The digital industry needs to do a better job of educating people about how advertising funds the free online services they heavily rely on in their daily lives.

The most illuminating part of the Internet Advertising Bureau’s latest Digital Adspend report wasn’t how much advertisers are increasingly pouring into online and mobile, but how little we’d be willing to pay for free services such as email, search and social media. 

It showed Britons are only willing to pay per month, at most:

  • £1.53p to use email.
  • £1.33 for search engines.
  • 92p for news sites.
  • 88p for social media.

Firstly, just think for 30 seconds how difficult your life would be without these services. 

Then think how staggering it is that people would only be willing to pay the equivalent price of a drink in a pub to use all these services for a whole month.

The key reason is that people are used to getting them for free. However, the majority don’t realise that advertising funds this, which is strange considering they know this is why TV (license fee aside) and radio is free. 

So it’s frustrating the hostility some people have towards online advertising, even though elements of the industry haven’t helped themselves by being carried away with different techniques.

These include invasive pop-ups difficult to close or retargeted ads that continually follow you around the web.

The latter are particularly concerning for people who don’t know how their data is used,  or whether their privacy has been violated,  to show ads relating to content they’ve browsed.

The value exchange

Thus, in the data age, the industry faces a major challenge in educating consumers about this ‘value exchange’: access to their data in return for free content.

For instance, if you asked people to give a large portion of their data to a company so it could create global Artificial Intelligence from all our data to serve ads to everyone, of course people would say no.

However, if you ask if Google makes their lives easier by bringing relevant content to them whenever they need it, they’d say yes. This an example of the digital value exchange in action, one where the consumer gets real value. 

A more straightforward example of displaying value could be simple techniques such as online publishers showing how much a user would have paid for the content consumed if they’d bought the print edition.

Alternatively, as with TV, the industry could charge a license fee for the internet á la TV. I wonder how much more receptive people would be to online advertising if it meant they avoided an annual bill for £145.50? In a very interesting piece of symmetry, the IAB’s £7.2bn digital adspend figure equates to about £147 per person online.

Another element of the value exchange is the actual web experience itself. A very visible example in action is when publishers remove free content because a person uses ad blocking software which stops a publisher receiving revenue from ads on that page.

If this activity was done at scale it would be an interesting start to show what people’s online experiences would be without this free content.

Alternative solutions?

A development on these themes is the idea of a ‘tiered’ web experience in which the level of advertising served is based on how much you’re willing to pay for the content.

The theory isn’t too dissimilar to some current subscriptions models as well as ISPs wanting to charge different fees based on how much bandwidth different individuals use. I do see the industry increasingly experimenting in this area.

Another area being explored is simply paying people – either by cash, vouchers or discounts – to provide their data.

However, the economics of this are unproven and, although there may be practical solutions, the idea of currently receiving a few pounds or offers from brands in return for data hasn’t gone mainstream.

Education is the key

It’s also about simple education, clearly explaining to people how their data is used.

The “Your Online Choices” and “AdChoices” icon initiative on behavioural advertising is a good start but the following would help:

  • Better descriptions in ads as to why you’re seeing them.
  • Better info on how cookies are used in publisher’s cookie ‘opt in’ notifications – and offering ad preference settings within these.
  • Greater education from the large tech firms that provide the web browsers we use.

However, the best way to highlight the value exchange is by providing more engaging, helpful and relevant ads, but doing so within acceptable limits.

For instance, ads showing flip flops and the Spanish weather because people looked at holidays there adds value. Ads utilising personal medical information in their targeting oversteps the line.

Better education whilst getting this balance right means people will become receptive about their data being used to personalise ads. A relevant and helpful ad experience is the first and most important step in showing consumers what’s in it for them.