Digital advertising extracts data from consumers and money from advertisers. Here is how to fix it.
The digital advertising ecosystem has engendered a global surveillance industry that violates privacy on a large scale and contains a few giant corporations with many conflicting interests. They operate markets for ad impressions, but also represent publishers as well as advertisers on this market. And they compete with publishers in the same market. The ecosystem is opaque even for its participants. Advertisers cannot trace where their money goes, buy junk inventory without knowing where their ads appear, and have no independent insights whether their ads reach the target group. As a side effect, the desire to maximize ad revenue motivates social networks to glue their users to the screen as long as possible by serving them sensational, inflammatory and addictive content that destabilizes democratic societies.
Can this ever be fixed?
Yes. Read below what we can do about it. This is an extract of a longer blog published here.
Ban individual ad targeting
Personalized ads are targeted at individual consumers based on their demographics, behavior, inferred intentions, and the context in which the ad appears. To serve them, advertisers used consumer profiles constructed by a surveillance industry that collects data about consumers online and offline in stealth mode. This industry violates consumer privacy rights on a large scale, but it has been able to fly under the radar by offering complicated privacy policies that the consumer can consent to in one click. Since the policies are inscrutable, and the consent click is a ticket to access a service for free, consumers consent without reading.
The experience of Apple, where nearly all users decline the option to be tracked, suggests that a simple change from opt-out to opt-in would eliminate most of the privacy violations in personalized advertising.
However, even with an opt-in system, ad exchanges would still be offering ad impressions for sale that contain personal data to an unknown set of advertisers, which still violates privacy rights. A cleaner solution is to simply ban personalized ads: No consumer profile data must be offered to advertisers in automated or human negotiations between publishers and advertisers.
What remains after such a ban is contextual advertising, based on the content of a page, the nature of an app, or the meaning of a search term. Ads will be shown based on the show that the consumer is watching, which makes ads less reminiscent of spam. Advertisers will not follow a consumer after they visited a premium site, until they touch a low-valued site where they can serve them their ad cheaply. Banning individual targeting benefits advertisers, consumers, and publishers, but it hurts the surveillance industry and ad intermediaries who have been raking in money from selling individual profiles.
Rein in individual post targeting
Digital advertising incentivizes social networks to keep consumers glued to their services for as long as possible, so they can serve consumers more ads and sell more ad impressions to advertisers. To achieve this goal, the posts that consumers receive are individually targeted. These posts are not ads and would not be affected by a ban on individual ad targeting.
Unfortunately, this has led to a barrage of hate speech, racism, misogyny, fake news, disinformation, conspiracy theories and other sensational or inflammatory junk. As explained by Gao Han, a senior UI designer at ByteDance and employee number 22, “We must face the fact that for 96% of the people, their needs are so vulgar” ([1], page 85).
In a free society, consumers are free to consume junk, and businesses are free to sell it. But with freedom comes responsibility. Suppose the post office decided which mail to send you. It turns out to send you photos and diary entries of your friends, messages of political parties, flat earth theories, conspiracy theories about the moon landings, racist content, fake news, and information about gardening. It streams live shootings and suicide videos. Wouldn’t you take the office to account for this?
The protection that social networks have under Section 230, by which they are not responsible for the content that they send to you, should be replaced by a responsibility for distributing, and amplifying, content on their network. Either the network decides what we see next and takes responsibility for it, or we decide that ourselves and take responsibility for it.
Moreover, just like late-19th century telcos, each network is currently a walled garden from which users cannot communicate with users in other networks. This must change to an ecosystem in which networks are interoperable and consumers can switch with little effort to a competing network that offers better service.
Replacing Section 230 and mandating interoperability will not reduce the addictive and destabilizing impact of social networks to zero. But it will introduce the invisible hands of democracy and the market to create responsible social networks.
Eliminate conflicts of interest
The programmatic advertising system is a duopoly of Google and Facebook, which occupy several roles in the ad stack that have conflicting interests. For example, Google Ad manager contains DoubleClick for Publishers, an SSP that represents publishers; it also contains ADX exchange, an ad exchange where publishers offer their inventory for sale. So the market master represents some of the sellers on the market. There are many other examples.
In the colorful metaphor of Cory Doctorow, “It’s a single lawyer representing both parties in a divorce, while serving as judge in divorce court, while trying to match one of the divorcing parties on Tinder.”
The bipartisan AMERICA Act proposes to break up ad tech companies along the lines of conflict. The British Competitioon and Markets Authority proposes to do the same [2], and the EU has started proceedings against Google that accuses them of self-preferencing by exploiting conflicts of interest. These processes will be slow, but they should result in a less extractive and more competitive digital advertising ecosystem.
Make the supply chain transparent
Three industry studies of the programmatic ad supply chain showed that even for its participants, the supply chain is opaque, advertisers do not know where their money ends up, they turn out to be advertising on over 40 000 sites whose value is doubtful, and there are growing doubts about the accuracy of individual targeting [2] [3] [4].
To improve this, data logs should be standardized so that independent verifiers can collect and aggregate data about spending and accuracy. There should be an ad repository that shows which ads are published where, accessible to independent verifiers. Without transparency, the service provided by ad tech must be assumed to consist of serving ads on junk sites, which robs money from advertisers. It is time to base ad campaigns on independent data.
The measures reviewed here require government intervention and regulation. We need the visible hand of government to give room to the invisible hands of democracy and the market to the digital advertising ecosystem.
The is an abstract of a blog published at https://www.thevalueengineers.nl/how-to-fix-the-digital-advertising-ecosystem/.