- People are growing increasingly sick of the amount of online advertising.
- The trend presents a thorny problem for the likes of Facebook and Google: They can’t keep growing revenues by simply shoving more ads in their products.
- This may be why we’re seeing diversification into new revenue streams like ecommerce, a major new focus for Facebook.
- Advertising has been the backbone of most of the modern tech giants, and any shift away from it would be an extraordinary inflection point for the industry.
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There’s a problem on the horizon for Facebook, and it has nothing to do with data security, terrorist propaganda, or political bias.
It’s much more straightforward, and more fundamentally challenging: People are just increasingly sick and tired of online advertising.
Research by Bank of America published in a research note in December found that people increasing think there’s too much advertising on major tech services across the board, but particularly on Facebook, as well as Google’s YouTube.
Analysts for the financial-services firm surveyed more than 1,000 US consumers about their perception of ad loads on Facebook, Instagram, Snapchat, Twitter, Pinterest, and YouTube. Over the last two years, the perception that there is too much advertising has grown more or less steadily — and for Facebook passed a key threshold of more than 50% of respondents saying there’s too much in 2018.
The findings underscore the new reality facing tech giants like Facebook as they enter the next phase of their evolution: The days of easy revenue growth by simply ramping up the amount of ads are over, and companies need to get more creative with sources of revenue to provide the kind of double-digit growth patterns that investors have become accustomed to.
This dilemma is likely a key part of why Facebook and other tech firms are looking beyond their historic advertising business to new monetization opportunities — notably ecommerce and payments, which has been estimated a soon-to-be additional $10 billion business for Instagram alone. Tech giants are also exploring advertising and revenue-generating opportunities on voice-based platforms.
More than half of all Facebook users surveyed in September 2019 by BofA and SurveyMonkey said there was too much on advertising on Facebook, versus a little under 40% who said it was “about right.” Less than 10% said it wasn’t really noticeable.
The numbers are more positive for Facebook-owned photo sharing app Instagram, with under 40% saying there’s too much, and a little over 50% saying it’s about right — indicating some potential room for growth in ad loads on the app without overly vexing users.
Google-owned video platform YouTube faces even greater resistance than Facebook over ads, however, with almost 60% of surveyed users say they think there’s too much advertising. It’s perhaps no surprise then that YouTube is pushing hard into the subscription business with YouTube Premium, a pay-monthly service that gives users access to an ad-free version of the app.
The future is brighter still for Twitter and Pinterest: Less than 30% of users of both services think there’s too much in the way of advertising.
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