Media ad blitz may drive an exodus to the Web3-based metaverse

The Situation: Ad-happy media giants seem determined to abuse their ownership of customer data as Apple and Netflix draw up plans to interrupt your viewing with ads. This could be the trigger for consumers to seek ways to take back control of their data—as enabled by Web3—forcing enterprises to rethink their relationship with data and follow the exodus into the metaverse.

Apple is reportedly building a demand-side platform (DSP), both privacy-focused and mobile-centric. A DSP is core to an ad tech stack for automated advertising. Think Facebook’s ad targeting with its campaign management capabilities and bidding and auction functions. Meta (Facebook’s parent) reported it generated $115 billion in ad revenue in 2021. Apple’s ad business is already worth $3.7 billion a year. Netflix is partnering with Microsoft to develop its ad-supported subscription plans – thought to be worth $2.5 billion a year in the US alone. Amazon, which uses Alexa among other routes to serve you ads, already has ad revenue of $31 billion a year.

While these data-owning giants of the internet age suck up dwindling revenues from what we used to call “mainstream” broadcasters, the ads on broadcast TV will get cheaper and come thicker and faster. The UK’s regulatory body Ofcom is already considering allowing more and longer ad breaks in the face of growing competition from streaming services. It will be making a new announcement on this before the end of the summer.

Bigco abuses our data to serve unwanted ads; Web3 offers consumers control

In the case of streaming services, it’s all about data. They want to use the data they own about you to serve you with “targeted ads.” The ad industry has been trying to do this for decades. The closest they have come is the ads you get served on Facebook. Yes, really. Consumers see their tolerance of the parade of rarely well-matched or well-timed offers as the price they pay for the “free” service Facebook provides. An example: My timeline at the time of writing is filled with offers of men’s shorts (too late, I already ordered), ads for USA vs. England women’s soccer (ok, so I watched England win, but so did 10 million other UK shoppers), and sponsored absolute bullshit (see Exhibit 1). The best they get is when an ad turns up for that thing you were just talking about. And then you just get spooked. Feeling stalked is not a recipe for a good relationship.

Exhibit 1: An example of data abuse. Here the users’ trust and use of the BBC—a matter of data record—is exploited to serve an absurdly bad piece of fake news. Thank you, Facebook.

Source: HFS Resource, Facebook screen grab August 2022

And this, my fellow sufferers, is the best-of-the-best targeting us with super-powered AI delivery. Meh.

The global market is growing at more than 10% per year with the expectation that it will reach $1 trillion within six years. The opportunity to abuse our data and advertise badly to us is in the hands of an increasingly few companies. Meta (Facebook), Alphabet (Google), Alibaba, Amazon, and Netflix are among them. So much for the freedom of the internet—Bigco has taken over. Frustrated acceptance of our data being abused may be a price many are willing to pay for their streaming content, but it’s hardly the stuff of customer experience (CX) dreams, and it won’t sustain loyalty. The moment something better becomes available, the audience will be gone.

Intensified interruptive ads are the death throes of an outmoded model

Something better is becoming available, held in the promise of Web3. In our Point of View (POV) describing how Web3 can finally deliver the internet’s promise of democratized experiences, we explained that data ownership would become a thing of the past thanks to Web3 being built on the blockchain, where all data is replicated on all nodes (devices) on the network. A revolt against our data being owned by someone else is the crux of Web3. In Web3, our data and networks become entirely portable. Democratizing the data democratizes the experience and potentially breaks the monopolies of curated social experiences—including the content we consume—currently held by the companies listed above.

The intensification of the old world’s interruptive ads, illustrated by Apple and Netflix’s intentions, are the death throes of an old model that owes more to the age of broadcast than to the age of the internet. The web was always meant to transform how we organize our businesses to optimize experiences for customers, employees, and partners. Too often, it reverted to being a broadcast medium—more of a one-way “information superhighway.”

New relationships with data prioritize real-time relationships

New relationships with data will change the broadcast approach—demanding that you place more value on the current state of your relationship with customers and, in focusing on real-time relationships, create opportunities for new ways of connecting and co-creating value.

When you can’t own data, every customer engagement relies on the current quality of your relationship. Imagine sending a customer an offer by email. Now imagine that if your customer does not respond, their email address is deleted from your CRM, all cookies linking them to you are wiped, and your record of transactions with them is vaporized. That’s where Web3 takes us—a place where customers are empowered by the blockchain to share the data they choose with the organizations, apps, or functions they choose, for the purpose they choose, at the moment they choose. This enhanced protection of user data does not mean the end of personalized service; it simply puts the control of that personalization in the hands of the customer. Enterprises will have to earn permission to maintain the relationship with their customers in each and every interaction.

The Bottom Line: Web3 will kill data-reliant ad targeting. Media must pivot to new business models built on the relationships content can build and maintain.

Web3’s data-democratization will make traditional media targeting obsolescent. Without the data to personalize what ads it serves up, big media won’t know who to interrupt, where, or when.

Every interaction will have to bring value to the customer in new models of intention-focused customer experience support, for example, brand-agnostic concierge services. I may share relevant data so you can offer me the best possible fit for a vacation trip. Each brand that benefits from the sale would pay the concierge. For more on the Web3 supply webs that make this possible, see our POV, AI holds the cards when everyone has the same access to Web3 data.

All enterprises must find their role in this new Web3-enabled landscape, and media companies are no different. They must embrace the new ways of working HFS identified in OneEcosystem, looking beyond their organizations’ “four walls” to collaborate with multiple like-minded organizations with common objectives. Content attracts people of like minds, and media companies should therefore plan to take a central role in creating value by bringing together ecosystems of people and businesses with shared purposes.

Read more HFS Research on Web3:

• How Web3 will democratize experience
• When to expect Web3 and how to prepare
• The A-Z of Web3
• AI holds the cards when everyone has the same access to Web3 data