advertising on most of the platforms where consumer attention is flowing:

  • Facebook
  • Twitter
  • Pinterest
  • Tumblr
  • Instagram
  • LinkedIn
  • G+
  • Name the next one

With attention flowing this way, valuations and business models on these platforms will follow. Besides all these platforms being social in nature, the other common theme is that they all have (or will likely have) business models that are about helping brands acquire audiences. First, you buy or build your audience, then you pay to reach them and the larger network on the platform. The better your messages resonate, the less you have to pay, and the more you naturally grow within the ecosystem.

All this without special boxes the brand can buy.

This new world with no special box is a big shift from a brand perspective and these platforms will all force companies to act more human and interesting in nature. Creating, liking, Tumbling, pinning and publishing alongside others in a way similar to how we all use these channels today. Of course, this is not a new thought, but the interesting twist I would put on it is brands, in theory, have the advertising money to buy an audience much bigger than we can afford as people, or even publishers, on these channels.

As an industry, we've been talking about brands as publishers, but with the barriers of distribution and audience acquisition taken care of at the platform level, what's holding any brand back from executing on an always-on content strategy? The economics of brands allow them to play the social game by entirely different rules than people, and even more interesting, the rules and unfortunate economics publishers have in competing for an audience on these channels. Brands have metrics that allow them to sell soap and a broader vision no matter what channel it is on, while the publisher needs to drive you back to their .com to sell an ad against your impression.

As a participant and an observer, it will be an interesting to watch as this plays out. What's the future of display? Will native formats on social platforms create an additive pool of dollars for internet advertising? Or will the dollars that flow to these new leaders of attention subtract from the current 'box-based' advertising world? What will publishers do? I ask these questions openly and I'm interested in watching how it all works out. I'm also an optimist who believes that if we can come up with better solutions, it will be great for everyone in the internet community that is supported by advertising.

I leave you with this, David Karp of Tumblr at the Ad Age Digital Conference: "You've seen the ad unit on Tumblr before. It's the Tumblr post."

James Gross is co-founder of Percolate. Follow him on Twitter at @james_gross.
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