From Doc Searles' Weblog:
In The Big Short, investor Michael Burry says “One hallmark of mania is the rapid rise in the incidence and complexity of fraud.” (Burry shorted the mania- and fraud-filled subprime mortgage market and made a mint in the process.)
One would be equally smart to bet against the mania for the tracking-based form of advertising called adtech.
Since tracking people took off in the late ’00s, adtech has grown to become a four-dimensional shell game played by hundreds (or, if you include martech, thousands) of companies, none of which can see the whole mess, or can control the fraud, malware and other forms of bad acting that thrive in the midst of it.
And that’s on top of the main problem: tracking people without their knowledge, approval or a court order is just flat-out wrong. The fact that it can be done is no excuse. Nor is the monstrous sum of money made by it.
“Sunrise day” for the GDPR is 25 May. That’s when the EU can start smacking fines on violators.
Simply put, your site or service is a violator if it extracts or processes personal data without personal permission. Real permission, that is. You know, where you specifically say “Hell yeah, I wanna be tracked everywhere.”
Of course what I just said greatly simplifies what the GDPR actually utters, in bureaucratic legalese. The GDPR is also full of loopholes only snakes can thread; but the spirit of the law is clear, and the snakes will be easy to shame, even if they don’t get fined. (And legitimate interest—an actual loophole in the GDPR, may prove hard to claim.)
Toward the aftermath, the main question is What will be left of advertising—and what it supports—after the adtech bubble pops?
Answers require knowing the differences between advertising and adtech, which I liken to wheat and chaff.
- Advertising isn’t personal, and doesn’t have to be.
In fact, knowing it’s not personal is an advantage for advertisers.
Consumers don’t wonder what the hell an ad is doing where it is, who put
it there, or why.
- Advertising makes brands. Nearly all the brands you know were burned into your brain by advertising. In fact the term branding was borrowed by advertising from the cattle business. (Specifically by Procter and Gamble in the early 1930s.)
- Advertising carries an economic signal. Meaning that it shows a company can afford to advertise. Tracking-based advertising can’t do that. (For more on this, read Don Marti, starting here.)
- Advertising sponsors media, and those paid by media. All the big pro sports salaries are paid by advertising that sponsors game broadcasts. For lack of sponsorship, media—especially publishers—are hurting. @WaltMossberg learned why on a conference stage when an ad agency guy said the agency’s ads wouldn’t sponsor Walt’s new publication, recode. Walt: “I asked him if that meant he’d be placing ads on our fledgling site. He said yes, he’d do that for a little while. And then, after the cookies he placed on Recode helped him to track our desirable audience around the web, his agency would begin removing the ads and placing them on cheaper sites our readers also happened to visit. In other words, our quality journalism was, to him, nothing more than a lead generator for target-rich readers, and would ultimately benefit sites that might care less about quality.” With friends like that, who needs enemies?
- Advertising isn’t personal, and doesn’t have to be. In fact, knowing it’s not personal is an advantage for advertisers. Consumers don’t wonder what the hell an ad is doing where it is, who put it there, or why.
- Adtech is built to undermine the brand value of all the media it uses, because it cares about eyeballs more than media, and it causes negative associations with brands. Consider this: perhaps a $trillion or more has been spent on adtech, and not one brand known to the world has been made by it. (Bob Hoffman, aka the Ad Contrarian, is required reading on this.)
- Adtech wants to be personal. That’s why it’s tracking-based. Though its enthusiasts call it “interest-based,” “relevant” and other harmless-sounding euphemisms, it relies on tracking people. In fact it can’t exist without tracking people. (Note: while all adtech is programmatic, not all programmatic advertising is adtech. In other words, programmatic advertising doesn’t have to be based on tracking people. Same goes for interactive. Programmatic and interactive advertising will both survive the adtech crash.)
- Adtech spies on people and violates their privacy.
By design. Never mind that you and your browser or app are anonymized.
The ads are still for your eyeballs, and correlations can be made.
- Adtech is full of fraud and a vector for malware. @ACFou is required reading on this.
- Adtech incentivizes publications to prioritize “content generation” over journalism. More here and here.
- Intermediators take most of what’s spent on adtech. Bob Hoffman does a great job showing how as little as 3¢ of a dollar spent on adtech actually makes an “impression. The most generous number I’ve seen is 12¢. (When I was in the ad agency business, back in the last millennium, clients complained about our 15% take. Media our clients bought got 85%.)
- Adtech gives fake news a business model, because fake news is easier to produce than the real kind, and adtech will pay anybody a bounty for hauling in eyeballs.
- Adtech incentivizes hate speech and tribalism by giving both—and the platforms that host them—a business model too.
- Adtech relies on misdirection. See, adtech looks like advertising, and is called advertising; but it’s really direct marketing, which is descended from junk mail and a cousin of spam. Because of that misdirection, brands think they’re placing ads in media, while the systems they hire are actually chasing eyeballs to anywhere. (Pro tip: if somebody says every ad needs to “perform,” or that the purpose of advertising is “to get the right message to the right person at the right time,” they’re actually talking about direct marketing, not advertising. For more on this, read Rethinking John Wanamaker.)
- Compared to advertising, adtech is ugly. Look up best ads of all time. One of the top results is for the American Advertising Awards. The latest winners they’ve posted are the Best in Show for 2016. Tops there is an Allstate “Interactive/Online” ad pranking a couple at a ball game. Over-exposure of their lives online leads that well-branded “Mayhem” guy to invade and trash their house. In other words, it’s a brand ad about online surveillance.
- Adtech has caused the largest boycott in human history. By more than a year ago, 1.7+ billion human beings were already blocking ads online.
This blog has been going since 2007, and continues one that began in 1999 and is mothballed here. On the social front, my tweetage is at @dsearls and I maintain the customary pile of biographical jive here on Linkedin.
A few among the many hats I wear:
- Editor-in-chief of Linux Journal, the original (and still the leading) Linux publication.
- Author of The Intention Economy: When Customers Take Charge, published by Harvard Business Review Press May 2012.
- Alumnus fellow of the Berkman Center for Internet and Society at Harvard University. I continue to head ProjectVRM there.
- Fellow at the Center for Information Technology & Society at UC Santa Barbara. There my focus is on work toward a book about the Internet and infrastructure, titled The Giant Zero.
- One of the four authors of The Cluetrain Manifesto, the iconoclastic web site that became the best-selling book in 2000 and still sells around the world in many languages. A 10th anniversary edition came out in 2009.
- A radio veteran from way back (that’s where the “Doc” nickname came from… my given name is David). I sublimate that now by taking part in podcasts by others, including Steve Gillmor’s Gillmor Gang.
- A marketing, PR and advertising veteran. Most notably I co-founded Hodskins Simone & Searls, which was born in North Carolina in the late ’70s and grew in the late ’80s and early ’90s to become one of Silicon Valley’s top advertising and public relations agencies. (HS&S was absorbed by Publicis Technology in 1998.)...