Targeted Marketing Considered Harmful

I’m concerned that the trend of monetization on the Web and in the Android ecosystem is overwhelmingly based on marketing revenue for free services. In these transactions, the product is not the app or website. You are the product being sold. The product you use is the bait to aggregate a lot of attention on the advertising that is sold and displayed through the app or website. The more information the tech company that is offering the free service knows about you, the more precisely they can target advertisements and the larger fee they can command for impressions.

This is bad for us as users.

I’m not particularly concerned about privacy today. Not yet. There may come a day when passive data about your online behavior informs things like what insurance or jobs you are eligible for. That’s not the problem I’m talking about. I’m concerned about something more insidious. What if the marketing works?

In fact, I’m sure that it does work. In order for this model of free services with advertising to work out financially, the cost of the service must be vastly smaller than the cost of the products you buy because of the marketing. Otherwise, the companies doing the marketing would not see a return on investment (ROI) commensurate with the cost of placing the advertising. The fact is, ad-supported services exist because the value of what you purchase due to being exposed to the advertising is far, far greater than the cost of the service in the first place.

The basic premise of advertising is to sell you something that you would not otherwise have purchased. It works by making you feel want something you didn’t want before. In other words, it affects your well-being and happiness. Because you want this new thing, you are less happy until you buy it.

The basic transaction of a free, ad-supported service is not trading “your attention for a free service” as suggested by Leo Laporte. The transaction is that you are trading your sense well-being and (in aggregate) your money – indirectly – for a free service. In aggregate, this is a significant effect but we don’t notice because we are constantly bombarded with advertising. The better and more targeted the advertising, the worse it is. The assertion that more targeted advertising is better for both advertiser and recipient is totally wrong. Its better for the advertiser and worse for the recipient because it is more effective at making you want the thing and therefore less happy with what you have and who you are today.

I noticed this for the first time when I returned to the US from Africa after Peace Corps where I was exposed to essentially zero advertising. I have found that I have been able to greatly reduce stress and anxiety in my own life by doing simple things to limit my exposure to advertising – the most basic was deciding to eliminate cable and broadcast television 12 years ago. We still enjoy TV shows but we buy them on DVD or Amazon streaming which are both essentially ad-free platforms. In general, I prefer freemium services like Flickr or outright pay-for services and apps because the relationship that I want is to be the customer and not the product. With the exception of digital periodicals like the Economist and NY Times apps, pay-for services are almost exclusively ad-free. That makes sense because the user is the customer not the product.

I think its high time the Internet business community comes up with some new and better strategies for monetization than tracking and ever more targeted advertising. Ad-supported is not purely benign. It’s a strategy that turns your users into your product. It puts internet companies in the business of ever more invasive profiling of their users. The pressure to aggregate data about users inevitably leads to breaches of trust and repeated bad press. After a sufficient kerfuffle, governments get involved and will start imposing regulations. Ultimately, it’s a very dangerous game.

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One Response to Targeted Marketing Considered Harmful

  1. Tail-Gunner says:

    I think you just scratched the surface. no not that surface.. ) um, wow, I recently found what could possibly the reason all this is happening.

    It may be more than your mind is willing to accept, although to be fair, I myself do not totally know the absolute truth.

    http://sincedutch.wordpress.com/2012/11/04/geoengineeringfrankenstorm-hurricane-sandy-and-the-air-force-weather-weapon-system-part1/

    Do me a favor don’t get side tracked, hit that page and watch the video first. It’s one hour, you won’t get bored. Listen INSIDE the video for the language about “targeting things” after your nausea goes away, then hit google images for photos of the X37. Ya might not sleep as well for a few days. This really is that much of a horror story if it’s true, and I got nothing saying it ain’t true at this current point in time as of 6:36 AM on Nov 8th 2012. And yet even playing this truth, not truth game in my head I can not find a solution which does not involve arresting many oath breakers in government, and then yet even with that, what about other governments?

    IF this is too tough to deal with, maybe just delete my entry here. It’s my second entry on your blog since I became interested after commenting on the first article (which both helped me and so I decided to give back on what I used it for) and then poking around your blog, since I’ve never been here before, and who knows I might even hang around for awhile.
    It won’t hurt me personally to delete anything I post, I totally understand, I’ve ran an ISP in California before, I’ve also ran unmanaged servers, as well as popular websites for bands and much other stuff nobody will ever know under the hood for my and other’s tv show’s as well. The important thing here, is I know that you will have received the answer to your question, as disturbing as this all sounds. Really that’s all that matters, man it almost sounds spiritual.

    I have an electronics background myself, so I am more hardware than software, but I can program stuff up on the fly as well. I love electronics and physics. With programming and art a close third and fourth. In fact I have also worked on Jet Aircraft. But I don’t do Meteorology, so …. then again I don’t see any flaws in the information yet either.

    You just have to watch I guess. I sure hope you don’t start talking like me afterwards. 😉

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