The internet advertising model of selling “eyes” in exchange for free content is struggling as consumers are growing smarter and turning to ad-blocking software. Companies will need to find alternate paths to add value to customer interactions and strengthen brand relationships.

The Economist:  Online Advertising: Block Shock

“…consumers are increasingly using software that blocks advertising on the websites they visit. If current trends continue, the saying in the industry may well become that half the ads aimed at consumers never reach their screens. This puts at risk online publishing’s dominant business model, in which consumers get content and services free in return for granting advertisers access to their eyeballs.”

“Websites’ use of ever more in-your-face advertising formats (videos that play automatically, pop-ups that obscure the text you are trying to read) have driven ever more people to seek ways to block them. Younger consumers seem especially intolerant of intrusive ads, and as they get older, overall ad-blocking rates are bound to rise further…”

Companies that innovate and try new things with marketing and customer engagement will win over traditional businesses that do not invest in reaching consumers in ways they respond to.

Fortune:  PepsiCo’s CEO was Right. Now What?

“…design has become an integral part of product development and marketing. Today there are angular Pepsi “Axl” bottles, for example, created at the company’s funky Design & Innovation Center in Manhattan’s SoHo. Pepsi hosted a “Kola House” at Milan’s Design Week, a concept that it is now selling to other companies. It is peddling high-end clothes with Pepsi influences, and it is attempting to rebrand even its commodity products, such as Lay’s chips, as cool.”

“Then there’s the Spire, the iPhone-inspired rethink of the soda fountain machine. Pepsi was not first in this market—Coke was—but its latest version is beautiful, a simple white or black frame with a touch screen that offers as many as 1,000 flavor combinations. Unlike Coke’s version, which requires that restaurants buy additional new equipment, Pepsi’s is more about form than function, replacing what the customer sees but not requiring an expensive upgrade.”

“Under Nooyi, R&D funding has doubled… such treats as a customizable Gatorade pod, tested by the Brazilian national soccer team, that mixes with water and delivers the proper electrolyte balance for your body’s needs; Naked Juice Kale Blazer, for green-juice devotees; Mountain Dew Kickstart, a fruit-flavored, lower-calorie drink; and Deep Ridged, a thick, super-crunchy potato chip developed first on a 3-D printer. ‘We have patents on the design, the cutter, the mouth experience,’ says Khan. ‘This is multiple layers of IP.'”

Apple CEO Tim Cook launches an opening salvo at companies that collect high volumes of user data, casting a spotlight on the tradeoffs between “free” and paid services.

TechCrunch:  Apple’s Tim Cook Delivers Blistering Speech on Encryption, Privacy

“‘Like many of you, we at Apple reject the idea that our customers should have to make tradeoffs between privacy and security,’ Cook opened. ‘We can, and we must provide both in equal measure. We believe that people have a fundamental right to privacy. The American people demand it, the constitution demands it, morality demands it.'”

“‘We don’t think you should ever have to trade it for a service you think is free but actually comes at a very high cost. This is especially true now that we’re storing data about our health, our finances and our homes on our devices…'”

“Apple has put all other cloud companies in the unfortunate position of digging themselves out of a moral communications hole to prove their altruism when it comes to user data. I’m not saying that Cook is correct in brutalizing the motives of companies like Google or Facebook — but it does craft a strong portrait — because Apple is safer and ‘not interested’ in your data casts a cloud (ahem) of doubt over pretty much every other company in its league.”

In the ongoing struggle for accurate online advertising data, Yahoo steps in as a surprising partner for brands and agencies to verify click-through rates for display and video ads.

VentureBeat:  Yahoo Now Allows Third Parties to Verify Fraud in Ad Campaigns

“A report from last year showed that bots account for as many as 11 percent of clicks on display ads and 23 percent of clicks on video ads. Put another way, of the $48.3 billion that will be spent on digital advertising this year, $6.3 billion will pay for fraudulently generated clicks.”

“Yahoo’s new fraud viewing tool gives advertisers insight into digital display and video campaigns across its sites as well as media bought through its programmatic platform. The company is tapping several third parties, including comScore, DoubleVerify, Integral Ad Science, and Moat, to independently verify fraud in ad campaigns.”

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