Will income inequality save marketing?
In our agency, there’s a serious addiction going on with a mobile game called Trivia Crack. In endless, heated competition, our creative and account teams compete against one another in questions ranging from entertainment to geography. They’re not the only ones hooked, apparently—according to The Guardian, more than 100 million Trivia Crack-heads across the planet play daily.
The app makes its money with advertisements and in-app purchases—but, like so many things in the digital realm these days, you can upgrade to a “premium” version for a few bucks a month and go ad-free.
A few bucks a month. Sound familiar? It seems to be the growing model these days.
We increasingly live in a rental world; a place where subscriptions abound. The software packages our agency relies on (created by Adobe) went to a monthly licensing agreement a few years ago. The work management software that runs our lives is also paid monthly, as is Lynda.com, the popular tutorial website that keeps us up to date.
And don’t even get me started on people’s personal lives. The mindnumbingly endless subscription list includes Netflix, Spotify, SiriusXM, Squarespace, NY Times.com, Hulu, LinkedIn Premium, Amazon Prime, NatureBox, FashionStork, etc., etc.
Many of the payments seem relatively small, compared to other things. It’s $10 here, $3 there, here a buck, there a buck, everywhere a buck, buck. But it has a cumulative effect, like being pecked to death by ducks.
Then, toss on crushing student loan payments, mortgage or rent, utilities, food, transportation and, well, you start getting that tight feeling in your chest.
Many free, online products offer ad-free premium upgrades or options. I’m even seeing these in some podcasts now—you download the regular podcast every week for free, complete with sponsor messages, or you can “upgrade” and get more content, with no marketing mumbo-jumbo, for just a few bucks a month. (There we go again.)
A friend of mine has a math-based theory about all this. And it’s one that most people don’t want to think about. He figures that if you’re a person with some serious entertainment impulses, you’d have to clear between $80,000 and $100,000 a year just to afford all your habits. I haven’t crunched the numbers, but considering the median U.S. household income is about $52,250 (as of 2013), that means people have some choices to make, or be seriously broke.
I’ve been thinking about our “rental society” against the backdrop of two big issues right now: Income inequality, and a growing trend for ad blocking in the digital and mobile spaces.
- Income inequality has been a thunderous talking point with politicos both left and right, and it will likely be a hot topic in our upcoming presidential election. The story, depending on what stats you read, is that most Americans’ incomes haven’t really risen in decades. Our middle class is rapidly becoming an endangered species. The question, as always, is not whether the problem exists—it’s what to do about it. In this paltry financial scene, it makes sense that subscription-type offerings are on the rise. Most people carefully manage what comes in vs. what goes out every month, and cancel-anytime subscriptions make that easy.
- Then, there’s the growing trend with ad blocking. More than a quarter of internet users use ad blocking now, and that’s growing. Apple will allow ad blocking on iPhones, and rumor has it that a major phone service plan will also allow ad blocking across its network (it’s already happening with providers in Europe). This is a big threat to marketers, publishers, and behemoths like Google that sell digital ads as their main source of revenue. A recent article I read reports that Google lost over $6 billion last year from ad blockers. Ouch.
The real issue is that people want content and entertainment for free, no strings or delays attached, like ads or messages from sponsors. Sorry, it just doesn’t work that way. Someone has to pay for this stuff… a sponsor, a brand, or a publisher. Good content or entertainment is expensive to produce. It takes time and resources.
As I watch these three massive forces at work—income inequality, ad blocking, and the rise of rentals in our culture—I start to wonder. Income inequality may ultimately force most people to choose only a handful of premium services… the ones they truly love. The rest? They’ll wait for the ad to play, they’ll click the banner away, or read some other message first, before going about their business. The irony is that people might not have the money to buy what’s being advertised anyway.
– Andy Badalamenti is the creative director for CI-Group