As more surfaces become ad inventory, the economics get complicated

They’re no longer confined to TV commercial breaks, billboards and magazine pages. Brands are increasingly integrating ads in between pictures of friends on social media, in ChatGPT search results, smart refrigerator screens and even car dashboards. 

As brands and publishers turn seemingly everything into ad inventory, the question becomes: How much advertising will shoppers tolerate before the value exchange starts to break down? 

That’s the question at the heart of this week’s Digiday Podcast episode with hosts Tim Peterson and Kimeko McCoy. 

It used to be that shoppers paid for a product or service and owned it outright. For example, Netflix launched as an ad-free streaming channel. Users paid for the subscription in exchange for content without ads. 

That social contract has since been upended. Now, Netflix’s basic subscription comes with ads. Last month, BMW owners saw ads for Spider-Man: Brand New Day on their dashboards, according to The Hollywood Reporter. Back in March, The Wall Street Journal reported Samsung’s smart fridges sold in the U.S. were serving up ads as part of a pilot program. Meanwhile, Time has started serving ads to AI agents and brands are inviting employees to be walking billboards. 

Shoppers have already started looking for workarounds, like adding profanity to queries to remove ads via advertisers’ brand safety control measures. Companies too have started taking steps to curb ads—not necessarily to address ad fatigue but to likely keep users from abandoning the product. Spotify recently added a feature that allows users to skip native ads. YouTube introduced a button that allows users to skip past sponsored segments within videos and Netflix is now requiring creators to remove sponsored segments from YouTube videos when syndicating them onto Netflix. 

This isn’t the first time there’s been an imbalance in the relationship between shoppers and advertisers. Last time the phrase “ad fatigue” crept into the industry’s lexicon, it was the mid-2000s. Google cracked down on low quality SEO blogs with its Panda update. A few years later, Apple enabled ad blocking in Mobile Safari. 

As more surfaces become ad inventory, the industry may find itself reckoning with the idea of useful advertising versus noise.