The Rise of the ‘PPC’ ad industry
It was one of the first digital ad formats, but it was also a time when the likes of Google, Facebook and Netflix could create ad campaigns on their own.
“The first advertising company to use video to reach the masses was called the Progressive PPC company,” says Mark Wilson, co-founder of advertising research company Brandwatch.
“It was a very large company with millions of people.”
The company used video as a way of selling advertising in a way that would appeal to a broader audience.
“PPC was the way to go,” says Wilson.
“They had a clear strategy that was aimed at targeting a very broad demographic.”
By the late 80s and early 90s, the PPC format had gained a huge following, as well as an unprecedented amount of advertising revenue, according to Wilson.
But for the last 15 years, the format has largely been stuck in the shadows, with little competition.
“I think there’s a lot of fear of what this could mean for the future,” says Mr Wilson.
That fear has been fuelled by an advertising industry that is often described as being “at war” with the new medium, according as Google, Amazon and Netflix all began using video in the late 90s.
And that’s largely been the case.
“We’ve had a pretty strong history of this sort of thing happening,” says David Brierley, managing director of the advertising consultancy Brandwatch, who says the industry has largely responded by adapting.
The “Netflix Effect” has been particularly damaging to the advertising industry, he says.
“People are more willing to buy advertising when they can buy it at a lower cost,” he says, because they can see the advertising and can see that they’re paying more for it.
That’s a major difference from traditional video advertising, which often relies on a higher upfront cost and can often be expensive to run.
“In the PPP era, you don’t need to do anything beyond just showing an ad,” says Brierly.
“You can get the same kind of result using a TV ad, a billboard or a billboard with a banner and no text.”
However, while the ad industry has adapted to the new format, it hasn’t quite figured out how to run it well.
“For a long time, they [the media] have just tried to use this as a means of marketing, not a method of advertising,” says Steve O’Connell, chief marketing officer at the advertising technology firm Admob.
“Now, the challenge is not just to deliver the ad but to make it compelling.”
What’s changed is the way we buy ads, says Mr O’Connor.
“If you can have the best ads, it’s a great idea,” he adds.
“But if you don, it can backfire.”
Advertisements are no longer targeted to the people buying them.
In the 1990s, people bought ads based on their personal preferences, so it was easier for advertisers to target their ads to those people.
However, the popularity of mobile devices has changed the landscape.
“What we’re seeing now is people are using their mobile devices as a tool of advertising, rather than as a medium for advertising,” Mr O’sConnor says.
And this has created a new generation of adverts.
For instance, many of the mobile ads used to be targeted to people living in areas with low internet speeds.
But this is no longer the case, he adds, because people are now using their phones as an extension of their homes.
“These are not ads targeting people in a particular location.
They’re ads targeting a range of people who live in different areas,” says O’Connell.
But the industry needs to start thinking about how to build an audience that’s interested in the ads, rather just how to use them.
And it’s not just the internet that has changed.
The ad industry’s digital advertising has been affected by a change in how people interact with content.
“Most people now use apps to browse the web,” says Ms Wilson.
“[But] a lot more people have smartphones, tablets and smart TVs,” she says.
With this new generation, “we’re trying to be more effective in creating and targeting the best content for our audience,” says Kati Schmoll, CEO of the digital ad agency DoubleX.
She says this is because people will often use their phones to browse content instead of just watching it on TV.
“When they watch content, they’ll spend more time looking at it than they do actually looking at what’s on TV,” she explains.
This has made advertising more effective, because it’s more relevant to people.
“That’s where it’s really become about creating that next layer of interaction with content,” says Schmolls.
And she says this strategy is working: DoubleX’s ad revenue in the first half of 2018 grew by nearly 20 per cent.
“There are some areas where people are just not paying attention to content