The May issue of Admap puts the spotlight on data ethics. In this exclusive op ed for WARC, Bob Hoffman, best-selling author, and creator of influential advertising blog The Ad Contrarian, explains how today’s data-obsessed adtech industry is based on tracking and surveillance. This has led to unintended and unfortunate consequences for the online advertising industry, and society.
In the advertising world today, the appetite for data has become voracious. According to Rishad Tobaccowala, chief growth officer of Publicis, the global trade value of data flows is now greater than the global trade value of merchandise.
Think about that for a minute. Add up the worldwide flow of trade in food, cars, electronics, airplanes, medicine, oil and Cheetos, and everything else that flows between borders… and the value of data already exceeds that. Data is very big business.
In fact, it is so big we have forgotten the limits. Gathering data, and the purported advertising benefits it provides, have become the glib justification for all kinds of mischief and dangerous activities.
Collecting data has become a drug. Like the addicts who take drugs not because it makes them happier, healthier, or brings them any kind of physical or social benefit, unrestricted data collection has become an addiction despite the fact that it is doing more harm than good.
The current online adtech ecosystem is based substantially on the collection and deployment of data about consumers. As a result, advertising — which used to be about imparting information — has become in equal measure about collecting information. It has become a vast and inescapable network of tracking, surveillance, and spyware.
Let’s have a look at how the shift to the current data-obsessed system of adtech has affected advertisers.
- Waste: The ANA (Association of National Advertisers in the U.S.) says that of every online ad dollar spent, only 25¢ reaches consumers.
- Fraud: It was reported recently that online ad fraud has grown to an astounding $50 billion. No one knows the true extent of fraud (only the crooks who are bad at it get detected) but all experts agree it’s massive.
- Public disdain: It has been reported that hundreds of millions, perhaps approaching two billion, connected devices are loaded with ad blockers. Once again, no one knows the true number. Of 13 different forms of advertising, the eight most disliked by the public are all forms of online advertising. Doc Searls, author of The Intention Economy, says that ad blocking has become the largest boycott of anything in the history of mankind.
- Effectiveness: Click rates for online ads are generally reported to be astoundingly low — between 5 and 10 per 10,000 ads served.
- Brand safety: I’m sure I don’t have to tell you about the scandals regarding advertising for quality brands winding up in horrifying places.
- Fake news: It is largely attributable to the value of click bait which is enabled by adtech. The economics of online publishing are largely centered on the lowest form of advertising achievement - the click.
- Degradation of journalism: The perilous degradation of journalistic standards is also a victim of the data driven click economy. The promise of re-targeting to marketers is essentially this: We will find the highest quality eyeballs for you at the cheapest (shittiest) locations. The result is that quality publishers have trouble surviving while junk publishers make money.
- Non-transparency: As detailed in a 2017 ANA investigation, and further supported in a recent follow-up report, the distrust among marketers of the agency business is pervasive and continues to grow.
- Corruption: Kickbacks, payoffs, FBI investigations, grand juries, and threats of jail time to social media execs have all become part of the daily reporting about online advertising.
- Perversion of democratic institutions: The worst consequence of all this is that the massive amount of personal, private information about citizens that is being collected 24 hours a day and is freely sold and traded presents a clear threat to individuals and democratic societies. It has already undermined our belief in the integrity of several important national elections and referenda.
It is impossible to separate the dreadful consequences of our adtech ecosystem from the promiscuous collection of data. They work hand-in-hand.
What have advertisers gotten in return?
Do we really believe that Pepsi has data that Coke doesn’t have? Do we expect that McDonald’s doesn’t have similar data to Burger King? Is it realistic to think that General Motors data is all that different from Ford’s?
The amount of data we collect is meaningless. Ask any major marketer and you’ll hear that despite our addiction to unbridled data collection, advertising effectiveness is generally believed to be at all-time lows.
Our ability to understand, interpret and utilize the data effectively is what counts. And with more heat from data privacy regulators, how we collect, store and treat individuals’ data is under scrutiny. As marketers, we must treat peoples’ data with due care and respect.
This will be a new competitive advantage.
If we had set out to create an advertising ecosystem that was a totally unsafe and wasteful fiasco, I’m not sure we could have done much better than our current data-obsessed online advertising model.
We know what happens when governments know everything about their citizens - when they follow us everywhere, track our every move, read our mail, listen in on our conversations, and keep secret files about us which can be used to influence our lives in ways that are only vaguely visible to us. Except this time it isn't our governments, it’s the marketing industry. In our pursuit of a 360-degree view of the customer, we are well on our way to a nightmare. J. Edgar Hoover would be proud. This is unprecedented and it’s hard to know where it leads. But it’s difficult to imagine that it leads anywhere good.
There is no benefit to marketers from collecting personal private data that comes anywhere near in importance to the privacy rights of individuals. Even Mark Zuckerberg who once said “privacy is no longer a public norm” has recently acknowledged the need for serious reform. Though his motives for this apparent pivot to privacy are highly questionable.
The current model of online advertising - based on tracking, surveillance, and massive data collection - is only 20 years old. But it is already far beyond its sell-by date. It is a ridiculous anachronism, born in a naive era of digital utopianism, and now absurdly outmoded, dangerous, and unsuited to its purpose.