It’s a time of upheaval for internet ads. Recent convulsions in data usage and targeting beg questions like: Are ads killing the internet? Are they the only way media will stay alive? Does that make them worth it? And do they actually work anyway? Rick Webb, co-founder of the Barbarian Group and COO for Timehop (and former 99U speaker) recently sat down with Gawker.com founder Elizabeth Spiers at the Northside Festival in Brooklyn for a conversation on the degrading value of online advertising. “Normal people go to a bar and talk about their exes,” Spiers said of her long friendship with Webb, “Rick and I go to bars and talk about digital and economy.”
Spiers and Webb unpacked how online advertising affects our offline social fabric, why we shouldn’t fear regulation in the age of GDPR, and why all of our assumptions of how the internet works are complete and total bunk.
Read on for some big picture insight into exactly what’s happening on your little screen.
Digital ads didn’t change our world.
“Almost everyone working in this industry is working under a bunch of false assumptions,” says Webb. The fact that the internet created a new world of ad spaces, doesn’t mean that those ad spaces are more valuable. How does Webb know? He compares it to the first appearance of TV ads. “The ad spending level in the US has historically been 1-2% of GDP and it hasn’t changed except for one time: television,” says Webb. “[TV advertising] worked demonstrably better, so [companies] all notched up their spend.” But when internet ads appeared, the advertising industry’s numbers didn’t mimic that game-changing TV moment. A metrics-based marketer might be able to tell you a whole lot of numbers, but if those numbers aren’t dollars it doesn’t matter. If you look at the U.S.’s spend on advertising like an economist, Webb concludes that digital advertising doesn’t add demonstrable value to advertisers.
Targeting may all be myth.
If Webb has one mission to fulfill, it’s to proclaim that targeting—the same issue that has the world up in arms over data protection—is overrated. In fact, it may not work at all. Sure, marketers can target a campaign to your age, size, weight, non-binary gender, and what you had for breakfast. But, so what? Granularity of targeting may just be an unnecessary layer of empirical rationale. “The data is kind of useless,” says Webb. “The difference between three people, when I try to sell a toothbrush, is zero. I don’t need to know anything about you guys except that you want to keep your teeth clean.”
If targeting is a myth, then user data and personalized strategy isn’t as valuable as advertisers think. That’s partly why Webb isn’t alarmed by the new regulations from GDPR. “Everyone is like, ‘This is terrible. The sky’s going to fall.’ And I’m like ‘I don’t care,” says Webb, going back to his point that targeting isn’t effective. “We don’t have to use all that data. We don’t do anything with it.’” If the advertising industry is built on a false premise of targeting, then personal data regulation won’t affect anything other than the house of cards that personalized metrics are built on. That’s why Webb embraces course corrections like GDPR. “I want to lay out the case for people to understand why regulation is good. It won’t hurt the industry, because we don’t need to be doing this targeting stuff.”
Ad money affects social institutions; think hard about where you put your ad spend.
Webb doesn’t just care about this because he’s an econ nerd. “The migration of ad money from offline to online parallels the migration away from news,” says Webb. As money leaves legacy print organizations like newspapers, their funding goes down. That downgrade in funding is pegged to the degradation in news literacy and public discourse. “All this sh*tty stuff on the internet is because of the financial drivers around the age of data: these ‘things’ seemingly being important to people. But what’s also obvious is that it’s not true,” says Webb on that state of his beloved internet. “They’re ruining our lives on a fundamentally flawed premise.”
Ads can have moral value. What are they worth when they don’t deliver?
Webb outlines three periods in U.S. history when we’ve had a reckoning with advertising. The first, he says is patenting and the invention of the Federal Trade Commission. The second came with the rise in conspicuous consumption and economists who pegged the functions of advertising into the pillars of supply and demand. “There was a big call for regulation again,” says Webb. Both times, he says, advertising wasn’t regulated because analysts advocated that it had a moral value because it funded news and encouraged trade. Now we’re in a third ‘convulsion.’ The big difference staring us all in the face? Advertising doesn’t fund the news anymore. If the moral argument for advertising has been thrown out, what other changes will follow?
Emily Ludolph is a director at West Wing Writers. She has published in The New York Times, The Atlantic, Artsy, Airmail, Eye on Design, JSTOR Daily, Quartz, Narratively, TED Online and Design Observer.