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The future of advertising is ‘fewer, better ads’

“By giving away stuff for free for so long, we’ve created an ad economy that is bigger than it should be,” Deep Focus CEO Ian Schafer says.

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For more than a decade, the online advertising world has been dominated by “display ads” served up to consumers alongside web content, search results or social media posts. But they’re not the only game in town, one digital ad exec says.

“I think the advertising world, going forward, is going to be filled with fewer, better ads,” Deep Focus CEO Ian Schafer said on the latest episode of Recode Media with Peter Kafka. “The display advertising market is going to crater.”

“By giving away stuff for free for so long, we’ve created an ad economy that is bigger than it should be,” he added.

Schafer says there’s a untapped value in “nonstandard” ads, meaning branded content and other forms of advertising on platforms such as Snapchat, Musical.ly, WeHeartIt and Imgur.

“There is a lot of audience that’s spread out on places that are not [Facebook and Google], especially younger audiences,” he said. “As audiences get younger, it’s becoming increasingly harder to reach them where everybody else is able to get reached.”

Schafer says he’s skeptical of the sustainability of branded content studios inside large media companies, which work with companies to create special types of ads (disclosure: Recode parent company Vox Media has such a studio). Those studios — also found inside companies like BuzzFeed, the New York Times and the Wall Street Journal — will lose ad dollars to tech companies because their business models are so different, he argued.

“For most publishers, especially the legacy publishers who’ve been around for decades, I would say it’s unsustainable,” Schafer said. “They can’t provide agency-like services — not even at agency-like margins, at a loss in most cases — for the price of getting display advertising, which is basically what it is.”

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This article originally appeared on Recode.net.

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