All the furore about online advertising is a sign of a vibrant market

By November 29, 2007 October 24th, 2008 2 Comments

A week ago Dan Greenberg wrote a post on Techcrunch which describes how to game YouTube to make videos go viral.  This has created quite a storm – check out the 493 comments for yourself to get a full feel for the passion, but as Alan Patrick points out (and thanks for the tipoff to the post) Mike Arrington’s response is peachy:

I will post a longer response to this later, but frankly I’m disgusted by this.

As Alan also points out the EU is investigating targeted ads, and we are all familiar with the fuss surrounding Facebook’s new initiatives (I’ve even written a bit about this myself).

For me these are all signs of a vibrant market.  Lots of advertising is happening and people are experimenting with ways to make it more effective – some of which will I’m sure fail horribly and some will hopefully succeed.  I am convinced there is value to be unlocked by targeting ads against private user data – this way ads become more relevant and less irritating.  We may even get some way towards the holy grail of advertising as content.

Making progress on this dimension means experimenting in a difficult and emotion laden area.  People are very sensitive about their privacy.  I think over time some experiments will work, and we will all start to get comfortable with new trade-offs between usage of our private data and services we are given for free.  Some experiments will also fail, and there will be casualties as a result – maybe even entire companies (certainly Facebook is at a high risk point right now), but I see little chance that the system will collapse.  For that to happen people would have to stop doing all the wonderful social media things we have come to love.

Alan describes the nightmare scenario in the following quote:

The problem responsible Advertisers have is that there is a “tragedy of the commons” effect going on – the irresponsible Advores will pile in now, make whatever money is on the table, but create the customer and regulatory backlash that will destroy value for all ongoing. “Tragedy of Commons” situations typically tend to only stop when the ecosystem collapses.

Somehow I just can’t see all this coming home to roost.  Much more likely for me is that some sites push things too far and their audience migrates to other sites which are less aggressive in their monetisation strategies and that over time we reach a happy balance.

This view is underscored by the belief that when companies get this wrong we might feel spammed, maybe even by our friends, and we might feel that our trust is abused and the odd embarrassing fact might crop up as a result, but the downside is really not that bad.  In fact it is irritating rather than harmful – and irritating will make people go to other sites, not stop using the web altogether.  Similarly irritating won’t drive regulation.

I guess, before I can finish I have to touch on identity theft – it is a real, growing and increasingly worrying problem, but it is only tangentially related to the issue of targeted advertising.  Moreover the solution lies in making it difficult to manufacture identities rather than not sharing personal data (I’m talking at the systemic level here – clearly we all need to be careful in our personal situations on a daily basis).