At a recent workshop, I asked students to explain how online ads were planned and sold.
Puzzled faces stared back at me. The word ‘programmatic’ was mentioned.
“Okay, how does that work?”
One student said that advertisers send a profile of the kinds of people they want to reach to a Demand Side Platform (DSP) and publishers send a request to a Supply Side Platform (SSP).
“And what happens in the middle?” I asked.
That’s not surprising because the way the market works is a murky, complex and highly specialised field of knowledge. Economists have a phrase to describe this: “Extreme a-symmetry of knowledge.” It means that one (normally small) group knows a lot and the other side is largely in the dark. You should smell a rat when the side that knows a lot tries hard to keep it that way by, for example, saying something like: “It’s all too complex to understand” or “You can’t know because it’s a trade secret” or “Don’t worry we have your best interests at heart.”
A new book by James Ball, The System: Who Owns the Internet and How It Owns Us, sets out to dispel the fog of ignorance. The chapter called ‘The Admen’ is a must read (I will come back to it). He kicks off with a warning from history.
A Warning From History
In 2008, we discovered how dangerous a-symmetric knowledge can be. In the previous decade, Big Finance had stopped serving its customers’ interests and started to invent all sorts of complex financial products (often called ‘marketisation’) so they could make big profits on their own account. Governments were persuaded to look the other way because big profits produced big tax revenue. Huge global businesses emerged like RBS, which had once been just a regional bank. They made their shareholders and executives rich, so the pensions’ funds did not look too closely either.
Big rich companies did what big rich companies do. They spent millions on lobbying. They also integrated themselves into, and cosied up to, those with political power. Marketisation was a great thing, the story went. It made financial allocation more efficient. Gordon Brown, then UK Chancellor of the Exchequer, took it hook line and sinker. It means “an end to boom and bust” he intoned. It turned out that marketisation also meant packaging up and selling all sorts of toxic loans to the unsuspecting. These exotic financial products were sold by companies that did not fully understand their implications and liabilities either. Then the solids hit the oscillator. I don’t remember much warning from academics, intellectuals and commentators in 2007.
Enter Surveillance Capitalism
History does not exactly repeat itself but it does often rhyme. About 15 years ago, a new type of company started to emerge based on a new technology that most people (highly educated people as well) did not fully understand. In fact, digital innovation moves so fast that even people inside the likes of Google and Facebook did not have a complete picture. (Declaration of interest: I used to work in a Google innovation division.) We were all peering ahead into the future as if through a glass darkly. But we were excited about the possibilities. We were going to “move fast and break things” and invent transformative new business models. Heady and idealistic days.
Now you can start to hear some of the rhyming tunes from the 2008 crisis. Here is Shoshana Zuboff in The Age of Surveillance Capitalism (which I reviewed in Aurora’s May-June 2019 edition): Big tech companies like Google and Facebook know everything about us, whereas their operations are designed to be unknowable to us. They are “protected by the inherent illegibility of the automated processes that they rule, the ignorance that these processes breed and the sense of inevitability that they foster,” and Surveillance Capitalists (SCs) quickly realised that they could do anything that they wanted and they did.
No Excuse for Ignorance
This time, there are public intellectuals (like Zuboff and Ball) to explain and warn. It is very late in the day because, 15 years on, those scrappy Silicon Valley start-ups have morphed into the most powerful and richest companies the world has seen. The super-rich are very difficult to dislodge. The super-rich do what they have always done; lobby hard and seduce with riches and influence in order to maintain their privileges.
Zuboff explains the big change in power represented by these companies.
“Industrial capitalism claimed nature (meadows, rivers, forests) and brought them into the market dynamic, where they are reborn as real estate that can be sold and purchased. Activities that people did in their homes, cottages, gardens and fields, were brought into the market dynamic so that it could be sold as labour wage labour.”
“Surveillance capitalism continues this tradition, but with what I regard as a dark twist. It claims private human experience, our inner lives, our daily lives, as a free source of raw material for a new kind of production process.”
“In this production process, our experience is translated into behavioural data. Those data are combined with world historic computational capabilities. Today we call this Artificial Intelligence, Machine Intelligence, Machine Learning.”
“What are produced are predictions about our future behaviour. And these predictions are then sold and purchased in a new kind of marketplace that trades exclusively in behavioural futures like wheat, or pork bellies, or spot trading in the oil markets.”
A Symmetry of Knowledge Gets Worse and So Does Programmatic
One way you experience this marketplace is in the form of online advertising. So, buckle up (and try not to lose the will to live), let’s get back to what happens between those DSPs and SSPs.
Let’s start with you. You clicked yes to ‘terms and conditions’ so a cookie could be planted on your browser. It means you could be followed around the internet by large numbers of companies that plant cookies. Just check your browser. “End users are being tracked on an industrial scale,” says Ball.
So, ad exchanges (previously called ad networks) were born. They sit between the DSPs and SSPs. They trade your personal data and you have no idea who they are. But maybe that’s okay.
That has spawned a new class of ‘publisher’ to hoover up audiences which you would recognise as ‘click bait’ or ‘content farms’ like Taboola and Outbrain. Suffice it to say they do not have to pay the wages of professional journalists, but they are scooping some of the revenue that should go to The New York Times and others.
Can We Muck Out the Augean Stables?
Why not just ban cookies? It is the radical solution but unlikely. Hugely powerful companies like Google and Facebook profit from this system of trading online advertising. It’s ‘a hammer to crack a nut’ they would say. Cookies are essential to service innovation and refinement. That horse has bolted.
Brian O’Kelley (who has become rich from ad networks) says: “The first step is for publishers to realise that they are taking part in their own downfall. Call an end to letting ad exchanges take data on your audience. This solution is unlikely too, as this tactic could temporarily hit publishers’ already strained revenue. Regulations like GDPR (but tougher) could help without requiring such drastic action from advertisers.”
Disrupt the Disrupters
My view is that a new generation of tech companies is needed to disrupt the now bloated SCs. The Economist sets out a vision for a better way: “A digital commonwealth governed by a new set of rules akin to a constitution with its own checks and balances. Respectful management of data offers another business opportunity...give users more control, telling them how much their data is worth and managing data on their behalf, as a data trust of sorts.”
Too idealistic? Not necessarily if people think they are being cut in on the deal – rather than just being a data point to be milked for profits by SCs. New generation platforms would still have to contend with governments who quite like SCs as they can be pressured to allow security services to access their customer data on an industrial scale. In China, WeChat is already both a commercial platform and a government surveillance system.
But a big change is needed and before too long. As the saying goes “You don’t know what you have till it’s gone.” I am talking about quality journalism and paid journalists. Without this we already know what the future is like. Fake news, bad actors, rumours, bullying, lying. Smelly in other words; like the Augean Stables after a hot spell of weather.
Julian Saunders was CEO, Red Cell (a WPP creative agency) and Head of Strategy, McCann-Erickson. email@example.com
The System: Who Owns the Internet, and How It Owns Us by James Ball
Bloomsbury Publishing, 288 pp; £20. ISBN: 978-1526607249