Why the Internet Can Survive Without Ads
Advertising was just a business model that was initially considered. Google originally thought that maybe 15 percent of its revenue would come from ads; Most of the money should come from licensing their search engine to corporate clients. It’s funny; their search algorithm was the origin of programmatic ads. Now it all depends on ads.
In the past, ads were sold the way a newspaper would sell them: you received a call from someone who wanted to buy a banner ad on your website. Google invented AdWords in the early 2000s to give people the tools to use data about what people are looking for. This model produced an amount of cash based on Willy Wonka’s Waterfall for Google, and then created the finance engine that is at the heart of the modern internet experience.
You start from this intuitive place: if I have all of this data on someone, should I not be able to send them messages that will make them act the way I want them to? There are two types of flaw in this thinking: one is the lack of correlation versus causality. In the end, you often end up targeting people who would have bought the product anyway, so the question of whether the ad will cause you to change your behavior is unclear.
Second, everyone assumes that the data you get about people is extremely accurate. But it turns out that that too is flawed.
Advertising works, but its impact is so limited and small that you have to conduct these enormously expensive experiments to see if it actually makes a difference or not. A few years ago, Procter & Gamble, one of the largest advertisers in the world, decided to cut $ 200 million on its digital advertising budget. The result hasn’t changed at all – they sold the same amount – which begs the question of what that $ 200 million will be spent on.
Advertisers say to regulators, “Don’t take my data away from me because if you do, the ads will be less effective and you will destroy our market.” But then we know nothing is going to happen. Suddenly the question arises, what have you been collecting all this data for all this time? The problem is, programmatic advertising is quick to make money. It’s hard to imagine an alternative monetization model that shares the same pattern. It’s like the scene in Indiana Jones where you have to replace the idol with another idol of the same shape and weight.
The bubble has to burst at some point. If you look at the history of any other market bubble, and there is exactly the same phenomenon: the underlying value of the attention gained through advertising is decreasing. Advertising has allowed us to take to the streets on some tough issues.
Are we okay with an Internet that is slowing down and more expensive to access? In a world where everyone has to subscribe to a search engine, should it be public or should access be subsidized by the government? How about a social network? Many alternatives are better from a social point of view, but they may not grow the way Silicon Valley is used to.
A non-advertising internet means we will see more innovative business models. Some of them will benefit content creators, while others will benefit businesses. Perhaps some of them will benefit the public. It will change the nature of the internet and it will take some getting used to.
Whether you are a technology believer or a technology critic, you have to believe in the effectiveness of technology, and many of our criticisms of technology give this myth a power it actually doesn’t have.
Interview with Aleks Krotoski
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