Online Advertisement, Privacy, and Journalism

-- By KjLim - 13 Nov 2017

Introduction

The purpose of this post is to discuss the problems of today's online advertisement and consequences of the increasing popularity of privacy technologies that fight against tracking. I will first discuss why online advertisement has become more problematic in the recent days, including how platforms' placement of advertisements can significantly affect the advertisers; I will then discuss privacy technologies, including ad blocking software that has accordingly gained popularity and how native advertisements that circumvent ad-blockers are creating problems.

What's Wrong with Today's Online Ads? Tracking

Online advertisement has been around for a while. But in my view it recently has become much more problematic than before, and the biggest culprit is the growing use of website visitor tracking. Website visitor tracking is a practice of tracking/monitoring website visitor’s online activities (often even when they leave the site) to create “big data” for advertisers who then use the data to provide “personalized” ads to web visitors. This practice has apparently become prevalent as big data analysis is now a buzzword that attracts advertisers who are looking to exploit the ever-increasing online markets (it is reported that internet advertising revenues in the U.S. has exceeded those of cable television and of broadcast television).

Despite the ironic reality that the click-through rate on online ads is reported to be less than 0.1%, more and more websites – including social network services such as Facebook that has access to more personal information than others – are using user tracking to sell their advertising spaces. And this is troubling, to say the least. First, this practice clearly is (or should be considered) a form of impermissible Internet surveillance that permeates today’s society because it is generally done without the knowledge/consent of the users, most of who are not tech-savvy and do not understand the consequences of allowing these websites, especially tech giants like Facebook/Google, to monitor their activities.

What's Making It Worse? Dominance of Google and Facebook's online ads market

The prevalence of tracking has led to the emergence of the duopoly of the online ads market by two largest platforms, Google and Facebook. These platforms gather personal information through user's website uses and through user's app use on their phone, which tends to provide much more personal information, as users are spending more and more time on their phones and are becoming comfortable providing personal information on their app these days. Due to this unparalleled data gathering capacity of the two platforms, Google and Facebook provide advertisers with access to greater audiences and, more importantly, with better tracking, leaving no room for other platforms to compete with them in the online ads market. This duopoly has left advertisers with little leverage power and at the mercy of these platforms -- Google and Facebook can command steep prices for popular target keywords and depending on how the platforms treat the ads, the ads can appear with different contents, which significantly affects the ads' effectiveness.

With these platforms dominating the ads market, other media websites have seen their ads revenue, which is often the main revenue source, sharply decline and are struggling to survive. If this trend continues, there will be fewer and fewer media sources and the duopoly will only be strengthened even further, and advertisers (who are often product and services businesses) will find themselves with little to no bargaining power against these platforms.

It is also concerning that the prevalence of tracking practice by these platforms reflects today’s business leaders’ insensitivity to and us ordinary persons’ ignorance of the importance of privacy and far-reaching implications of surrendering it to big corporations with technology and money that can then use such information to subtly control our lives in troubling ways.

Privacy technology -- Ad-blockers Fight Back

Fortunately, there has been some successful effort to fight back: ad-blockers that selectively download material when visiting a website, usually excluding advertisements and tracking components. According to Adobe’s 2015 Global Adblocking Report, “there are now 198 million active adblock users around the world … [adblocking] grew by 41% globally in the last 12 months”. A Harvard Business Review article called it “the largest [boycott] in human history”. Ad-blockers have become so popular that the popularity is even sparking ethical discussions on whether it is morally wrong to deprive web publishers of means/opportunities to earn money, which could lead to the decline of journalism in general.

While ad-blockers are the most common privacy technology even non-sophisticated users can employ to defend against tracking, ad-blockers admittedly are rather basic privacy technology that helps users fight against tracking.

Native Ads and Problems

Against this backdrop, the issue I would like to discuss here is the growing prevalence of native ads that more and more online advertisers are starting to use in response to ad-blockers because they can circumvent the blockers. Native ads are forms of advertisement that match the online platforms’ form and function so as to look like the platform’s content, and some examples can be found here.

Two main problems of native ads I think are: first, it is often difficult for many website users (who I assume are not tech-savvy) to tell if some content is in fact a native ad, creating misleading, if not deceitful, impressions of products the ad is promoting. Second, perhaps more importantly, when it is difficult to tell the difference between journalism and advertisement (because many native ads operate on online publishers websites), it could eventually erode the independence of journalism and, if combined with tracking, the Internet would no longer be a place for content democratization and free exchange of ideas.

Concluding Remarks

I have mainly discussed the problems of online advertisements that create privacy issues and market imbalances, and threaten the Internet’s (online publishers’) integrity, without discussing solutions. Honestly, I am not sure what solutions there are, especially considering that web publishers’ need to monetize their websites/content is also important; if they can’t do so, we will have fewer and fewer web publishers that can financially survive, threatening the notion of content democratization championed by the web. Nonetheless, a better understanding of the problems should help us find solutions as we move forward.

I raised some issues in my comments on the first draft. You responded, but we could derive more benefit from the resulting inquiries had they been more inclusive. Your approach to the Google/Facebook duopoly is no more complex than to say that "if this goes on, there will be fewer choices and more power for the duopoly" or a facsimile thereof. Some actual discussion of the antitrust possibilities, along with other forms of legal response, might be fruitful.

Similarly, your account of ad-blockers and native advertising acknowledges that actual consumer defense tools beyond ad-blocking in the browser does not have to be so stupid, and can accomplish more for the user. But you don't investigate or say how. The definition of native advertising is still wrong, as I indicated in my comments.

Because the follow-up on these points can be strengthened, we can then make progress on the conclusion, which continues to see "advertising supported" and "economically viable" as synonymous. This implicit assumption dictates the circularity. Once the issue is how to fund creation without advertising, the re-framing disposes of the tautology.u