Threshold thinking

I consider our industry’s current approach to ads to be wildly inefficient. Very “good” click-through rates are in the single-digit percentages, and more likely one or two orders of magnitude below that.

Let’s assume for the sake of argument that some brand advertising is valuable, which is to say that the impression serves a purpose even if the user doesn’t click.

So, being charitable, 90% of ads that we put on our sites are of no economic value, which is to say, of no value to the user.

This makes them a degradation of our product. We go to great lengths to get the design just-so, and then we mar it with an element that serves the user not at all.

I don’t say this because I am against ads; I am against ads for which there is no evidence of value.

I think of this in economic terms. Ads are negative consumer surplus in 90% of cases. They make our published product a worse value. Over time, customers should be expected to migrate to products that provide better value.

I don’t expect this to simply be solved by better targeting which nudges up click-through rates. There needs to be an order-of-magnitude change.

I’d like to see the first publisher or ad network that only chooses to serve ads for which it has evidence of economic value; in the absence of such evidence, an ad is not shown at all.

Our current method of ad delivery is spray-and-pray. If we are very good at targeting, 10% of the ads have value. What if we had higher standards than that?