Why Ad Monetization is Wrong (Really)

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In a recent article on Medium called The End of the Ad-Supported Web, Julien GENESTOUX is putting the finger on a many things I was obsessing with these last few months about ad monetization. You may want to read the article first, the following are my extra comments:

The main gripe with ad monetization that we all think we understand, is that companies involved in this strategy disconnect their added value from what they invoice. This lateral move seems minor while it is quite critical. When Zuckerberg meekly declares that ads are the way to allow everyone on the platform he already has excluded the possibility to have tiers where some will pay and other not.

Why? Because he wouldn’t make nearly as much money. But the few degrees of difference in the initial trajectory have been now compounded over 14 years both in the culture, the strategy and essentially, what is Facebook as a product. Which means that it is an ad machine and nothing else anymore.

The risk for any new entrants (not only in social media) that find smart to monetize ads is that they will be running in the same trap if they ever be successful. While the irony of glorious incumbents such as the New York Times that where monetizing through both ads and subscriptions, is that they feel more and more the monetary pull to become also ad machines. But you also see this struggle with ‘famous’ Youtubers: is your content value is how much Youtube pays you, or how much Patreon pays you? Because the are not aligned.

As people working on innovation strategy the core assumption we always work on is that you monetize your added value and then decide of the shape, color and odor of your product. (A not-so-subtle way to prevent would-be innovators to spend months coding or working on the product, without taking care of what is their market.) This always removes ads from the table as a monetization scheme.

The ontological perversion we’ve been living with is that Google as one of the most successful company of the «news economy» embedded in our mindset is that any form of transaction based on content, information, news, or data is monetizable at the root through ads.

This is an original sin that still weights on the global economy.

Author: Philippe Méda

Philippe has been training about 200 startups a year since 2007, consulted for dozens of multinationals on rupture innovation or corporate incubation. He also teaches innovation in key MBA programs in Paris and Shanghai.