Idea: Why Customers Are Willing to Pay Not to See Your Ads
Recently, we suggested that ad-blocking technology isn’t necessary because our brains are already wired to do it. In many ways, this kind of “wiring” benefits marketers as it keeps people who aren’t interested in a product from clicking on the pay-per-click ad. It’s this brain wiring that causes someone to realize that every car on the road is a dark-gray Honda Civic—something they didn’t know until they started thinking about purchasing a dark-gray Honda Civic.
The recent ad-blocking debate focused on whether it is ethical to block ads. Media companies want to convince us that ad-blocking is “highway robbery.” Others want to convince us that product placement or “native advertising” is a slippery slope that leads to a world best satirized in the 1998 film, The Truman Show.
But ad-blocking comes in another flavor that is ethically pure and uses an online economic model that’s becoming more-and-more ubiquitous. This ad-blocking strategy is similar to the “freemium” model that provides a software feature or service in tiers. It begins with a free version and then upgrades to a feature-rich paid (premium) version. In this case, the media company’s premium, killer feature is letting people pay to make advertising disappear.
In precisely the way Apple proved people will pay for “free music” if you provide an ethical and trusted means for them to purchase it (the iTunes store), we are rapidly moving into an era in which the “ad-free” premium option will be tested with all sorts of media and content.
On an accompanying Hammock.com blog post we explore ways the following companies are using the incentive of “ad-free” to successfully generate billions in revenue from content: Wikipedia, Netflix, Spotify, Salt Lake City Tribune, Audible.com / Amazon Kindle.
While naysayers will argue that only a small percentage of users will opt for the paid version of something available for free, most advertisers will realize that those who have the passion and means to pay for ad-free content are likely the most desirable and influential customers they seek.
Bottom Line for Marketers: Advertising is not going away. But the ability to reach customers with traditional models of advertising “placement” is going to be challenged by customers who are tired of being buried in mountains of ads or are creeped out by “personalized ads” that stalk them around the web. At the same time, more and more media companies are going to discover the high margins of selling an ad-free version—something that is simply a “paid” ad-blocker. Even Google—the creator and master of the one pure web-native form of advertising, search—has accepted the truth that some people, and most likely the users most coveted by marketers, are willing to pay to turn off ads if they are convinced it is legal and ethical.
We believe that in such a post-advertising world the most effective marketing will be to provide content to customers in the form of information and knowledge that ties customer and provider together in ways customers view as a valuable part of a company’s product or service. And, as we’ve shown before, most companies have the potential to provide content that customers will be willing to purchase.