The Real Cost of the Free Internet

The Real Cost of the Free Internet

Insights after reading the book: The Daily You - How the New Advertising Industry Is Definining Your Identity and Your Worth by Joseph Turow @JoeProf

Written for my friends who may are not in the advertising industry to give them a good idea of what is going on. Also written for my friends in the advertising industry since we may not know everything that we think we know and may have not thought through the implications of what we are doing. Hope that you enjoy.

Lets start at the beginning....

People will not pay for information or content on the Internet. Its a fact. Another fact is that it costs money to put up a site and keep it running. Why would anyone want to create a site and update it and attract new Internet surfers for free? They don’t. Advertisers pay them to do it. Everything that follows can paint the web economy as evil but the fact is that they are doing what they have to do in order to give web surfer what they want for free. Don’t blame the industry, blame yourself. Include me since I don’t pay to read things on web sites either.

Why advertise on the Internet?

One of the advantages of the internet for advertisers is its to get the right ads to the right people at the right time. Unlike a roadside billboard or a TV commercial, Internet ads are not only able to be displayed where you are or next to what you are watching, they have the ability to be shown where ever you are going based on where you have been. Imagine a roadside billboard that promotes a happy hour only on Friday evenings only to people who are leaving their offices and not going home.

“I know that half of my advertising works, I just don’t know what half.” - John Wanamaker

Internet advertising has focused on eliminating advertising waste. Getting the right message to the right people at the right time. Web sites can bring more value to their advertisers by giving more data on the people who visit their site. This way they can charge more for each ad on the site since they have done a better job in eliminating advertisers waste.

Advertising technology companies exist and make a good amount of money tracking where surfers go. When you visit a site a “cookie” is placed in your browser and every time that a surfer visits another site that is contracted with the same company that placed the first cookie, that cookie is updated and a profile is created. It matches the average user data from the site with the following sites you visit to create a user profile. Theses ad technology companies then sell that data to advertisers and the sites that they have their technologies on so that advertisers can reach the audience they want.

Large advertisers have large budgets and need to reach large numbers of people. Few sites can satisfy a large advertiser’s thirst for audience. This gives birth to the publisher network. A publisher network is a collection of web sites. Networks sell the audience of many web sites to advertisers and then pay the web sites within their network to show those ads to the audiences that the network sold to the advertiser.

We love you, but you, not so much..Not all Surfers are Created Equal

Advertising technology companies can also contract directly with the web site to provide user data to them so that these web sites and networks can sell their audience more effectively. With more targeting advertiser waste is transferred to web site publisher waste. If a web site can’t find an advertiser that wants to reach then there is no reason to cater to what those users want to see. On the other hand, the surfers that advertisers want to reach become that much more valuable. It is the web site’s job to not only attract more of these people but also keep them on the site longer in order to view more pages and see more ads.

Great, that is how it works. So what? What does it mean to me?

Dynamic Personalization - News

Now the web sites have financial incentive to keep the right people on their site. How do they do that? By giving the user what they want to see. A user visits the site and a web site can detect their interests based on the cookies on your browser. By identifying what you are more likely to like, then the articles you are most likely to read are highlighted.

This reinforces your worldview and eliminates the diversity that you may get from going to any news site. If you are a republican you will be fed republican leaning articles and democratic leaning articles will be buried on the site. Wherever you go and wherever you are getting your news, it will always be skewed toward that worldview that the data thinks you have.

Today’s political environment is more divided and argumentative than ever. Is this because (first) cable channels and (now) web sites focus on one stance and then reinforce that stance with more and more stories that support it? Is the American viewing public getting both sides of the story anywhere? What does someone have to do to learn both sides of a particular issue?

Dynamic Personalization - Shopping

Any web site that has something to sell has a good idea of what you like and how receptive you are to discounts or ads that promote the prestige of a particular product. They also have a better idea of what you are more likely to buy.

Two people can go to the same site and see completely different ads. One surfer will see successful people driving a BMW while another will see a special offer to buy a Hyundai right now.

Both the new sand the shopping examples show that in order for web sites to make more money and be able to deliver better stuff to web surfers, they have to change what they show you based on your past viewing history and the information about you. In the long run this serves to pigeon hole you and hurts every one's ability to grow, change and be exposed to new things. Facebook is the same way but you do it yourself by selecting your own friends with similar views.

These are the unintended consequences of the free Internet. There is no such thing as a free lunch.

Thank you for reading. Feel free to comment.