Tech companies are embracing in-app ads, highlighting a broader trend where user attention is increasingly monetized, even by subscription services.
Lyft, the “other” ride-hailing service, recently announced a new feature for its app: ads. Riders will soon see advertisements on their ETA screen when matching with a driver during their trip. Lyft notes that its “captive audience” checks their phones an average of nine times per ride—nine unmonetized glances that have now been corrected.
However, Lyft didn’t invent the concept of in-ride advertising. Taxi TV beat them to it by over 15 years. More recently, Uber introduced its in-app advertising feature, capitalizing on the assumption that it commands “two minutes” of rider attention per trip. This generated $650 million in revenue in Q2 2023, contributing to Uber’s first-ever reported profit. Lyft, which lost over $100 million during the same period, decided to follow suit—borrowing from its larger competitor.
Uber and Lyft were originally built to sell transportation to customers, but now they also sell access to their customers to advertisers. This isn’t exactly a pivot; while Uber’s ad business is still a small fraction of its $9.2 billion revenue, it’s a clear sign of the changing tides in the tech industry. Monetizing captive, paying users with ads has become a common strategy among struggling tech companies looking for new revenue streams.
Big tech’s desire to extract more money from users isn’t new. However, what’s changed is the realization by a range of companies that they can squeeze a little harder. Last year, Netflix, a company once founded on an anti-advertising stance, introduced a low-cost subscription plan with ads. Other companies like Instacart, DoorDash, and Amazon have increasingly relied on high-margin ad businesses, with Amazon now ranking as the third-largest digital advertising firm behind Google and Meta. Even Apple, which prides itself on protecting user privacy, has its own ad business, generating around $4 billion annually. Brands like Marriott, Best Buy, Target, and CVS are also getting in on the action, all driven by one common goal: to monetize their user base.
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The phenomenon of “ad creep” isn’t new. It was coined in the ’90s but is especially acute among popular app-based services. For instance, Google and Instagram are free platforms built on advertising. The growing trend is that if a service is free, users will inevitably be shown ads, and if they pay, they can avoid them. This model isn’t perfect—targeted ads feel intrusive and raise privacy concerns—but it’s become the standard.
Compared to older media providers, like TV and newspapers, the modern approach of integrating ads into digital platforms has created a new world where the boundary between paying for a service and being the product is often blurred. Even with its discounted $6.99 streaming plan, Netflix’s introduction of ads represents a shift back to the advertising-heavy model of traditional cable TV. Once revolutionary, Netflix is now following in the footsteps of old media.
The app-ification of non-media businesses (food delivery, shopping, and ride-hailing) introduces new scenarios where ad creep is more subtle but equally pervasive. Amazon, for example, is a prime example of how digital ads are integrated into the shopping experience, subtly pushing consumers toward more purchases while monetizing their every action on the site.
Although users have grown accustomed to ads on their smartphones and laptops, the intrusion still raises questions. The difference between ad creep in a store and an app is that users expect ads as part of the digital experience, even though it diminishes the quality of their engagement.
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For tech companies, ads are seen as a way to pass along costs, especially given the financial challenges many face. As subscription services rise and prices increase, the future looks more expensive and plastered with ads.
