- We know we’re being tracked all across the internet but aren’t really aware of the scale of it, nor the technology that underpins it. A new book by a former Google exec lays bare the workings of the machine.
- The $500 billion online advertising business model is also in crisis. The internet is degrading the very resource — our collective attention — on which its financial survival depends.
- At the same time, the introduction of AI as an augmentation or replacement for “traditional” knowledge structures, and how we search for information online, poses an existential threat to what we know.
Advertising on the internet has become the primary funding model for everything from the biggest streamers to the smallest publishers — but what happens if it’s wrong?
That’s the contention of Tim Hwang, the former global public policy lead for artificial intelligence and machine learning Google, who has written the book, “Subprime Attention Crisis: Advertising and the Time Bomb at the Heart of the Internet.”
Hwang’s central argument is that everything about the internet — from the emphasis on data collection and the use of the “like” button to the fact that services like Google Search and Facebook are free — flows from its core business model.
But that $500 billion business model is also in crisis. The internet is degrading the very resource — our collective attention — on which its financial survival depends. The resulting “subprime attention crisis” threatens to upend the internet as we know it.
In conversation with Ezra Klein for The New York Times, Hwang targets the impact of programmatic advertising, which is the use of algorithms to buy and sell attention online.
“Google, Facebook needed to not just sell enough advertising to fill a magazine,” says Hwang. “They needed to sell enough advertising to sell ads against every possible search query that someone might have online. And so they invented programmatic advertising — which looks a lot more like the high frequency trading of capital markets.”
Since the Mad Men of the 1950s, the dream, as Hwang puts it, has always been for an ad exchange that would connect ad buyers and ad sellers in a transparent marketplace where finally we’d be able to overcome Wanamaker’s law.
This is the well known aphorism where 50% of the money that is spent on advertising is wasted — you just don’t know which half.
The trackable nature of targeted advertising is supposed to solve this once and for all.
But Hwang says this idea is founded on sand.
He says the online marketplace may be a lot less functional than it might initially appear because it relies on a number of assumptions that don’t turn out to be ultimately true.
That’s why he warns of a subprime crisis in the making.
“That we have a market that people believe is extremely, extremely valuable and only getting more valuable, whereas the reality is actually things are getting more and more dysfunctional,” he says. “The central promise of this market, which is I can reach a consumer and get them to buy my product, is not really ultimately playing out.”
He points to studies that suggest that more than half of display advertising may actually never see a real person, because it is lost to fraud.
Other studies suggest that a large percentage of ad campaigns don’t actually reach the right person because the ad data is inaccurate.
“So you think you’re reaching male, 25 to 35. Turns out, it’s female 75 to 95 that’s living somewhere completely different from where you thought.”
He cites a Google study that suggested that even if the ad is delivered, more than half are just never seen because “they’re in some weird corner of the website. You’re just not looking at it because you’re reading the article.”
Elaborating on the subprime metaphor he says, “We’re buying these clickthroughs, these engagements, these moments that you look at online. But the core of it, which is how much are people actually paying attention to the ad, is declining.
“I think it’s a bit like the subprime mortgage crisis in the sense that the underlying asset is just getting worse and worse and worse until the whole thing kind of busts.”
But why should we care if Mark Zuckerberg of Google shareholders misses out on a couple of billion dollars as a result?
The reason is that internet advertising funds almost everything on the web.
“It subsidizes the fact that we can access a lot of services for free online. It funds journalism and media. If you think that’s important, that’s a huge reason to care.”
It simultaneously subsidizes advancements in AI — investments made by companies like Google at a huge loss because they make money through advertising.
“So there’s also this relationship between the health of this ecosystem and the advancement in science and technology.”
Hwang advocates subscription-based media to counterbalance the trend, or at least the hybrid models with which Disney and Netflix are dabbling. He says this will brings back a basic principal of consumers paying what they think quality content is worth.
The introduction of generative AI and large natural language models pose another threat, however. Google, for instance, is integrating AI into search in a way that could even more fundamentally skew discovery and learning of objective knowledge.
“I think part of the question is, do people not necessarily really want an internet of websites, when they really want an internet that’s translated through an assistant? And I think that leads to a very, very different experience of the web if we go down that route,” he says.
“It is potentially worrisome, that we’re moving to an internet that’s based on monolithic narrative synthesized by a machine rather than an internet that’s based on searching through lots of different options on your own.”